A county building permit and an environmental licence are not the only approvals a construction project needs before ground is broken in Kenya. The National Construction Authority regulates who may lawfully carry out construction work and, through the levy it collects, has a direct financial stake in every substantial project. Developers who overlook the NCA layer of compliance, treating it as a contractor’s problem rather than their own, can find a project stalled or a completed building difficult to sell once the gap surfaces. This article sets out the NCA approvals developers and contractors actually need to secure under the National Construction Authority Act, and why treating NCA approvals as a checklist item matters.
Contractor registration is the foundation of NCA approvals
Section 15(1) of the National Construction Authority Act, 2011 provides that a person shall not carry on the business of a contractor unless registered by the Authority’s Board. Section 15(2) requires that a firm seeking registration have at least one partner or director who holds the prescribed technical qualifications, skills, or experience for the class of work concerned, and section 17(2) sets out the wider criteria the Board considers, including technical competence, relevant construction industry experience, professional conduct, and whether the applicant has the plant and equipment appropriate to its registration category. A developer engaging a contractor who is not properly registered is not merely taking a reputational risk. Section 15(3) makes it an offence to carry on business as a contractor without registration, punishable by a fine of up to one million shillings, imprisonment for up to three years, or both, and a project built by an unregistered contractor carries that exposure through to the developer who engaged them.
Verifying registration before you sign a contract
Because the registration obligation sits with the contractor rather than the developer, it is tempting to assume the point does not require the developer’s own diligence. In practice, a developer who signs a construction contract with an unregistered or improperly classed contractor bears the practical consequences: work can be halted by the Authority mid-project, and a building constructed by a contractor operating outside its registered class can face difficulty at the point of eventual sale, when a buyer’s lawyers ask for proof that the works were carried out lawfully. Confirming a contractor’s registration status and class before signing, not after works are underway, is a straightforward check that avoids a much harder conversation later.
The NCA levy
Section 31(1) authorises the Cabinet Secretary to impose a construction levy on registered contractors, and section 31(2) caps that levy at an amount not exceeding 0.5% of the value of any contract exceeding five million shillings. The levy is typically collected from the contractor as a percentage of the contract sum, but developers structuring project budgets and contractor payment schedules should account for it explicitly, since a contractor who has not properly remitted the levy on a project can find works suspended by the Authority partway through construction, disrupting the developer’s own timeline regardless of where contractual fault lies.
Where NCA compliance meets other approvals
NCA registration operates alongside, not instead of, county building approvals and, where the project falls within the Second Schedule to the Environmental Management and Co-ordination Act, an EIA licence from NEMA. Our guide to NEMA EIA licence requirements covers that separate layer of compliance in detail. A project can be fully compliant on the environmental side and still be exposed on the construction-authority side, or vice versa, because the two regulators assess entirely different things: NEMA is concerned with environmental impact, while the NCA is concerned with the competence and regulatory standing of the people actually doing the building work. Developers assembling a compliance file for a project, whether for their own records or for a lender’s due diligence, should treat NCA approvals, meaning NCA contractor registration and levy compliance, as a distinct checklist item, not a subset of the environmental or county approvals.
Consequences of non-compliance and how to fix a gap
Beyond the criminal penalties attaching to unregistered contracting, the Authority has power to investigate construction sites and issue directions, and section 23(3A) makes wilful failure to comply with an investigating officer’s directions itself an offence, carrying the same penalty as unregistered contracting. Where a developer discovers, part-way through a project or after completion, that the contractor’s registration lapsed or never properly covered the class of work undertaken, the practical fix usually involves engaging a properly registered contractor to complete or certify the remaining works and regularising the position with the Authority before the project is marketed for sale or used as loan security, rather than waiting for the gap to surface during a buyer’s or lender’s due diligence.
How We Can Help
Clay & Associates Advocates advises developers on structuring construction contracts to allocate NCA compliance risk clearly, verifying contractor registration before signing, and resolving compliance gaps discovered during a transaction. Our property due diligence guide sets out the wider checklist a buyer or lender should apply to a completed development. Contact our Real Estate and Property Law practice to discuss NCA compliance for your development.
Frequently asked questions
Is NCA registration required for small residential projects?
The registration requirement applies to the contractor carrying out the work rather than to a threshold based on project size, so even a modest residential build should be carried out by a contractor registered in the appropriate class.
Who is liable if a contractor turns out to be unregistered, the contractor or the developer?
The criminal offence under section 15(3) attaches to the person carrying on business as a contractor without registration, but the practical consequences, including halted works and title or financing difficulties, fall on the developer regardless of where the legal fault lies.
Does paying the NCA levy replace the need for a NEMA EIA licence?
No. The levy and NCA registration relate to the contractor’s regulatory standing, while an EIA licence, where required, is a separate environmental approval assessed by NEMA under EMCA. A project can need both.
Can construction work already carried out by an unregistered contractor be regularised after the fact?
Sometimes, typically by engaging a properly registered contractor to review, complete, or certify the works and resolving the position with the Authority, but this is more disruptive and costly than confirming registration before the contract is signed.
