Local Investors to Benefit from New NCA Rules

New Foreign contractors in the country will be required to cede at least 30 percent stake to local investors according to new industry rules that were effected from last month and the new rules apply to all new projects involving foreign firms according to the National Construction Authority (NCA).

With the new regulations in place, the Chinese contractors are the biggest casualty of new industry rules since they dominate the list of Kenya’s 60 top-tier foreign-owned contractors that are classified as Category 1. Those who will fail to comply risk being debarred and have their names expunged from the register of contractors.

NCA Chief Executive Daniel Manduku stated that they will no longer register projects from foreign investors who will not have followed the rules adding that at they will be checking on ownership at the point of registration.

The classification allows the firms to bid for big ticket deals across all construction classes, according to data from the sector regulator. Chinese contractors control the majority of Kenya’s big construction projects in the country like as railway, roads, ports and real estate.

The ratio of ownership of a joint venture for construction work between a local firm and a foreign firm, according to Mr. Manduku, shall be at least 30 per cent for the local firm, adding that the guidelines are there so as to help boost the capacity of Local contractors through skill transfer. Kenyan Contractors will also be in a position to have a share of the profitable infrastructure projects in the country.

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The indigenous ownership requirement is likely to cut Chinese firms’ dominance in Kenya’s construction industry, and hand a lifeline to local contractors who have in recent years been locked out of mega deals.

Other big foreign contractors in Kenya are largely from Japan, India, Dubai and a few from Europe.
NCA is empowered to register all construction projects and license contractors. The regulator charges a 0.5 per cent levy based on the value of the project, with the minimum threshold set at Sh5 million.

NCA has licensed more than 15,000 construction firms across different classes such as building, civil, mechanical, and electrical and specialist works; and accredited in excess of 5,000 construction workers in Kenya.

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