Why Kenya’s Procurement Reform Targets for FY 2025/26 Are Unlikely to Succeed
Category: Procurement Policy
By: Jackline Kagume,
Among the flagship reforms announced by the Cabinet Secretary for the National Treasury in the FY 2025/26 Budget Statement was a full rollout of the E-Government Procurement System (E-GPS), launched in April 2025. The policy directive required a mandatory transition to the System by all users, on the first day of the current Financial Year. As described, the E-GPS was expected to improve governance of public procurement in fulfilment of the constitutional requirement for a transparent, fair, competitive, and cost-effective system, espoused in Article 227. Accordingly, Ministries, Departments, and Agencies (MDAs) were expected to henceforth carry out all procurement processes through the E-GPS, from procurement planning and tendering to bids evaluation and contract management.
The ambition described by the National Treasury was that the E-GPS would seal procurement loopholes, and save the government up to 10 percent of the procureable budget. This was an ambitious claim, given Kenya’s public procurement history, documented elaborately in annual financial and periodic forensic audit reports, and the compliance reports prepared by the Public Procurement Regulatory Authority (PPRA). From the onset, it was clear that the expectation that a digital system would cure all existing inefficiencies without parallel legal and institutional reforms was going to face formidable institutional and compliance challenges.
Reflecting back to 2021, Kenya’s then President Uhuru Kenyatta estimated that the country loses Ksh 2 billion daily to corruption. A large share of that sum was attributed to public procurement leakages through inflated tenders, ghost projects, multiple financial improprieties, among other inefficiencies entrenched in the current mixed but mostly manual procurement system. In present value terms, that figure could be significantly higher, given the minimal reforms since. So the rollout of the E-GPS, that follows years of persistent nudging by Kenya’s development partners was supposed to be‘momentous’.
The World Bank, in particular, has consistently called for a fully automated procurement system that reduces human intervention, and generates a digital audit trail. This push has similarly been amplified by the International Monetary Fund, the UK’s Foreign, Commonwealth and Development Office (FCDO), and other development partners with an interest in better economic governance and prudent management of public funds in Kenya. Alongside these external pressures, there is also a domestic constituency for reform, including sections of the National Treasury, the Public Procurement Regulatory Authority, civil society organisations, and stakeholders in the private sector that view automation as a way to reduce rent-seeking, and improve predictability of the public procurement system.
Despite the seemingly positive goals behind the E-GPS, the real test began after its full deployment, two months ago. The first expected hurdle could be preempted from Kenya’s history with deployment of technology solutions for fiscal management in the public sector. Unfortunately, the country has an uninspiring record of launching digital reforms with great ambition, only to later blame capacity gaps, and political interference for their subsequent failure. The experience with the Integrated Financial Management Information System (IFMIS), is an instructive example. The IFMIS digitized many aspects of public financial management, but did not in fact prevent fraud. In some cases, it apparently streamlined it.
The second and greater hurdle is the National Assembly’s recent annulment of the proposed enforcement of the mandatory use of the E-GPS by the Public Procurement Regulatory Authority. The PPRA had issued a circular demanding strict compliance and mandatory use of the E-GPS by all procuring entities.
In its annulment, the Committee on Delegated Legislation cited contravention of the constitutional principle of non-discrimination given that some regions lack internet access, conflict with Section 77 of the Public Procurement and Asset Disposal Act, 2015 (PPADA) which still allows tenders to be submitted either manually or electronically and the overreach of attempting to create binding obligations and offences without legislation. While the infrastructure argument was cited officially, it appears inconsistent with the reality that the Integrated Financial Management Information System (IFMIS) already operates nationwide across government, raising questions as to whether the real resistance emerges less from connectivity constraints and more from institutional and political reluctance to embrace full procurement transparency.
Parliament’s decision illustrates a classic tension between regulatory prescriptions and the institutional framework required to sustain reform. From a legal perspective, the National Assembly was emphatic that a circular cannot displace the provisions of the PPADA, which still recognizes both manual and electronic submissions of tenders. Parliament’s decision quoted the supremacy of statute over administrative directive, and emphasized that innovations in governance must operate within the bounds of constitutional order and statutory authority.
From an economic assessment, the annulment creates a profound efficiency problem. Electronic procurement promises significant efficiency gains in terms of reduced transaction costs, and enhanced opportunities for competition. Electronic procurement delivers efficiency by shortening procurement cycles, standardizing processes, and generating a digital audit trail that reduces opportunities for discretion. It also widens access to tenders, which increases competition and can lead to better value for money in public contracting. However, with a choice of voluntary compliance that is not legally binding, public procuring entities are now faced with divergent incentives. Some MDAs with the requisite digital capacity may adopt the system for its efficiency benefits, while others may claim infrastructure and other technical constraints, and revert to manual processes. This will likely result is a fragmented procurement landscape that perpetuates the existing procurement fraud market.
