Counties and national government agencies are facing a serious cash crunch following delays in transitioning to the new digital public procurement system.
This threatens budget implementation just a month before the end of the first quarter of the current financial year, as projects remain unfunded.
The National Treasury said that no county budget had been uploaded on the electronic procurement (e-GP) system by Thursday, while the uploading of the budgets of State departments was underway.
Following the rollout of the e-GP system last month, the budgets of all counties and the national government are required to be uploaded onto the platform for any procurement transaction to be approved.
Thus counties and many State departments have only been paying salaries while procurement-based expenditures are stuck.
Treasury CS John Mbadi said the entities would only be allowed to proceed with procurement after they upload budgets on the Integrated Financial Information Management System (Ifmis), and Treasury transfers the documents to the e-GP portal.
“Budgets for procuring entities using Ifmis as their financial management system must be uploaded in the e-GP system before preparation of the annual procurement plan and subsequent initiation of the procurement process,” Mr Mbadi said.
By Thursday, Mr Mbadi said, only 31 counties had successfully uploaded their budgets on the Ifmis following approvals by the Controller of Budget (CoB), but only four counties were ready for transfer to the e-GP.
The delay to upload budget documents on the e-GP to give way for procurement looks set to subject counties and State agencies to delays in implementation of projects and other procurements, such as office supplies, which could affect their operations.
This is because it is only after uploading the budget documents on e-GP can entities prepare procurement plans and request cash to implement projects and source supplies.
“So, the tendering process begins after the procurement plans are prepared in the e-GP. There's no way you can start the tendering process without the procurement plan in the e-GP,” Mr Mbadi said. Treasury estimates that about Sh1 trillion worth of spending in the current fiscal year is procurement-based, underlining the scale of impact of the delays for the e-GP.
This means that about Sh250 billion worth of procurement-based spending for the first quarter remains largely untapped and will form a huge headache for entities to absorb it in just weeks to the end of September.
He said the Treasury has begun uploading state departments’ budgets and was expecting them to be ready by today, though counties would have to wait until Monday.
CoB Margaret Nyakang’o, last week, told the Business Daily that she had only approved budgets of 26 counties, which would then be uploaded onto the Ifmis for onward upload to e-GP. The number of counties has since risen to 31, Treasury said.
“Now that four counties are ready for that exercise, my team here will upload the budgets of those four counties into the e-GP, awaiting the other 27, which should also be ready from the Ifmis to be uploaded. This exercise should be concluded by Monday next week,” Mr Mbadi said.
Monday is the date the government will start the last month of the first quarter of the 2025/26 financial year, which means most of the entities have just weeks to implement projects and source supplies budgeted for the first quarter. In July, the first month of the quarter, the Treasury released development funding to only two state departments in the national government.
Mr Mbadi said failure to fund other departments was not tied to the delays in uploading budgets onto the e-GP.
Treasury said it has trained finance officers of State corporations on how to prepare budgets on the e-GP, though it is still preparing the system for them to upload budgets.
“Once the e-GP template has been cleared by the national treasury, it's expected that the finance officer shall upload the same in the e-GP system to facilitate the preparation of the procurement plan,” CS Mbadi said.
It is after entities’ budgets are uploaded on the e-GP that they will start procuring and get approvals to pay for projects and services, the Treasury maintains.
Treasury also warned entities against paying for services outside the digital system, noting that the system will not allow backdating of transactions.
The Public Procurement Regulatory Authority (PPRA) two weeks ago warned that some entities were backdating transactions in order to pay for services outside the system, cautioning officers that they would be surcharged.
Treasury said 1,285 public entities and 7,637 suppliers have so far been moved their operations to the e-GP, with more than 7,000 officers across cadres trained.
The government rolled out the e-GP on July 1, 2025, to automate procurement processes from planning to payment of services and hopes that the system will save it up to Sh150 billion in the current year, by sealing procurement loopholes previously exploited.
