Tenders awarded by government agencies shrink as cash crunch continues to bite
The national and county governments awarded tenders worth Sh204.05 billion in the Financial Year 2023-2024, a sharp decline from previous years, due to financial constraints.
This marks a drop of Sh7.49 billion from the Sh211.55 billion awarded in the previous financial year and represents the lowest value of tenders in the last three years.
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Data from the Public Procurement Information Portal (PPIP) shows that the value of government tenders is now less than half of the Sh567.4 billion allocated in the year to June 2022.
The significant drop in tender value comes as the government faces a growing cash crunch, prompting a slowdown in procurement activities.
Treasury Cabinet Secretary John Mbadi has outlined that state corporations must adopt stringent financial management practices to enhance cost control, aiming to deliver services most cost-effectively.
“State corporations are required to entrench prudent financial management practices in their planning and enhance cost control measures with the aim of delivering services in the most cost-effective manner,” Mbadi said in a circular on the 2025-26 budget cycle.
Low-value deals
Despite the reduction in tender value, the number of tenders awarded increased by 4,613, reaching 27,886 in the year to June 2024, compared to 12,303 the previous year. This suggests a shift toward low-value deals, reflecting the government’s need to manage its spending more carefully.
The Treasury’s austerity measures come in response to rising debt obligations.
In the year to June 2024, 68.3 per cent of collected revenue, or Sh1.56 trillion, was allocated to debt servicing.
The remaining funds are being stretched thin to cover procurement, development projects, and salaries.
The Treasury has also instructed public entities to withhold new tenders until they clear outstanding arrears, further straining the private sector, which has long depended on lucrative government contracts.
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