Parliament’s annulment of the mandatory E-GPS adoption separately highlights the distributive implications of technological reforms. The National Assembly correctly pointed to structural inequalities in internet access across the country and argued that a system that requires universal connectivity without addressing regional disparities risks excluding marginalised suppliers from accessing state contracts. In essence, this creates a barrier to entry that disproportionately disadvantages smaller enterprises. While these may seem like a convenient argument for proponents of the existing manual system of procurement, the lesson here is for policymakers to be keen on the legal safeguards against discrimination, in order to expand competition and equitable access to government procurement opportunities.
Beyond Parliament’s concerns, for the E-GPS to be a success, it should be accompanied by an institutional shift towardstransparency and accountability. That means that data generated by the system must be accessible and open to external scrutiny by CSOs, the media, and the general public. A reform that is difficult to scrutinize is barely a reform at all. Going by audit reports and the Executive’s own admissions, the continued failure of the procurement system are costly. The cost of inefficiency is measured in the leakage of billions that could provide healthcare, feed schoolchildren, or ease the burden of public debt.
The challenge therefore is to align Kenya’s legal framework with the economic rationale for reform. Parliamentary approval through statutory amendment is required to provide the necessary legitimacy for the E-GPS. To address the National Assembly’s concerns, there is need for greater capacity investments in connectivity, and it seems that phased adoption would be the better approach to reduce the distributive inequities raised during the parliamentary debates. Such a strategy could begin by requiring all high-value contracts above Ksh 20 million to be processed exclusively through the E-GPS, while smaller contracts transition over a defined period, for example within three to five years. The National Treasury should work with Parliament to formalize the mandatory use of the E-GPS through a new law or an amendment to the PPADA. Without legislative amendment to make e-procurement the legally recognised default process, supported by credible enforcement mechanisms, procuring entities retain lawful discretion to bypass it. In this context, the system risks becoming another piece of underutilized infrastructure.
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Why Kenya’s Procurement Reform Targets for FY 2025/26 Are Unlikely to Succeed
| Post date: Fri, Sep 5, 2025 |
| Category: Procurement Policy |
| By: Jackline Kagume, |
Among the flagship reforms announced by the Cabinet Secretary for the National Treasury in the FY 2025/26 Budget Statement was a full rollout of the E-Government Procurement System (E-GPS), launched in April 2025. The policy directive required a mandatory transition to the System by all users, on the first day of the current Financial Year. As described, the E-GPS was expected to improve governance of public procurement in fulfilment of the constitutional requirement for a transparent, fair, competitive, and cost-effective system, espoused in Article 227. Accordingly, Ministries, Departments, and Agencies (MDAs) were expected to henceforth carry out all procurement processes through the E-GPS, from procurement planning and tendering to bids evaluation and contract management.
The ambition described by the National Treasury was that the E-GPS would seal procurement loopholes, and save the government up to 10 percent of the procureable budget. This was an ambitious claim, given Kenya’s public procurement history, documented elaborately in annual financial and periodic forensic audit reports, and the compliance reports prepared by the Public Procurement Regulatory Authority (PPRA). From the onset, it was clear that the expectation that a digital system would cure all existing inefficiencies without parallel legal and institutional reforms was going to face formidable institutional and compliance challenges.
Reflecting back to 2021, Kenya’s then President Uhuru Kenyatta estimated that the country loses Ksh 2 billion daily to corruption. A large share of that sum was attributed to public procurement leakages through inflated tenders, ghost projects, multiple financial improprieties, among other inefficiencies entrenched in the current mixed but mostly manual procurement system. In present value terms, that figure could be significantly higher, given the minimal reforms since. So the rollout of the E-GPS, that follows years of persistent nudging by Kenya’s development partners was supposed to be‘momentous’.
The World Bank, in particular, has consistently called for a fully automated procurement system that reduces human intervention, and generates a digital audit trail. This push has similarly been amplified by the International Monetary Fund, the UK’s Foreign, Commonwealth and Development Office (FCDO), and other development partners with an interest in better economic governance and prudent management of public funds in Kenya. Alongside these external pressures, there is also a domestic constituency for reform, including sections of the National Treasury, the Public Procurement Regulatory Authority, civil society organisations, and stakeholders in the private sector that view automation as a way to reduce rent-seeking, and improve predictability of the public procurement system.
