How to start a construction company in Kenya

Starting a company
Starting a company in Kenya is now as easy as 123. PHOTO/FILE
The Kenyan construction industry is quite lucrative and a great choice for budding entrepreneurs seeking impressive returns on their investments.

Unfortunately, a huge number of people are not familiar with the process of starting a construction enterprise – a situation that leads to a huge number of informal (jua kali) construction businesses.

Here is a quick guide to starting a construction company in Kenya.

1.) Conduct a name search
A name search is carried out to ensure that no other business bears the name you have in mind.

This can be done at any time of the day via the e-Citizen portal (www.ecitizen.go.ke) at Sh150 per name.

The procedure takes a day and once you find an available name, it will be reserved for a period of 30 days within which you must register the company.

2.) Prepare Memorandum and Articles of Association
A memorandum of association defines the company’s structure and objectives. It provides the company’s name and outlines the scope of activities it can engage in.

It contains the names of directors and their shareholding in the company.

The articles of association on the other hand set out the regulations through which the company is to be governed and owned. It also indicates the powers, rights and responsibilities of each of the directors.

The documents act as the company’s constitution and are a requirement during the company’s incorporation and registration with National Construction Authority (NCA).

3.) Apply for Company Registration
Complete and submit your company registration application (which combines the applications for Company Registration, KRA Pin, NHIF and NSSF registration) on the e-Citizen.

The duration of registration and requirements depend on the type of company you have formed, i.e. sole proprietorship, partnership (2 to 20 people) or a limited company (2 to 50 owners).

The standard registration fee is Sh10,650, although this may be higher for limited companies.

Once your application goes through, you will obtain your certificate of incorporation, CR12, KRA Pin, NSSF and NHF numbers online.

4.) Register with the NCA
Having been issued with a certificate of incorporation, you will need to register your company with the NCA for clearance to legally operate as a contractor.

The NCA is tasked with supervising and regulating all construction activities around the country.

The regulatory body has 7 classifications depending on the scope of work the company is allowed to undertake starting from NCA 1 which enjoys an unlimited contract value to NCA 7 which can undertake contracts not worth more than sh20 million.

The requirements vary depending on category, with a company registered under NCA 1 being required to have at least one director with a degree in a building and construction related field while a director with a trade test is required for registration under cadre NCA 7.

The registration fee as well as the annual license renewal fee also varies across the categories ranging from Sh10, 000 to Sh50,000 and Sh5,000 to Sh10,000 respectively.

In addition, you are required to submit proof of a bank account opened in the company’s name and copies of your registration certificate, national ID/Passport, tax compliance, PIN and VAT certificates plus a CV for each of the directors.

According to the constitution, all government departments must earmark and award 30 per cent of their tenders and contracts to women, the youth and people living with disabilities.

If you fall under any of these groups and are interested in working with the government you have to register with the Access to Government Procurement Opportunities (AGPO) for a certificate which prequalifies you to bid in the reserved tenders.

5.) Apply for Business Permit
Apply for a business permit from your respective county government. For those operating in Nairobi, you can access this service online via the Nairobi City County website.

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