Chinese construction giants face uncertain future in Kenya

Workers look over building beams at a prefabs factory in China on March 20, 2015
Workers look over building beams at a prefabs factory in China on March 20, 2015. PHOTO:AP/PENG PENG
Foreign contractors in Kenya have less than a month to cede 30 per cent of their ownership to Kenyans or sub-contract a third of their works to local contractors in order to qualify for registration in the country.

In a public notice issued on Thursday by the National Construction Authority (NCA), the firms have up to May 28 to comply with the new rules failure to which their operations will be suspended.

The NCA, which was constituted under the Act No. 41 of 2011, is mandated to register contractors and to prepare a register of builders cleared to work in Kenya.

READ: National Construction Authority Registration Regulations

The new rules, which seek to check the growing influence of foreign builders on the local scene, also restrict state-funded construction projects of below Sh1 billion to local contractors.

The adoption of the regulations will largely affect Chinese firms that have bagged nearly all major infrastructure projects in Kenya over the past few years.

Global conglomerates in deals passed between States will, however, be exempted from the new regulations.

Some of the Chinese corporations undertaking major construction projects locally include China Road and Bridge Corporation (CRBC), China Wu Yi and China Jiangxi International among others.

CRBC is currently building the Sh347 billion Standard Gauge Railway between Mombasa and Nairobi, while China Wu Yi – which was involved in the Sh32 billion upgrade of Thika Road in 2012 – is presently involved in the construction of the Nairobi Southern Bypass.

The firms have also ventured into private multi-billion shilling projects, including construction of churches, thereby causing jitters among local contractors who in 2013 moved to court to fight off Chinese growing influence.

READ: Chinese ‘grab’ church construction projects in Kenya

China Wu Yi is also the main contractor for the University of Nairobi’s 22-storey complex valued at Sh2.3 billion. The firm is also building the Sh2.1 billion KCB Plaza, a 21-storey office block in Upper Hill, which will host the bank’s headquarters.

Another Chinese firm, China Jiangxi International is currently building what is set to be the tallest building in East and Central Africa – Hazina Trade Centre in Nairobi.

According to the Kenya Federation of Master Builders (KFMB) chairman Moses Mwihia, the new regulations will reform the local construction industry.

“Once the local companies have been involved, they will gain the necessary capability and thus in future be able to handle mega projects,” said Mwihia.