Why government must insist that local workers benefit from contracts it signs

President Uhuru Kenyatta and First Lady Margaret Kenyatta fasten the first nuts to secure the first rail of the Mombasa-Kampala-Kigali-Juba Standard Gauge Railway . PHOTO | PSCU 

In Summary

• Unfortunately, most of these constructions will be undertaken by foreign companies, with tacit support from their governments. As the contracts are signed and foundation stones laid, the big question should always be “What is in it for Kenya”?
• Such procurement may also be through local firms. It should never appear as if Kenya does not have a choice and must sing to the tune of the prime contractor. 

 

By Patrick Muigai
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My recent article titled “We must entrust management of key positions in counties to professionals” (DN, December 26), elicited interesting responses. Its main theme was choosing merit and passion over mediocrity and cronyism.

Kenya has made, and continues to make, great strides in many areas. The multiple projects on oil exploration and extraction, airport, sea port, railway constructions, and an underwater museum in Kilifi are testament to the government’s commitment to developing infrastructure.

Unfortunately, most of these constructions will be undertaken by foreign companies, with tacit support from their governments. As the contracts are signed and foundation stones laid, the big question should always be “What is in it for Kenya”?

For all the major deals, this question must have clear and convincing answers. It should be evident that Kenya stands to gain in the short and long terms. It is critical to ensure the contracts don’t put Kenya in a disadvantaged position.

However sweet the deals may appear, we must always remember the saying that there is no free lunch. We cannot mortgage the country in the name of development.

One way to safeguard the country’s interests is to mandate the participation of local businesses. The large foreign companies must be made to subcontract a certain percentage of the projects to locally-owned businesses. This will enhance knowledge transfer and build local capacity, in addition to creating jobs.

In the USA, for example, protections for disadvantaged business enterprises are established at Federal, State and county levels. These programmes are created to level the playing field, enabling small minority- and women-owned companies to compete in procurement.

In Kenya, the national and county governments should establish goals for the participation of local companies, mandating multinational companies to subcontract a certain percentage of the contract value to locals. Such goals should cover the procurement of labour, materials and tools.

There must also be provisions that all manual labour force (drivers, carpenters, masons, electricians, painters etc) is sourced locally. For managerial and leadership positions, the foreign companies must employ as many Kenyans as possible with the aim of transferring knowledge from foreign technical experts.

Materials required for any project must be sourced locally to the extent possible. For example, Kenyan cement needs to be used in the construction projects. For tools and machinery that are not produced locally, the prime contractor may be allowed to import but the pricing terms must be competitive.

 

Such procurement may also be through local firms. It should never appear as if Kenya does not have a choice and must sing to the tune of the prime contractor.

An example of how these contracts can be skewed will suffice. In the early 1990s, the Japanese International Cooperation Agency (JICA) sponsored the National Youth Service Engineering Institute in Ruaraka. Some Japanese “experts” were enlisted and deployed at the institute to transfer knowledge to locally trained engineers who were lecturing at the institute.

It was not uncommon to have some expert with no knowledge of English arrive from Japan. It is obvious that no knowledge transfer would be possible with such a communication barrier. Obviously some people had been compromised.

Similarly, the laboratory was filled with “commercial” Hitachi TV sets and radios. There was not a single exploded (with exposed circuit board) TV that could be used to demonstrate the various stages of the TV signal within the set (High Frequency-HF, Intermediate Frequency-IF, Low Frequency-LF).
Obviously the commercial units made teaching difficult and never enhanced the students’ learning.

Mr Muigai is a project manager, in Atlanta, USA, (muigaipatrick@yahoo.com)