Members of Parliament are now advocating for the restructuring of the awarding of tenders financed by international investors, following revelations that Kenyans are being excluded from these opportunities, as financiers favour their own local subsidiaries.
The MPs sitting on the Public Accounts Committee (PAC) have called on Attorney General Dorcas Oduor and National Treasury Cabinet Secretary John Mbadi to explain why Kenyans are being discriminated against in financing agreements.
The lawmakers argue that while international financiers have inserted clauses favouring their own firms in tender awarding, any loan facility extended to Kenya is ultimately serviced and repaid by Kenyan taxpayers.
Led by committee chairperson and Butere MP Tindi Mwale, alongside MPs Otiende Amollo (Rarieda), Edwin Mugo (Mathioya), and Samuel Gachobe (Subukia), the legislators insist that Kenyans should be given priority in the awarding of tenders, as they possess the requisite qualifications to execute such projects.
The MPs’ concerns emerged during a meeting with Roads Principal Secretary Joseph Mbugua, who had appeared before the committee to respond to queries from Auditor General Nancy Gathungu. The issue arose during discussions on the financing of the $60 million (Sh7.74 billion) Bus Rapid Transport project along Outering Road after it emerged that South Korea, which had financed the project through a loan, had insisted on working exclusively with South Korean companies at the expense of Kenyan firms.
Under the agreement between the Kenyan government and South Korea, only South Korean companies or entities registered in South Korea can bid for consultancy services. Mbugua stated that most of these agreements are structured by the Attorney General and the National Treasury, and he was therefore unable to clarify the decision-making process.
He explained: “According to the financing agreement, we are only permitted to invite Korean companies to bid. Once this was done, they provided the design, and before procurement, we forwarded the details to Korea for approval. I may not be in a position to elaborate further, but I will attach the communication, annexes, and the Attorney General’s response regarding this clause.” However, he defended the agreement, arguing that concessional loans often include conditions set by the donor country.
He stated: “Concessional loans, which offer low-interest rates and extended repayment periods, typically include conditions such as requiring the donor country’s companies to execute the project. These stipulations are part of the trade-off for accessing affordable credit.”
Otiende Amollo raised constitutional concerns over the agreement, arguing that the clause effectively excludes Kenyan taxpayers, who will ultimately repay the loan, from benefiting from the project.
He contended that the restrictive bidding clause contravenes Kenya’s procurement laws and constitutional provisions against discrimination. He noted that while Section 42 of the Public Procurement and Disposal Act 2015 provides exemptions for bilateral or multilateral agreements, these exemptions should not override constitutional principles.
He stated: “A financing agreement is a contract between the Kenyan government and foreign firms. We must obtain the legal opinion from the Attorney General that has been referenced. This is a loan, not a grant. Why are we borrowing money from South Korea, which will be repaid by Kenyan taxpayers, yet the agreement states that only a South Korean company is eligible to win the tender? This is outright discrimination and unconstitutional.”
