The Treasury will scale down funding for ongoing IMF-backed automation of government tendering processes next financial year starting July despite pressure from President William Ruto for a full rollout.
Draft budget proposal documents show the Treasury will cut expenditure on the long-delayed project by more than three-quarters (82.14 percent) to Sh100 million from Sh560 million in the current financial year.
Full rollout of the electronic government procurement system (e-GP), whose total cost is estimated at nearly Sh5.05 billion on completion, will see that all government contracts are initiated, evaluated, and awarded online.
It is expected to boost transparency in line with the Public Procurement and Asset Disposal Act of 2015 and accompanying regulations.
The system, whose full rollout the Treasury forecasts will be completed by June 2028, will be interfaced with the Integrated Financial Management Information System (Ifmis) which processes payments to suppliers and contractors.
The reduced funding may work against a presidential directive to fully automate government contracting processes from April.
“The National Treasury has been dragging its feet in the implementation of an e-procurement system for nearly 10 years,”Dr Ruto said during his constitutional annual State of the Nation Address late last November.
“I direct the National Treasury to roll out the e-procurement system by the end of the first quarter of 2025 and ensure that, going forward, only procurement undertaken through this system is sanctioned.”
The shift, part of the far-reaching reforms by the International Monetary Fund, will result in minimal human interaction and enhance transparency in fatty State deals, cutting inherent graft which costs taxpayers are estimated to lose a third of annual budget allocation every year.
Corruption in the public sector is seen as the “biggest industry” in Kenya, gobbling about a third of the annual budget (projected at about Sh3.8 trillion this financial year), going by estimation first made by former Ethics and Anti-Corruption Commission chair Philip Kinisu in March 2016.
"By automating the procurement process from budgeting to expenditure, we will be able to reduce wastage. If we automate our systems properly, I believe we can save more than Sh100 billion," Treasury Cabinet Secretary John Mbadi said last October.
"If you minimise human interaction with a system, it becomes more efficient. It can easily reduce corruption in our procurement system."
The proposed allocation is less than 10 percent Sh1.12 billion funding requirement for the fiscal year 2025/26, the Treasury writes in the document.
Treasury has cited the lack of budgetary allocations for past failure to complete the rollout of the e-procurement system.
“It will interest you that when I came, I asked where digitisation of the procurement system had reached, and I was told that we needed Sh560 million which was not in the budget. I used the power given to this office to sign off the budget under Article 223 and that money is now available,”Mr Mbadi said a few months after taking up the role.
Besides the IMF, the United States has also been mounting pressure on the Ruto administration to seal loopholes for corruption in national and county governments.
Washington says American firms have encountered cases where authorities at national and county levels continue to directly ask for bribes from investors seeking government deals and other approvals.
“Corruption remains a substantial barrier to doing business in Kenya. US firms routinely report direct requests for bribes from all levels of the Kenyan Government,” outgoing US Trade Representative Katherine Tai’s office wrote in the 2024 National Trade Estimate Report on Foreign Trade Barriers (NTE) in March last year.
Apart, from having all payment processing systems online, the Treasury also plans a virtual system that will process all public tenders and be linked to the Kenya Revenue Authority in a policy shift aimed at enhancing transparency and nabbing tax cheats.
The adoption of the e-GP system is set to be complemented by other interventions including the enhancement of transparency of beneficial ownership in public procurement.
The Public Procurement Regulatory Authority (PPRA) has asked procuring entities to upload awarded contracts containing beneficial ownership information to the public procurement information portal (PPIP).
The PPRA has been conducting training with procurement entities to improve their understanding of beneficial ownership disclosure obligations.
“Of the many difficult assignments I have undertaken, this fight against corruption is one I now take on with resolve going forward,” Dr Ruto said. “Let this serve as notice to all. Independent institutions charged with this responsibility must up their game, pull up their socks, and match up to the expectations of the people of Kenya.”
The Treasury has already shifted claims payments to online platforms, disrupting cartels who have for long exploited suppliers and contractors through delayed approval of disbursements to solicit bribes.
An enhancement of the national Ifmis has shifted the management of purchase orders and invoices online in a bid to make the processing of payments to suppliers more efficient and transparent.
The enhanced system, which went live on February 14, 2022, has removed human interaction and will enable suppliers at the national and county levels of government to get purchase orders generated from Ifmis through email.
Emails and text messages will also be sent to suppliers at various stages of the payment process after the delivery of goods and services to the purchasing State entity is confirmed.
This is expected to weed out fraudsters who often exploit suppliers in the guise of facilitating payments at various government offices in payment of lucrative State tenders.
