It’s time to listen to our firms’ cry for protection

It is not right for local firms to be reduced to the level of begging the Government for protection from unfair foreign competition in public procurement whether the projects in question are locally or foreign funded.

After all, Kenyan taxpayers will still have to repay the foreign funds unless they were disbursed as grants. The Kenya Manufacturers Association (KAM), earlier this week, decried lack of enforcement of the local content clause under the Public Procurement and Disposal Act (PPDA). The neglect favours foreign firms.

Instead of waiting for the local firms to cry out in frustration, the government ministries, departments and agencies should consider advancing the interests of local firms. Hopefully, the public service will do this in for key areas.

One, they will strictly enforce the local content legislation under the PPDA meant to help local firms compete –at home-- against their foreign counterparts. To his credit, President Uhuru Kenyatta recognises the importance of Buy Kenyan, Build Kenya policy as demonstrated last March when he directed procurement officers in ministries and State agencies to purchase locally made goods.

Admittedly, the President was specifically targeting the Information Communication Technology (ICT) sector. But it can be inferred from various policy statements made by different government officials—at all levels—that the directive was meant to cover the manufacturing sector which has stalled at about 10 per cent of the Gross Domestic Product (GDP). It should be a matter of concern to all Kenyans that the country needs to bolster its manufacturing sector to at least 20 per cent of GDP to attain the goals set in Vision 2030.

Two, the Government needs to join hands with the private sector to ensure that, where appropriate, the laws—including those governing taxation—are amended to unapologetically favour the use of locally produced goods and services in the execution of all the country’s development projects.

No excuse, including the so-called lack of capacity, quality or pricing should be used to shut out local firms unless it can be shown—in facts and figures—that they could not possibly have been eligible despite the government officials’ best efforts.

Towards this end, local companies may be allowed to team up and tender as one entity to overcome the shortcoming of lack of capacity and they can be allowed to upgrade their systems and processes to meet the required quality standards.

Externally funded

It should be instructive that some local cement manufacturers successfully adjusted their production processes to meet the quality standards set by the Chinese contractor building the Standard Gauge Railway (SGR). Given a chance, there is nothing to suggest that other manufacturers cannot do the same provided they are provided with the required specifications.

In the same manner, the pricing strategy should not be allowed to lock out local manufacturers as has often been the case because a simple adjustment of taxes can easily tilt the scale in favour of the local firms. This issue requires a special focus because many externally funded projects that demand international tendering do so with the proviso that the imported materials be duty exempt.

In other instances local manufacturers find themselves between a rock and a hard place when they are forced to pay import duty for raw materials and Value Added Tax (VAT) for the finished products thus becoming highly uncompetitive.

Third, there ought to be a greater appreciation among top decision makers that the country’s entire industrialisation efforts would amount to nothing unless immediate steps are taken to stop the reckless importation of goods that can or are manufactured locally.

The added tragedy is that many of the imports may be cheap in price but extremely expensive when their utility is taken into account and when they have the potential to cost human lives.

For example analysts are coming round to the conclusion that some of the motor vehicle accidents occurring on Kenyan roads may be due to the fitting of cheap spare parts such as brake pads while some of the fires breaking out in questionably put up buildings may be attributed to shoddy imported electrical cables.

—nmbatau@gmail.com