National Assembly Treasury Cabinet Secretary John Mbadi has confirmed that the government will grant no further exemptions for the electronic Government Procurement (eGP) system starting next financial year. During an interview on Sunday, April 12, Mbadi clarified that the state intends to shut down procurement loopholes that consistently drain public resources and place an unnecessary burden on the National Treasury.
While the government allowed a limited number of exemptions during the current financial cycle, Mbadi noted that the grace period ends in July. He views the full enforcement of the eGP system as a critical tool for ensuring transparency and accountability in how the state handles public contracts.
“If we can have a system like eGP, which is rolled out fully, we can close these procurement loopholes. I know we gave some exemptions this year, and I am saying this today, next financial year, there will be no exemptions for eGP,” Mbadi stated.
The electronic Government Procurement (eGP) system serves as a digital gateway for managing state contracts, handling everything from the initial tender advertisement and bidding to final evaluations and payments. By digitizing these steps, the government intends to foster a culture of transparency and accountability across all public institutions.
While the state originally introduced the platform as a cornerstone of broader public finance reforms, it initially allowed some institutions to stick with manual systems. These temporary exemptions gave various government entities additional time to prepare for a full transition to the digital environment.
However, Mbadi identified procurement as a primary source of financial leakage, noting that the government loses significant funds through inflated pricing when sourcing goods and services. He illustrated how these manual loopholes allow for price manipulation that benefits intermediaries at the expense of the taxpayer.
“Where we waste money is actually on the procurement side, where instead of procuring a hall for Ksh15,000, you procure for Ksh50,000, and the surplus is shared in between.”
Regarding inflated state spending, Mbadi admitted that the government faces significant hurdles in trimming the budget, largely due to a ballooning wage bill and persistent salary demands. He noted that pressures from Collective Bargaining Agreements (CBAs) and the security sector, combined with adjustments for inflation, leave the Treasury with very little maneuvering room to reduce costs.
“We have limited space in terms of cutting expenditure. You look at our wage bill. We are getting pressure from CBA, the security sector, and in terms of increasing salaries and the inflation index,” Mbadi said.
The CS also warned that reducing recurrent expenditure requires careful consideration. He warned that overly aggressive austerity measures could stifle economic activity and hurt the private sector. Consequently, the Treasury has shifted its strategy toward rationalizing development spending, specifically by reviewing and halting projects that lack commercial viability.
Mbadi addressed the frequency of supplementary budgets presented throughout the current financial year, admitting his personal distaste for constant revisions. However, he clarified that several unavoidable factors, such as overlooked donor-funded initiatives and unexpected salary commitments, forced the government’s hand.
“Poor planning. We left out some donor-funded projects which we had to expand. Number two is Personnel Emoluments. Some CBAs had been suspended by court, and we became liable, and we had to pay,” Mbadi explained.
At the same time, the Treasury has significantly increased its domestic borrowing target by 52.29%, an addition of Sh570 billion for the financial year ending June 30. This move signals a tighter credit market, as the government competes with households and private businesses for local loans, likely driving up interest rates and squeezing the private sector.
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