KAM launches Public Procurement Study 

• KAM Study aims to enhance government’s procurement system and promote market access for locally produced goods 

Kenya Association of Manufacturers (KAM) has launched the Public Procurement Study to Promote Market Access for Locally Produced Goods in Kenya. The report’s findings and recommendations aim to support the national and county governments in enhancing the government’s procurement system and increasing market access for locally made goods. 

Speaking at the launch, Industrialization Secretary, Prof. Erastus Gatebe noted that, “Government has put in place various initiatives to reform the public procurement system including Local Content Policy; enactment of the Public Procurement Regulations; access to Government Procurement Opportunities (AGPO) which has set aside 30% of public procurement opportunities for women, youth and persons with disabilities; Buy Kenya Build Kenya Strategy; and development of the Master Roll of Locally Produced Goods, among others. As the State Department of Industry, we continue to drive the Buy Kenya Build Kenya Strategy as it will support Kenya become a middle-income country as envisaged in Kenya Vision 2030. We look forward to engaging manufacturers among other stakeholders on the findings of this report as we drive manufacturing sector growth.”

Speaking on behalf of Public Procurement Regulatory Authority (PPRA) Director General, the Principal Officer for Compliance, Mr Stanley Miheso explained that PPRA is keen on working with local industries and the National Treasury in ensuring that there is a digitalized master roll of goods produced in the country. He further added that the study findings will be instrumental in shaping public procurement system in the country, noting “This document should be a must-have resource for this country. We need to ensure this information is accessible to move the country to a better place.” 

KAM Board Director, Mr Ashit Shah emphasized the importance of encouraging local entities to prioritize local procurement. With the government being the largest buyer in any country, there is need to address challenges facing public procurement in Kenya. 

“Domestic producers find difficulties accessing government procurement opportunities because they are often unable to compete with foreign suppliers; are generally perceived to be producers of inferior products compared to imports from developed countries; are unable to compete both in terms of price and quality from foreign goods; and they lack policy support to guide promotion of domestic consumption,” added Mr Shah. 

KAM Ag CEO, Mr Tobias Alando noted that access to local, regional and international markets is integral to the growth of local industries. He added, “The Buy Kenya Build Kenya (BKBK) strategy has been a great initiative towards increasing the consumption of locally manufactured goods in the country, more so with a focus on public procurement.

KAM commissioned the study to assess Kenya’s Public Procurement Legal Framework and System in promoting market access for locally produced goods, including measures such as preference and reservations for locally produced goods, and the access to government procurement opportunities (AGPO) program.” 

Some of the findings include:  

1. The meaning of local manufacturing is unclear in the context of public procurement and does not address the issue of the percentage of local content that a product should have to be recognized as local. 
2. The procurement plans indicate a reservation of a minimum of 30% of the budget for enterprises owned by women, youth, persons with disabilities (PWD) and other disadvantaged groups. The 30% reservation currently benefits enterprises owned by women, youth and PWD, but the “other disadvantaged groups” such as micro and small businesses have not been clearly identified as such to benefit from reservations. 
3. The definition of local supplier is confused with citizen contractor and the combination of shareholding for the purpose of applying margins of preference. There is also a challenge of confusing local suppliers with local goods, mostly that awarding a local supplier is synonymous with supply of local goods, when in fact there is no direct correlation because suppliers import goods. 
4. There is no centralized register of local manufacturers and their locally produced goods, from which procuring entities could conduct a market survey to inform their procurement planning and subsequent procurement of the goods. Besides the registration of suppliers, there is a need for a national electronic register of manufacturers with the category of locally produced goods. 
5. The standard tender document for goods has 100 pages, while the tendering forms that bidders should use to prepare and submit bids is only 24 pages, showing the tender documents were designed with efficiency to facilitate bidders to prepare bids. In practice, however, procuring entities demand that bidders fill in the information in the tendering forms and submit the whole tender document back as the bid. This practice leads to bulky bids submitted by bidders, increasing the cost of doing business and discouraging small businesses from public tendering due to its tediousness. 
6. Unlike foreign manufacturers, most local manufacturers rarely publish or publicize their product brochures, which means that Internet searches mostly return foreign product offerings, thereby reducing visibility of local products when procuring entities perform online market surveys. Without product brochures, local manufacturers are at a disadvantage in bidding and winning public tenders and other public procurement opportunities. 
7. About 31% of the tender documents did not have information about the supplier payment period. Whereas the payment period in the standard tender documents is 30 days, procuring entities modified this period to 45, 60, 90 or even 120 days in an attempt to delay payment of suppliers and reduce the chances of the aggrieved suppliers charging interest on delayed invoices.