Farmer at Mount Kenya on her field
30 per cent of the government tendering has to be awarded to disadvantaged, among them women. Photo: Neil Palmer

Is Public Procurement really favouring the Disadvanged?

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Five years after the launch of AGPO, an assessment by media is worthwhile: whether the initiative reached the intended goals of allowing marginalized groups preferred access to government contracting opportunities.

On July 29th 2012, former President Mwai Kibaki launched the Access to Government Procurement Opportunities (AGPO) initiative after the realization that in addressing the issue of unemployment, the youth had to be granted meaningful access and participation in government tenders and contracts.

In 2013, President Uhuru Kenyatta directed that the procurement rules be amended to provide that 30% of all government contracts and tenders be allocated, without competition from established firms, to not only the youth, but also women, and people with disabilities (PWDs). The president warned that procurement officers found to be disregarding this directive would be sacked.

Details about AGPO Procedures are online

To make access to this initiative easier, an online information and registration portal was set up and has been open for use. The portal has details about AGPO, target groups, qualification for preference and reservation scheme, regulations, and among other things how to qualify.

Possible Story: Has it worked or not?

Fraud in Public Procurement

Multiple reports by the Auditor General and reports in the media suggest that procurement fraud is one of the biggest avenues where the Kenya government loses a lot of money.

Possible story here – What is the situation of procurement fraud in the counties?
Assessment of the critical statistics for national and county levels, Which counties are lagging behind most?

Not 33 Percent, but less than one Quarter of it

A report by Hivos – a globally operating Dutch NGO based in Nairobi in February 2018 shows that only 7.7 percent of the contracts valued at over Ksh 5 million are being allocated to firms that are registered under the AGPO initiative.

 

This demonstrates that the absorption rate of high value contracts by AGPO’s target groups is extremely dismal. Though it can be attributed to among other reasons lack of access to information about the initiative by the target beneficiaries, it could also just be that the target groups do not have enough capital base to go for the high value contracts and tenders.

Possible story for media: Look at this situation in your county

Steep Rise of potential Beneficiaries of the AGPO Rules

Another finding is that due to the initiative, there has been an 82 percent increase in the number of enterprises owned by the youth, a 70 percent  increase in job creation of new jobs for target groups, and a 71  percent increase in the revenues made annually by enterprises owned by the youth.

Closely related to this is the finding that most of the youth benefiting from this initiative are based in Nairobi and not simply all urban centers. The report says 67 percent of the AGPO registered firms are in Nairobi, 6 percent are in Mombasa county followed by 5 percent for those from Kiambu County.

Challenges for the AGPO success

The report also highlights challenges holding back AGPO initiative. Low levels of information on the procurement cycle amongst the target groups, lack of funds to furnish the tenders, late payments of awarded tenders and also the fact that most contracts focus on Nairobi County.

Possible story for media: How is the state of access to information regarding AGPO at the counties level, especially those outside Nairobi, Mombasa, Kisumu, and Nakuru?

Government to publish Details

On 13 June 2018 President Kenyatta issued an Executive Order 2 of 2018 directing all government entities to publish details about their procurement activities from July.

Possible stories here:
Have the the government institutions complied with this order? What about the counties? Which is the best-performing county, and which the worst? 

The Disadvantaged’s Companies: Small and in the Service Sector

Furthermore, most of the tenders that are valued at more that 5 million Kenya shillings are for the construction sector. Yet most of the AGPO registered firms are in the services sector. There have also been instances of exploitation of intended beneficiaries as well as companies masquerading as those in the bracket of disadvantage group.

In October 2016 Sundales International Limited, was among companies whose directors including President Kenyatta’s sister Nyokabi Kenyatta Muthama and cousin Kathleen Kihanya, were named on the Public Procurement Oversights Authority’s 2014 roll of “Disadvantaged Groups” that should receive preferential treatment when they bid for tenders.

Possible story for journalists to follow: Are such companies are still on the roll of “disadvantaged groups”.

by Robert Wanjala Kituyi

Links:
AGPO Regulations (external link) 

Our own page on Tenders for Disadvantaged

More Story Suggestions for Media: Business for Disadvantaged

Our Toolbox Pages on Public Procurement