United States companies are having integrity issues with the Kenyan Government’s electronic procurement system, the Integrated Financial Management Information System (IFMIS).
- IFMIS is an Oracle based Enterprise Resource Planning (ERP) being used at both the National and County levels of government.
- It is aimed at enhancing accountability and transparency in the Public Finance Management systems of budget formulation and execution, public procurement and financial reporting.
- The 2024 National Trade Estimate Report on Foreign Trade Barriers offers a review of significant foreign barriers to US exports of goods and services, US foreign direct investment, and US electronic commerce in important export markets.
Besides singling out security gaps that render the system vulnerable to manipulation and hacking, the firms also say insufficient connectivity and technical capacity in county governments, apathy from county government officials and the central control shutdowns are teething problems that should be addressed for a fair play in the procurement system.
In revelations contained in the report, US firms note that since May 2015, an initiative dubbed “Buy Kenya Build Kenya” has required Kenyan state ministries, departments, and agencies to procure at least 40 per cent of their supplies locally. For example, government entities are required to give an exclusive procurement preference to motor vehicles and motorcycles produced by companies that have assembly plants in Kenya.
Further, the 2016 Public Procurement and Asset Disposal Act (PPADA) reserves procurement preferences for Kenyan-owned firms and goods manufactured or mined in Kenya. For tenders funded entirely by the government with a value of less than KSh 50 million, the preference for Kenyan firms and goods is exclusive.
If the procuring entity seeks to contract with non-Kenyan firms or procure foreign goods, the PPADA requires a report detailing evidence of an inability to procure locally.
In April 2020, the National Treasury issued implementing regulations for the PPADA, which mandate that tender proposals include skills and knowledge transfer to Kenyan citizens, a 75 percent set-aside of employment opportunities for Kenyans, and a plan relating to domestic sourcing.
“As of January 2019, all tenders and procurements are required to be undertaken through the Kenyan Government’s electronic procurement system, the Integrated Financial Management Information System (IFMIS),” acknowledges the US in the report.
“U.S. firms have had very limited success bidding on Kenyan Government tenders, and corruption remains a significant concern. Many of these tenders are challenged in the courts. Foreign firms, some without proven track records, have won government contracts when partnered with well-connected Kenyan firms or individuals,” the report says.
Also in the report, foreign participants in the telecommunications services market laments on the long delays in the licensing process, creating an unpredictable regulatory environment.
On Real Estate Investments, the report says for undeveloped land, investors risk receiving fake title deeds or leasing a plot with multiple titles and unauthorized sales.
“The 2010 Kenyan Constitution prohibits foreigners from holding freehold land title anywhere in the country, permitting only leasehold titles of up to 99 years. The process for leasing developed land and property is clear and established, but the process for obtaining clear title of undeveloped land is opaque and unreliable.”
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