Promoting Local Suppliers Through Public Procurement & Application Of Information Technology

1. Promoting Local Suppliers Through Public Procurement & Application Of Information Technology

2. OUTLINE • Introduction • Promoting Local suppliers Through Public Procurement: Initiatives/Strategies Gains/milestones • Impact/effect of Application of Technology in procurement: Challenges & solutions • Conclusion

3. Introduction • In any given economy the government is the single largest buyer • Public procurement is a budget implementation tool as well as tool to achieve socio-economic development • Public procurement therefore is an important strategy to promote employment, local industries through targeted initiatives & overly economic growth and development

4. Promoting Local Suppliers Through Public Procurement How? By: • encouraging and supporting the participation of citizen entrepreneurs • developing specifications/requirements, designs and technologies within the capacity of local contractors/ supplies. • increasing and enhancing the capacity of institutions and local industries through the transfer of technology and expertise • putting in place an enabling legal framework

5. Promoting Local Suppliers Through Public Procurement How? By: • Ensuring international firms/ suppliers/ contractors enter into joint venture with local suppliers/contractors • Ensuring international firms/bidders/contractors source locally available supplies including labour.

6. Promoting Local Suppliers Through Public Procurement How? By: • Setting aside opportunities to citizen/local suppliers/contractors-preferences and reservations • Applying exclusive preference for goods and services produced locally. • unbundling contracts into different affordable sized packages • Simplifying tendering requirements/documents as well as cost of tendering

7. Gains/Milestones In promoting Local Suppliers Kenya has made strides towards supporting local industries and suppliers/contractors • Enactment of a conducive legal framework to guide implementation of the preference and reservations in the public procurement targeting disadvantaged groups such as the Youth, Women and Persons with Disability to enable them take full advantage . • In addition, the National Treasury and the Authority have issued directives to Accounting Officers to guide implementation of Preference & Reservation.

8. Gains/Milestones cont’d. • Establishment of the Preferences & Reservations Secretariat under the National Treasury responsible for: • registration, prequalification and certification of the persons, categories of persons or groups • training & capacity building of the target groups; • providing technical & advisory assistance to procuring entities in the implementation of the preferences and reservations • monitoring and evaluating the implementation of the preferences and reservations under the procurement law

9. Gains/Milestones cont’d. 3. Reservations PES are required to reserve 30% of their budgetary allocation to the special groups: youth, women & PWDS. 4. Creation of additional employment and income for the target groups arising from doing business with the governments at national and county level. This has enhanced their livelihoods/welfare.

10. Gains/Milestones cont’d. 5. Elaborate M& E mechanisms of implementation through reporting and oversight by Parliament 6. LPO Financing PES are required to facilitate financing thro; authenticating their notification of award, LSO,LPO to financial institutions

11. Gains/Milestones cont’d. • Prompt Payment • Payment shall not delay beyond 30days. • Where there is delay 50% payment will be made with written explanation for delay. 8. Invoice discounting Where there is possibility of delay in payments for works performed, a procuring entity is allowed to facilitate invoice discounting arrangements with a financial institution for the purpose of advancing credit to the affected enterprises

12. Gains/Milestones cont’d. • Unbundling of contracts PE’S shall unbundle goods , works or services into practicable quantities to ensure maximum participation of disadvantaged groups.eg lots for goods. • Exemption from Provision of Tender Security The youth, women & PWDS shall not submit tender security, instead they shall fill in an undertaking to fulfill the conditions of the tendering through tender declaration security form.

13. Gains/Milestones cont’d. • preference for manufactured articles, materials and supplies partially mined or produced in Kenya or where applicable have been assembled in Kenya; or firms where Kenyans are shareholders at 51%. • exclusive preference shall be given to citizens of Kenya where the funding is 100% from the national government or county government or a Kenyan body and the amounts are below the prescribed threshold; • Margin preference for goods manufactured, assembled, mined, extracted or grown in Kenya and also based shareholding

14. Other Gains/Milestones cont’d. • International tenderers must demonstrate that they will source 40% from citizen contractors • The National and County Governments have facilitated identification and registration of the target • Recognition of the target groups through regulations and Legal Notices thus empowering them to participate in public procurement.

15. Challenges Faced By Local Suppliers • Most of the Target groups do not get the information on tender opportunities. Bidders with hearing and/or speech impairments experience challenges in access of information from the PEs • Financing-Limited access to financing; most of the Financial Institutions require the borrower to provide collateral to access financial services and hence pose a challenge to the target group to mobilize financial resources for government tenders

16. Challenges • High degree of risk aversion within procuring entities, leading to emphasis on well established, reputable and tested suppliers or one large supplier, which work against local suppliers • Demand for unnecessarily high technical & financial qualification levels/ requirements including access to credit lines • perceived lack of resources even when the local supplier possess requisite capabilities

17. Challenges • Delays in payments • Inadequate capacity and non performance by the local suppliers • designing of projects with focus to foreign bidders • Use of technology- local surppliers may not be exposed to the requirements of online procurement. This has affected their ability to respond to government tenders through the system.

18. Application of technology in public procurement Areas technology is applied in procurement • Infrastructure in place- ICT would be critical in providing the information • Registration (AGPO) is online • Tender portal • Number of bidders registered under IFMIS • Online submission of bids • Statistics on use of IFMIS, tender portal

19. Impact & Effect of Application of Technology In Public Procurement to Suppliers • Application of Technology in procurement provides benefits and challenges to suppliers on the participation in procurement Benefits of use of technology to suppliers • Widen access to information on procurement opportunities and catchment arears as technology, allows suppliers to efficiently engage in more opportunities. • Acquisition of bid documents free by downloading • Reduced costs of bidding: • time and effort of submitting a tender, • financial costs including postage, • reduced paperwork.

20. Impact & Effect of Application of Technology In Public Procurement to Suppliers Benefits of use of technology to suppliers • Increased transparency and openness in bidding process-suppliers able to see all tender opportunities, deadlines & extensions, current statuses of the process and the final outcomes. • speedy communication and effective feedback as suppliers are always aware of the current situation. • Technology helps the supplier to avoid making procedural mistakes in submitting tenders

21. Challenges in use of Technology • Some local suppliers are not exposed to the requirements of online procurement thus affecting their ability to respond to government tenders through the system. • Inadequate capacity in use of technology by local suppliers • Inadequate capacity leads to increased costs of bidding where supplier use a guide to offer assistance • Technology inaccessibility due to connectivity challenges

22. Challenges cont’d • Resistance to technological change • Lack of appreciation in use of technology • Unreliable power supply and connectivity which affects biding process

23. Solutions and Interventions • Continuous targeted training to both procuring entities and local suppliers • Establishment of the Preferences & Reservations Secretariat under the National Treasury responsible for training and capacity building of the above target groups; • Establishment/Creation of digital villages

24. Solutions and intervention • Access to technology through spread of fibre optical cable connectivity in villages and upgrading of systems (e.g. 4G speed connectivity); and • Establishment of Huduma centres across the country- a dedicated desk to assist local suppliers

25. Conclusion Enhancement of socio-economic development is anchored on uninterrupted application of information technology and more successful bidding opportunities for local suppliers who are largely Small and Medium Enterprises (in the Kenyan context emphasis is on Youth, Women and Persons with Disabilities)

26. The End