Despite the seemingly positive goals behind the E-GPS, the real test began after its full deployment, two months ago. The first expected hurdle could be preempted from Kenya’s history with deployment of technology solutions for fiscal management in the public sector. Unfortunately, the country has an uninspiring record of launching digital reforms with great ambition, only to later blame capacity gaps, and political interference for their subsequent failure. The experience with the Integrated Financial Management Information System (IFMIS), is an instructive example. The IFMIS digitized many aspects of public financial management, but did not in fact prevent fraud. In some cases, it apparently streamlined it.
The second and greater hurdle is the National Assembly’s recent annulment of the proposed enforcement of the mandatory use of the E-GPS by the Public Procurement Regulatory Authority. The PPRA had issued a circular demanding strict compliance and mandatory use of the E-GPS by all procuring entities.
In its annulment, the Committee on Delegated Legislation cited contravention of the constitutional principle of non-discrimination given that some regions lack internet access, conflict with Section 77 of the Public Procurement and Asset Disposal Act, 2015 (PPADA) which still allows tenders to be submitted either manually or electronically and the overreach of attempting to create binding obligations and offences without legislation. While the infrastructure argument was cited officially, it appears inconsistent with the reality that the Integrated Financial Management Information System (IFMIS) already operates nationwide across government, raising questions as to whether the real resistance emerges less from connectivity constraints and more from institutional and political reluctance to embrace full procurement transparency.
Parliament’s decision illustrates a classic tension between regulatory prescriptions and the institutional framework required to sustain reform. From a legal perspective, the National Assembly was emphatic that a circular cannot displace the provisions of the PPADA, which still recognizes both manual and electronic submissions of tenders. Parliament’s decision quoted the supremacy of statute over administrative directive, and emphasized that innovations in governance must operate within the bounds of constitutional order and statutory authority.
From an economic assessment, the annulment creates a profound efficiency problem. Electronic procurement promises significant efficiency gains in terms of reduced transaction costs, and enhanced opportunities for competition. Electronic procurement delivers efficiency by shortening procurement cycles, standardizing processes, and generating a digital audit trail that reduces opportunities for discretion. It also widens access to tenders, which increases competition and can lead to better value for money in public contracting. However, with a choice of voluntary compliance that is not legally binding, public procuring entities are now faced with divergent incentives. Some MDAs with the requisite digital capacity may adopt the system for its efficiency benefits, while others may claim infrastructure and other technical constraints, and revert to manual processes. This will likely result is a fragmented procurement landscape that perpetuates the existing procurement fraud market.
Parliament’s annulment of the mandatory E-GPS adoption separately highlights the distributive implications of technological reforms. The National Assembly correctly pointed to structural inequalities in internet access across the country and argued that a system that requires universal connectivity without addressing regional disparities risks excluding marginalised suppliers from accessing state contracts. In essence, this creates a barrier to entry that disproportionately disadvantages smaller enterprises. While these may seem like a convenient argument for proponents of the existing manual system of procurement, the lesson here is for policymakers to be keen on the legal safeguards against discrimination, in order to expand competition and equitable access to government procurement opportunities.
Beyond Parliament’s concerns, for the E-GPS to be a success, it should be accompanied by an institutional shift towardstransparency and accountability. That means that data generated by the system must be accessible and open to external scrutiny by CSOs, the media, and the general public. A reform that is difficult to scrutinize is barely a reform at all. Going by audit reports and the Executive’s own admissions, the continued failure of the procurement system are costly. The cost of inefficiency is measured in the leakage of billions that could provide healthcare, feed schoolchildren, or ease the burden of public debt.
The challenge therefore is to align Kenya’s legal framework with the economic rationale for reform. Parliamentary approval through statutory amendment is required to provide the necessary legitimacy for the E-GPS. To address the National Assembly’s concerns, there is need for greater capacity investments in connectivity, and it seems that phased adoption would be the better approach to reduce the distributive inequities raised during the parliamentary debates. Such a strategy could begin by requiring all high-value contracts above Ksh 20 million to be processed exclusively through the E-GPS, while smaller contracts transition over a defined period, for example within three to five years. The National Treasury should work with Parliament to formalize the mandatory use of the E-GPS through a new law or an amendment to the PPADA. Without legislative amendment to make e-procurement the legally recognised default process, supported by credible enforcement mechanisms, procuring entities retain lawful discretion to bypass it. In this context, the system risks becoming another piece of underutilized infrastructure.
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Introduction The matatu metaphor can be used to analytically frame Kenya’s budget as a system that is subject to binding constraints, evolving expectations, and continuous adjustment to shocks. Like the matatu sector, fiscal policy reflects a balancing act between efficiency and quick action seeking to respond to public service delivery while constrained by competing sector […]
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