Background to the legislation

The construction industry in Kenya is regulated by the National Construction Authority Act (No. 14 of 2011) (the Act). Though the Act does not expressly make reference to the term “local content” it does have provisions that provide for both local and foreign contractors.

Categories of registration of contractors

National Construction Authority Regulations of 2011 (the Construction Regulations) provides for different categories of registration. Registration of contractors under NCA-1 category is open to both local and foreign contractors. On the other hand, any registrations that fall between NCA-2 to NCA-8 are restricted to local contractors only. This provision has the effect of restricting the type of work that a foreign contractor may undertake.

Registration of foreign contractors

The Construction Regulations define a “foreign contractor” as:

• a firm incorporated outside Kenya; or
• a firm incorporated in Kenya in which 51% of the shares are held by a non-Kenyan.

A foreign firm is required to make an application to the National Construction Authority before undertaking work under category NCA-1. The application must be accompanied by an undertaking in writing that the foreign contractor shall:

• subcontract or enter into a joint venture with a local person or firm for not less than 30% of the value of the contract work for which temporary registration is sought; and
• transfer technical skills not available locally to a local person or firm in such manner as the National Construction Authority may determine from time to time;

The National Construction Authority may register such joint ventures that a foreign contractor enters into with a local firm or person.  The Construction Regulations further require that the employees of such a joint venture be competitively recruited from the local labour market. Recruitment or employment of foreign technical or skilled workers on such contract shall only be done with the approval of the National Construction Authority where such skills are not available locally. It is important to note though that contractors may be exempted from this provision by the National Construction Authority.

Conclusion

Although the Act does not make express reference to “local content”, restrictions contained in the Act regarding local and foreign contractors could be argued to be an adaptation of local content policies because they give local contractors an opportunity to maximize on specific projects.