Kenya: Local Firms Face Ban From State Deals Over Imports in Kenya

Local suppliers relying on imports will any minute at this time be locked out of lucrative government tenders under the Buy-Kenya-Build Kenya initiative, Deputy president William Ruto has said.

He said such suppliers will only be considered if the same goods are not readily available in the country, noting that the preferential treatment under the initiative initial laid out in the 2013/14 budget statement has been abused.

His concern echoed sentiments by Kenya Association of Manufacturers, which in August last year, said local traders who were importing goods were being treated equally as those sourcing them locally under government supply contracts.

KAM outgoing chief executive Betty Maina had at the time called for a comprehensive policy to guide the procurement process under Buy Kenya, Build Kenya initiative, aimed at promoting industrialisation.

Maina was concerned that only "a certain category of persons" were benefitting from government tenders under the preference and margins of preference provision.

Lack of audit on the source of goods and services, she had said, was leading to an influx of imports, further widening Kenya's deteriorating balance of payments.

Last year, the price of exports jumped 11.8 % to Sh1.52 trillion from Sh1.36 trillion in 2013, according to data by Kenya National Bureau of Statistics, while exports grew by a marginal 6.5 % to Sh537.23 billion.

Ruto joined the fray on Thursday warning that government would only consider imports if they are not available locally.

"What we have agreed is that we will no longer give tenders to suppliers who import at the same time as we have the same goods available," Ruto told a luncheon next a bi-annual presidential round-table conference with Kenya Private Sector Alliance.

"That way we can give additional reason for industrial expansion because we will be creating market for local products."

He however stressed that local manufacturers should improve on the competitiveness of their products as the cost of production continues to fall, thanks largely to dipping power costs that account for about 40 % of their overheads.

In February, for example, China Roads and Bridges Corporation - the major contractor for the Sh352.11 billion($3.8 billion) Nairobi-Mombasa standard gauge railway - complained of poor standards of local inputs. The contractor did not name the products although cement and steel are the major inputs in the 485 km project.

"CRBC cannot just say some local inputs don't meet standards without naming them," Maina said on phone on February 13. "This is an opportunity they want to use to import the materials from China."

Export of domestic produce and products was last year captured at Sh459.19 billion, a flat 0.3 % increase compared to Sh457.70 billion a year before, according to the official data by the KNBS.

KEPSA chair Vimal Shah said it was appalling that Kenya's exports have grown by a marginal six % over the last decade.

"Most of this increase was mainly driven by services while the manufacturing exports have remained flat from presently on we still lead in EAC," he said, adding that only 16 % of agricultural exports are shipped as finished products.