Kenya’s economy has seen an increasing emphasis on local manufacturing, driven by the need to create jobs, foster innovation, and reduce dependence on imports. As the government strives to enhance local procurement through the Public Procurement and Asset Disposal Act of 2015, procurement experts are advocating for crucial reforms to ensure that locally manufactured products receive the support they deserve. The proposed policy changes aim to define local goods based on the quantity and value of local raw materials, thereby enhancing market access for local manufacturers and protecting them from unfair competition posed by imported goods.
Current Landscape of Public Procurement in Kenya
According to recent data, public procuring entities in Kenya concluded 23,367 contracts in the fiscal year 2023/24, valued at a staggering Ksh 210.8 billion. However, a mere 4% of these contracts, amounting to Ksh 8.5 billion, were reserved for disadvantaged groups. The distribution of contract values indicates a significant reliance on non-consulting services (43%), followed by works (39%) and goods (17%). Consulting services accounted for only 1% of the total contracts. This distribution highlights a potential imbalance in how procurement opportunities are allocated, particularly for local goods and services.
Procurement expert Joseph Ogachi has raised critical concerns regarding the existing framework. He argues that the Public Procurement and Asset Disposal Act of 2015 lacks clarity on what constitutes a locally manufactured product. This ambiguity has led to a loophole where imported, pre-packaged goods can easily be passed off as locally made, undermining the very purpose of promoting local manufacturing. As such, the current procurement policies may inadvertently favor unscrupulous traders, allowing them to exploit the system for government tenders.
The Need for Clear Definitions
To address the issues of misrepresentation and unfair competition, procurement experts are calling for a more precise definition of locally manufactured goods. This definition should hinge on the value and percentage of raw materials sourced locally. By establishing such criteria, local manufacturers would gain the upper hand, as they would not only be recognized for their products but also for their contribution to the local economy.
The Kenya Association of Manufacturers (KAM) has taken a proactive stance by conducting a procurement study in 2024. The study recommends distinguishing between reservations for local suppliers and those for locally produced goods. This differentiation is crucial for creating a fair playing field for local manufacturers who adhere to quality standards and contribute to the economic development of their communities. By clearly defining the criteria for local goods, KAM believes that procurement policies can significantly boost local manufacturing.
Centralized Register of Local Manufacturers
In addition to redefining local goods, procurement experts are advocating for the establishment of a centralized register of local manufacturers. This register would showcase locally produced goods, allowing procuring firms to conduct market surveys and make informed procurement decisions. A centralized database would enhance transparency and accessibility, making it easier for government entities and private sector players to identify and source local products.
A well-maintained register would not only streamline the procurement process but also foster collaboration between local manufacturers and procurement entities. This partnership could lead to increased demand for local products, driving growth in the manufacturing sector and ultimately contributing to job creation and economic development.
The Economic Impact of Local Procurement
The push for enhanced local procurement is not merely a regulatory concern; it carries significant economic implications. By prioritizing local manufacturers, the government can stimulate economic growth, create jobs, and reduce the trade deficit associated with importing goods. This aligns with the broader goals of the Kenyan government to promote sustainable development and enhance the competitiveness of local industries.
Furthermore, fostering a robust local manufacturing sector can lead to innovation and the development of new products tailored to meet the needs of the local market. When local manufacturers thrive, they can invest in research and development, improve their production processes, and contribute to the overall economic resilience of the country.
Challenges and Opportunities
While the call for policy reforms and a centralized register of local manufacturers presents promising opportunities, challenges remain. The government must navigate the complexities of implementation, ensuring that the proposed changes do not inadvertently stifle competition or create inefficiencies in the procurement process. Additionally, there is a need for capacity-building initiatives to support local manufacturers, particularly small and medium-sized enterprises (SMEs), in meeting the quality standards required for government contracts.
Moreover, awareness campaigns are essential to educate both procuring entities and manufacturers about the new definitions and requirements. Engaging stakeholders across the supply chain will be crucial for fostering a collaborative environment where local procurement policies can thrive.
Conclusion
The future of local procurement in Kenya hinges on the implementation of thoughtful and strategic policy reforms. By redefining locally manufactured products based on local raw material content and establishing a centralized register of local manufacturers, the government can create a more equitable procurement landscape. This transformation will empower local manufacturers, stimulate economic growth, and enhance the overall competitiveness of Kenya’s economy. As the government continues to prioritize local sourcing, it is imperative that all stakeholders come together to build a robust and sustainable manufacturing ecosystem that benefits everyone.
Through these efforts, Kenya can pave the way for a more prosperous future where local manufacturers are not only supported but celebrated for their contributions to the nation’s economy.
