Opportunities to Special Groups in Public Procurement 1
OUTLINE • Introduction • Initiatives/Strategies in promoting special groups access to opportunities in public procurement • Kenyan case: Gains/milestones; Challenges & solutions/interventions • Conclusion 2
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 special and disadvantages groups, through targeted initiatives & overly economic growth and development • SMEs are key in driving socio-economic development 3
Enhancing access of Special groups to opportunities in the Public Procurement How? By: • encouraging and supporting the participation of special groups • developing specifications/requirements, designs and technologies within the capacity of special groups contractors/ suppliers. • increasing and enhancing the capacity of institutions and special groups through the transfer of technology and expertise 4
Enhancing access of Special groups to opportunities in the Public Procurement How? By: • putting in place an enabling legal framework addressing identification and registration of the special groups, application of reservations and preferences relating to opportunities set aside to the groups • Ensuring international firms/ suppliers/ contractors enter into joint venture with special groups suppliers/contractors • Ensuring international firms/bidders/contractors source locally available supplies including labour from special groups where capacity is available . 5
Enhancing access of Special groups to opportunities in the Public Procurement How? By: • Setting aside/reservations/ exclusive preference of procurement opportunities to special groups • unbundling contracts into different affordable sized packages • Simplifying tendering requirements/documents/ issuance of guidelines to potential bidders 6
Enhancing access of Special groups to opportunities in the Public Procurement How? By: • reduce cost of tendering and contracting exempt special groups from providing tender security/ bid bonds exempt special groups from providing performance guarantee/provide a ceiling on the amount of gurantee • Ensure access to finance/credit by special groups create dedicated funds/ collaborate with banks and financing institutions to support the special groups) LPO/LSO financing Invoice discounting 7
Kenya’s Experience: Gains/Milestones in Widening/Enhancing Special Groups Accessing Procurement Opportunities; Challenges and Suggested Solutions 8
Kenya’s experience: Gains/ Milestones Kenya has made strides towards supporting access to opportunities in public procurement by special groups’ suppliers/contractors 1. Enactment of a conducive legal framework to guide implementation of the preference and reservations in the public procurement targeting special/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 Preferences & Reservations. 9
Other Gains/Milestones cont’d. • The National and County Governments have facilitated identification and registration of the special groups. • Recognition of the target groups through regulations and Legal Notices thus empowering them to participate in public procurement. 10
Gains/Milestones cont’d . 2. Establishment of the Preferences & Reservations Secretariat under the National Treasury responsible for: a) registration, prequalification and certification of the persons, categories of persons or groups b) training & capacity building of the target groups including a manual for submission of responsive bids; c) providing technical & advisory assistance to procuring entities in the implementation of the preferences and reservations d) monitoring and evaluating the implementation of the preferences and reservations under the procurement law 11
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 including contributing in economic development. 12
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 13
Gains/Milestones cont’d. 7. 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 14
Gains/Milestones cont’d . 9. Unbundling of contracts PE’S shall unbundle goods , works or services into practicable quantities to ensure maximum participation of special/disadvantaged groups.eg lots for goods. 10. Exemption from Provision of Tender Security The youth, women & PWDS do not submit tender security, instead they shall fill in an undertaking to fulfill the conditions of the tendering through tender securing declaration form. 15
Gains/Milestones cont’d • Automation of Registration of special groups’ suppliers • Establishment/Creation of digital villages to widen access of technology to special groups especially those domiciled in rural areas • Establishment of Huduma centres across the country- a dedicated desk to assist special groups’ suppliers 16
Gains/Milestones cont’d • Existence of a dedicated & interactive Tender portal providing consolidated information on procurement opportunities • Establishment of funds to support the special groups Youth Enterprise Development Fund Women Fund Uwezo Fund Informal table banking initiatives • Plans are at advanced stage to merge Youth Enterprise Development Fund, Women Fund and Uwezo Fund 17
Other Gains/Milestones cont’d . • The following set of preferences outlined in the procurement law creates avenues/opportunities to special groups to benefit from public procurement: 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 International tenderers must demonstrate that they will source 40% from citizen contractors 18
Other Gains/Milestones cont’d . • Despite the gains realized, the uptake of the procurement opportunities reserved for the special groups is low (see table next slide). Note that the statistics are only for few procuring entities that filled returns/reports with the Authority as the level of reporting is low. • A study to identify and assess factors that Influence the Uptake of 30% Procurement Spend Set Aside for Youth, Women, and People with Disabilities in Kenya to inform action to be taken to enhance uptake is ongoing. 19
Summary of Reservations for the Special Groups (June, 2016 – June 2019) Reporting Total Planned Procurement Amount Reserved for % Period Budget (Kes) Disadvantaged Groups FY (Kes) 206,666,287,925.00 47,510,361,053.35 2015/2016 22.99 (USD: 2066,662,879 ) (USD: 475,103,611 ) 203,526,193,984.11 35,311,660,615 2016/2017 17.39 (USD: 2,035,261,940 ) (USD: 353,116,606 ) 194,840,106,412.77 45,502,968,613.41 2017/2018 23.35 (USD: 1,948,401,064 ) (USD: 455,029,686 ) 210,044,280,763.06 46,020,549,183.51 2018/2019 22 (USD: 2,100,442,808 ) (USD: 460,205,492 ) 815,076,869,084.94 174,345,539,466.02 TOTAL (USD: 1,743,455,395 ) 21.39 (USD: 8,150,768,691 ) 20
Summary of Level of Absorption of Reserved Funds for the special Groups (June, 2016 – June 2019) Reporting Amount Reserved for Amounts Awarded Level of Period Disadvantaged Kes Absorption of FY Groups (Kes) Reserved Funds 2015/2016 47,510,361,053.35 16,068,980,485.21 33.82% (USD: 475,103,611 ) (USD: 160,689,805 ) 35,311,660,615 24,412,160,837.17 2016/2017 69.13% (USD: 353,116,606 ) (USD: 244,121,608 ) 2017/2018 45,502,968,613.41 28,463,970,095.65 62.55% (USD: 455,029,686 ) (USD: 284,639,701 ) 2018/2019 46,020,549,183.51 22,164,176,673.93 48.16% (USD: 460,205,492 ) (USD: 221,641,767 ) 174,345,539,466.02 91,109,288,091.96 TOTAL 52.26% (USD: 1,743,455,395 ) (USD: 911,092,881 ) 21
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