The Kenya National Highways Authority (KeNHA) is on the spot for awarding Chinese firms mega road construction projects that risks breaching State policy that demands they reserve 30 per cent of their work to local firms.
KeNHA says the Chinese contractors will be penalised if they fail to achieve the 30 percent rule at the conclusion of the ongoing road projects.
“Their contracts demand they get to 30 percent. They can hire locals, source materials within Kenya and add that as local content,” said KeNHA in a statement.
According to KeNHA data nine Chinese firms have so far offered local contractors an equivalent of 9.5 percent of the Sh129.68 billion worth of road constructions deals.
Foreign contractors will be required to subcontract a third of their work to Kenyans under a policy that exempts them from the 2012 proposal that overseas firms doing construction in Kenya be 30 percent locally owned.
The rule’s implementation in 2014 was expected to have the greatest impact on China, whose state corporations have been undertaking projects funded by Beijing and negotiated under a government-to-government pact.
The 30 per cent rule was enacted to encourage local firms to participate in multibillion-shilling State contracts.
However, based on a sample of ongoing road projects provided by KeNHA, Chinese firms appear to be struggling to meet the share.
China Railway No.10 Engineering Group has offered Kenyans a pittance of 0.9 per cent, or Sh12.8 million, of the Sh1.31 billion cost of building the eight-kilometer dual carriageway from the Kisumu Boys’ roundabout to the Mamboleo junction.
Kenya has embarked on its most ambitious infrastructure investment in two decades, involving the construction of new roads, the upgrading of some facilities, and the rehabilitation of others.
Local firms have missed out on large deals, winning only a small portion of the total value of contracts awarded, with the remainder going to foreign firms, primarily from China.
One local contractor blamed the government for increasing tendering demands on firms, such as requiring experience on large projects, which many lack due to decades of underinvestment in the sector.
In the past, some local contractors tarnished the industry by causing project delays, producing shoddy work that frayed soon after completion, and diverting project funds.
Although China’s growing economic presence in Africa has raised concerns about excessive dominance, Chinese contractors have won praise from Kenyans for their efficiency and speed in helping to improve the country’s dilapidated road network in recent years.
China Road and Bridge Corporation (CRBC) has awarded contracts worth Sh7.9 billion to Kenyans for the construction of the Sh60 billion Nairobi Expressway, reflecting a local content stake of 13percent for the nearly completed double-decker road.
For the Sh2.1 billion Kibwezi-Mutumo-Kitui road, Sinohydro Corporation has offered locals deals worth 2.3 percent, or Sh495.8 million.
Local firms have secured a 3.3 percent stake in the Sh4.4 billion Kitale-Endebes-Suam road being built by China State Construction Engineering Corp Ltd.
However, the Chinese company building the Sh8.4 billion Kenol-Sagana Road has reversed the trend. Jiangxi Transportation Engineering Group, which is constructing the 84-kilometer road, has offered Sh2.1 billion, or 25percent of the contract value, to locals.
Unlike their Western counterparts, who are known for stringent financing conditions, China has used soft loans to win the hearts of most African governments.
Typically, the terms and conditions of engaging Chinese firms are negotiated between Heads of State.
One example is the tender for a multibillion-dollar Standard Gauge Railway project, which was won by a Chinese company and sparked widespread criticism for the lack of transparency in the process.
The China Road and Bridge Corporation has been tasked with constructing a new railway line from Mombasa to Nairobi at a cost of Sh447.5 billion.
There was no public bidding in the tender, which they claim was a condition for Chinese loans to help fund construction, and some MPs complained that the contract was overpriced.
The government agreements in Beijing-funded construction projects had cushioned Chinese companies from the 2012 regulations that required they cede part of their stakes to locals.
By John Willy