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3 Reasons Why Foreign Firms DOMINATE Kenyan Mega Projects
Liz Neke
August 28, 2025 • Estimated Reading Time: 4 minutes
Whenever a major project is announced in Kenya, the same question arises: why do the biggest contracts almost always land in the hands of foreign firms?
The reason has much more to do with financing than technical expertise; whoever funds the project calls the shots.
There are three blunt realities that shape procurement choices when deciding whether to award these large projects to local or foreign firms.
1. Financing Comes With Strings Attached
Most mega infrastructure projects in Kenya, and across Africa, are funded by external lenders like the World Bank, JICA (Japan International Cooperation Agency), or Chinese state banks.
These loans are often tied aid, meaning the money must be spent on contractors, equipment, and technology from the lender’s home country.
Example: Toshiba supplying turbines to Olkaria → fits JICA’s financing terms and supports Japanese industry.
Similarly, Chinese Exim Bank financing often comes with a Chinese EPC like SEPCO or Sinohydro.
Financing and contractor selection are often baked into the financing deal before the tender is even announced.
If the project is being financed by, say, the Japanese government via JICA, there’s often an unspoken (and sometimes formal) expectation that a Japanese contractor or technology provider will be involved.
2. The Scale and Risk Profile
Large infrastructure projects like Olkaria’s geothermal rehabilitation often involve delivering hundreds of millions of dollars’ worth of assets within a fixed deadline, usually under a turnkey arrangement where the contractor hands over a fully operational plant.
That’s high stakes: delays can cost the client (and the contractor) millions per day in penalties.
Multilateral lenders (World Bank, JICA, AfDB) funding such projects want a contractor with a proven record of delivering similar scale projects globally.
As such, there's a preference for companies with deep balance sheets, political risk insurance, and hundreds of similar projects under their belt.
Nearly 70% of Africa’s large infrastructure projects over the past two decades have been financed, and often built, by foreign entities. China alone has lent over $155 billion since 2000.
3. The Technical Qualification Barrier
Most mega projects involve manufacturing highly specialised systems and integrating complex control systems. This requires decades of experience and proprietary technology.
For a geothermal EPC tender, the bidding documents might require:
At least three similar projects completed in the last 10 years, each over 100 MW capacity.
A minimum turnover of USD 200–500 million annually for the last 5 years.
Proven experience with specific OEM (Original Equipment Manufacturer) technologies like Toshiba’s or Mitsubishi’s geothermal turbines.
This automatically eliminates most local firms, not because they lack skill, but because they lack the track record at this scale.
Only a handful of firms globally have this capability (Toshiba, Mitsubishi, Ormat, Fuji Electric, etc.) and they tend to operate as EPC leaders or major subcontractors.
THE BOTTOM LINE
In the end, foreign firms dominate EPC projects not because local companies lack talent, but because the rules of the game (financing, risk appetite, and technical barriers) are stacked in favor of global giants.
Until local firms can access cheaper capital, build stronger balance sheets, and accumulate large-scale track records, they will remain locked out of the biggest contracts.
The challenge for policymakers and industry leaders is to find ways of shifting this balance, so that Africa’s infrastructure story is not only built here, but also built by us.
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