Starting any kind of business in Kenya is well known for the bureaucracy involved and is not for the faint hearted. While it is said that in Rwanda starting a business takes you only one day, in Kenya the story is a bit different and you will need three to four weeks of paperwork. Starting a construction company adds more paper to that work. Note that, though you do not need to be an engineer or a construction professional to start a construction company in Kenya, at least one of the directors of your company has to be. This article will take you through the key steps that you go through in starting a construction company in Kenya.
Register your company/Business
The first step involves registering your company at the registrar of companies located at Sheria House. The law in Kenya allows for three kinds of companies: sole proprietorships, partnerships, limited liability companies. A sole proprietorship is owned by one person, a partnership has between 2 and 20 owners and a company can have a minimum of 2 and a maximum of 50 owners. Each of these has their own requirements and duration of registration. The legal and monetary requirements required for a sole proprietorship are less compared to the others, so this option is best if you are a budding entrepreneur. Generally for all of them, you will have to do a name search to find out if other companies have the name that you have in mind. After the name search and filling in the required forms, your company will be registered and you will be issued with a certificate of incorporation or a business name. This may cost you between sh2,000 (Sole Proprietorship) and 30,000 (LLC) depending on which route you use.
Registering With the National Construction Authority
For you to legally operate as a builder or contractor, you will need to register your company with the National Construction Authority. The NCA is mandated to oversee all construction activities in the country. The paperwork here is immense as you might have guessed. In order to be registered by the NCA, you will need to be registered as above (sole proprietorship, partnership or Limited Liability Company). You will need to furnish the NCA with your ID/Passport, your registration/incorporation certificate, and provide a PIN, VAT and Tax Compliance certificate from the KRA. You will also need to provide a CV for each of the directors/partners and evidence that there is a bank account in the name of the company.The NCA has 7 categories from NCA1 [unlimited contract value] to the smallest, NCA7 [that can do contracts of up to Sh20,000,000 in value]. Each has minimum qualifications for one of its directors. For example NCA1 requires at least one director with a Bachelors’ Degree in a construction related field. NCA5 requires a director with a diploma and NCA7 requires a director with a trade test. You will need to part with registration fees of between Sh10,000 and Sh50,000 depending on your category and an annual practice license renewal of between Sh5,000 and Sh10,000. If you operate without registering, you risk paying a penalty of Sh300,000.
Going for Government Tenders
If you are a youth, a woman or a person with disability, all government agencies are by law required to set aside 30% of their tendered procurements for you. In order to get this though you need to – yes you guessed it – register with the Access to Government Procurement Opportunities under the National Treasury. You will be issued with a certificate showing that you are from any of these special interest groups and you can bid for the special category tenders.
It is a process, but they said ‘you have to start somewhere.’
[Image Credit: Aaron Knox]