State, KRA get link to view suppliers’ bank accounts

The link will enable tender evaluation committees in ministries, departments and agencies as well as counties to have visibility of inflows and outflows from accounts of the firms bidding for government deals, which are estimated at Sh2.5 trillion next financial year.

Besides establishing the financial capacity of the firms to supply goods and services, procurement officials will also flag suspicious illicit transactions such as money laundering and terrorism financing.

The e-GP, which the Treasury has been trying to implement for 10 years, is set to go live in July following the pilot phase on select State-owned entities and three countries from April.

The link to KRA will allow the revenue agency to track and nab suppliers earning billions of shillings from counties and State tenders without paying their share of taxes.

“All suppliers who deal with the government must register on that portal. We will not do any business with the government in the manner we have been doing,” Dr Kiptoo told Fixing the Nation morning show, which airs on Nation Media Group’s broadcast platforms.

Read:  KRA gets link to spy on civil servants and suppliers pay

“We will link every supplier to KRA for a tax compliance certificate and to your bank for a statement. So there will be no monkey business where you go to, say River Road [a street in downtown Nairobi], and print some fake bank statement and come and use it to bid or get some fake tax compliance certificate.”

This seeks to curb cases where shell firms bid for State tenders using fake documents and fail to fully deliver on promised goods.
Others win tenders intending to sell to third parties for a profit.

The link to bank statements will give public procuring agencies a view of transactions for a specific period of time, unlike the KRA, which has real-time access through integration of its electronic tax system (i-Tax) with companies, including banks.

The shift comes in a period when the Treasury is seeking approval from lawmakers to enable the KRA to access all transactional data, including personal information and trade secrets, without a court order.

The proposed changes to subsection 1B of section 59A of the Tax Procedures Act are part of the Finance Bill 2025 that is before Parliament for approval.

The Treasury is banking on the shift to online bidding, evaluation and award of government tenders from a largely manual process to cure some of the past scandals that saw taxpayers lose billions of shillings.

Some of the tendering processes believed to have been hit by fraudulent practices involving a web of shady firms, which inflated prices of goods, include Covid-19 medical supplies at the Kenya Medical Supplies Authority and the importation of edible oil by the Kenya National Trading Corporation.

The e-GP portal is expected to ensure minimal human interaction and eliminate the exchange of voluminous bid documents in tendering processes that take a long time to evaluate.

Dr Kiptoo estimates the shift to electronic processes will cut the cost of processing government tenders by at least 10 percent, citing experiences of other counties which have implemented similar platforms.

“Countries that have done this e-procurement [system] have achieved between 10 and 15 percent reduction in costs. Out of 4.24 trillion budget [for fiscal year starting July], procurable items are around Sh2.5 trillion,” the PS said.

“So if we force everybody -- and we are going to fight because there are those who are going to resist because it is not going to an easy space for those who have never wanted to do things proper-- will raise about Sh250 billion if we just take about 10 percent [in estimated cost reduction].”

Dr Kiptoo says the procurement system is also being interfaced with the Integrated Financial Management Information System (Ifmis), which processes payments to suppliers and contractors.

The Treasury has been training procurement staff in government ministries, departments and agencies as well as counties on the use of the portal, maintaining that all tendering and disposal of public assets will be automated from next financial year.

The rollout of the electronic system to all government entities is part of public finance reforms that the International Monetary Fund (IMF) wants Kenya to adopt and enhance transparency and accountability in public procurement.

Corruption in the public sector is seen as the “biggest industry” in Kenya, eating about a third of the annual budget, according to past estimations following findings by former Ethics and Anti-Corruption Commission chair Philip Kinisu in March 2016.

That will add to nearly Sh1.4 trillion in the budget for the next financial year, estimated at Sh4.24 trillion, including debt repayments and disbursements to counties.

The automation of government tendering processes is part of the reforms under the Public Procurement and Asset Disposal Act of 2015 and accompanying regulations.

“Procurement of [government] goods tends to be overpriced. If we all go into this system and you can see who is bidding and at what price, we expect prices to come down,” Dr Kiptoo said. “We are also moving from cash accounting to accrual, so from July 1, every statement will be reflected as accrual, meaning we recognise expenditure when they are incurred and not when it is paid.”

The Public Procurement Regulatory Authority (PPRA) requires ministries, departments and agencies to upload awarded contracts containing beneficial ownership information to the public procurement information portal (PPIP).

“Of the many difficult assignments I have undertaken, this fight against corruption is one I now take on with resolve going forward,” President William Ruto said last November.

“Let this serve as a notice to all. Independent institutions charged with this responsibility must up their game, pull up their socks and match up to the expectations of the people of Kenya.”

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