History of Public Procurement in Kenya
The Public Procurement system in Kenya has grown from a rudimentary stage during the colonial and post colonial period to a vibrant regulated system that compares well with the international standards. I would like to trace this growth to present day, first for the benefit of the new generation that is entering the profession of Procurement, secondly as one who has been involved in Public Procurement for now over 30 years having joined it in 1983. For ease of managing the massive data and better understanding, I would like to divide my discourse as follows:
- The colonial period
- Post-colonial era i.e. 1963-1978
- Era of reform 2001-2010
- The Era of the New Constitution i.e. 2010 to the present
We are sure the above classification of epochs will make it easier for readers to know what changes were taking place in area of Public Procurement. It will also bring to light how the various political systems and regimes affected Public Procurement (Political economy so to speak).
Kenya was a colony state under Britain. The economy was arranged so as to serve the colonial masters where Kenya was converted into a cheap source of raw materials and manufactured goods were to be imported from Great Britain.
To facilitate the process of procurement, the following structures were in place:
Handled overseas purchases on behalf of the Government. Its prominent role continued into 1970s.
- Central Tender Committee (CTB) was established in 1955 through a Treasury Circular. CTB was to handle all government tenders.
- In 1959, Procurement and Supplies Unit was established under the Ministry of Public Works to handle common-user goods and services. In 1960 it was converted to Supplies Branch which exists to date but with much reduced mandate.
It should be appreciated that during this period the government organization was small and therefore Procurement and Supplies was centralized. In 1960, Supplies Branch went through further restructuring and the Chief Storekeeper (possibly a White man) became the Chairman and the Chief Purchasing Officer became its Secretary. All Government Departments were to obtain their common-user supplies from Supplies Branch. The Government Press under the office of the Governor and later the President was to provide the printing services.
Period between 1963-1978
Kenya attained independence from the British Colonial rule in 1963 and like all other structures, supplies services continued as they were during the pre-independence period whereby Crown agents organized Procurement for the government up to 1970s. However, in 1974 there was a major shift when the CTB was placed under the Treasury from the Ministry of Public Works. The Chairman was the Deputy Secretary, Ministry of Finance and the Secretariat was managed by the Supplies Staff. The Secretary was the chief Executive Officer. Another major introduction was the Supplies Manual in 1978.
For a while, the Supplies Manual became the main guiding document in supplies matters. A major flaw of the document was that it never unified procurement in the government. It further did not cover corporations and parastatals. Another major development in this era (1963-1978 was the establishment of the office of the Head of Supplies Services (HSS). The first occupant of this office was Mr. Wan’goo. He was still in office when we joined the service as university graduates in 1983. The main responsibility of HSS was to ensure observance of the manual.
Those of us who joined the supplies services then were perplexed and confused at the number of circulars we were to refer in order to make a procurement decision:
- Many Treasury Circulars some superseding each other at high speed
- Circulars were also emanating from the Ministry of Public Works that was also to clear a department when getting common user supplies outside Supplies Branch.
- Other circulars were emanating from the office of the President.
The above scenario became riddled with corruption and thievery of public money. Above all works were not covered by the Supplies Manual. The Ministry of Public works and the office of the President had a free hand on public works.
1978-2001 – Era of World Bank Reform
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In 1997, the World Bank conducted country wide review on Public Procurement and reported the following weaknesses:
- Reduced effectiveness of Public Financial Management
- Government inability to deliver services effectively
- Obscure rules not based on fair competition and transparency rendering the system to abuse
- No legal framework to enforce procurement rules.
During this period the most famous Procurement policy document was the Blue Book (Nyachae Book) that regulated Procurement in the era of District focus for Rural Development Strategies.
Era of Public Procurement Reform 2001-2010
This “Golden Era” saw major reforms in Public Procurement with far reaching results.
- Enactment of the Exchequer and Audit (Public Procurement) Regulations, 2001.
Major changes were: CTB was abolished, and Public Procurement Directorate and Public Procurement Appeals Board were established. The Chairmen of the Tender Committees were to come from the private sector. Corporations and parastatals were for the first time subjected to the Public Procurement Regulations just as was the Central Government. Each public procuring entity was to establish a procuring unit within it and all purchasing and disposal processes were to be managed by the same unit. This was the genesis for the establishment of the current Procuring Department in the University under the Procurement Manager. Before then, procurement (Tender) and Purchasing were under Personnel Division and Finance Department. In later discussions, we shall trace the evolution of Procurement in the University of Nairobi and challenges.
- Public Procurement and Disposal Act, 2005
The Public Procurement and Disposal Act, 2005 was approved and gazetted in 2005. The Act had to wait for the approval of the Public Procurement and Disposal Regulations, 2006 to be approved by the Minister for Finance then Mr. Uhuru Kenyatta in order to operationalise the Act. The Act, 2005 came into operation in 2007. Henceforth, Public Procurement and Disposal came under one legal regime.
- Public Private Partnership
The Government found that it did not have enough financial resources to carry out projects it deemed necessary to enhance economic growth and public welfare. As a result, the above regulation was enacted to assist in mobilizing financial resources in the private sector to be used in public projects under specific conditionalities.
The above Public Procurement Law & Regulations that started in 2001 have dramatically changed the landscape of Public Procurement functions hence the profession has been upgraded significantly from its obscure position in 1970s through 1980s.
2010 – PRESENT DAY
- The new Constitution, 2010 has outlined principles for Public Procurement and Disposal i.e.:
- The Public Procurement and Disposal (Preference and Reservations) Regulations 2011.
These regulations cover groups or regions that have been disadvantaged over time and cannot be able to compete favorably with more established firms and hence must be given preference. The target groups include:
- Small enterprises
- Micro enterprises
- Disadvantaged groups
- Citizen contractors
- Local contractors
- Citizen contractors in joint venture with foreign forms
The objective of the Regulations is to promote local firms/industries and disadvantaged groups or individuals.
- Public Procurement and Disposal (County Governments) Regulations, 2013
The Regulations, 2013 focus on Procurement and disposal within the newly established County Governments. The purpose of the Regulations is to operationalise the application of the Public Procurement and Disposal Act, 2005 in County Governments and promote local industries. Otherwise the principles and tenets of Public Procurement and disposal remain the same.
Regulation, 2013 marks the end of our discourse on the historical evolution of Public Procurement in Kenya starting from the colonial period to the present.
In conclusion, Public Procurement in Kenya has come a long way beginning from the colonial period through the post colonial to the present. Further changes are bound to occur.
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