Treasury to spend Sh560 million on digital procurement system rollout

The Treasury is set to spend Sh560 million to finalise the digitisation of its procurement system as part of reforms supported by the International Monetary Fund (IMF) to enhance transparency and efficiency in government contracting.

Initially, the system was to be launched in July, but budget constraints delayed its roll-out, prompting special funding from the Treasury.

"When I assumed office, I inquired about the progress of the procurement system's digitisation and was informed that Sh560 million was required but not included in the budget. Using the powers granted to this office under Article 223, I authorised the allocation of funds, and now the money is available," Treasury Cabinet Secretary John Mbadi said.

The government is working on implementing an e-government procurement system (e-GP) to move all public procurement and asset disposal transactions online.

This system will enforce adherence to the Public Procurement and Asset Disposal Act of 2015 and its regulations. It will also be integrated with the existing Integrated Financial Management Information System (IFMIS) to facilitate supplier payments.

In January, the government informed the IMF that it had begun piloting the e-GP system in 12 ministries and State departments.

Online payments

The Treasury has already moved claims payments to online platforms aimed at disrupting cartels that have taken advantage of suppliers by delaying payment approvals to solicit bribes.

Improvements to IFMIS have also enabled the management to purchase orders and invoices online, aiming to improve the efficiency and transparency of supplier payments.

The upgraded system, operational since February 14, 2022, eliminates human involvement and allows suppliers at national and county levels to receive purchase orders via email. Suppliers are also notified by email and text messages at various stages of the payment process after the confirmation of goods and services delivery.

This transition is expected to eliminate fraudsters who exploit suppliers to speed up payments for lucrative government contracts.

In addition to digitising payment processing, the Treasury plans to introduce a virtual system for processing all public tenders, linked to the Kenya Revenue Authority, to promote transparency and detect tax evasion.

The e-GP system will also be supported by measures to enhance transparency in the disclosure of beneficial ownership in public procurement.

The Public Procurement Regulatory Authority (PPRA) has instructed procurement entities to upload contracts with beneficial ownership information onto the public procurement information portal (PPIP).

The PPRA has been training entities on beneficial ownership disclosure requirements, but as of last September, only 842 out of more than 33,000 entities had registered with the portal.