News Column

State Bets On IFMIS to Lift Buying Image

June 3, 2014

Constant Munda

Contractors and suppliers to the public sector will get the reprieve of being paid on delivery, as the National Treasury seeks to break away from traditional lengthy delays with a new system.

Cabinet Secretary Henry Rotich has said the Integrated Financial Management Information System (IFMIS), expected to go live next month, will make this possible.

IFMIS will enable online transactions in public procurement processes.

Rotich said the key component of the IFMIS, first developed in 2004 but long delayed for implementation, was "Procure to Pay".

"With this component, the challenge of delayed payments will be a thing of the past as all suppliers will be paid in real-time. This development will boost suppliers' confidence in doing business with the government," Rotich said.

Delayed payments to government contractors was largely blamed for last year's 30.91 per cent surge in non-performing loans in the banking sector to Sh80.59 billion from Sh61.56 billion in the previous year.

The revised Central Bank of Kenya's Prudential Guidelines require lenders to classify loans considered "doubtful" or "substandard" to "watch" for six months even after all due principal and interest is repaid in full. Consistency would then see the facilities re-classified as "normal".

Besides the IFMIS, the Public Procurement Oversight Authority is betting on new regulations it issued early January which, among other changes, reduced the tender pre-qualification period to at least seven from the previous 14 days.

Preparation of national tenders should also take a minimum 14 days from the earlier 21 days, while for international tenders the time was trimmed to 21 days from 30 days previously.

"It should not take more than 30 days to complete a procurement (from the day it is opened) under the new regulations that we have issued. That should help ministries to absorb money early," Rotich said in an earlier interview.

The government is targeting an absorption rate of at least 80 per cent in its development budget in the next fiscal year 2014/15 starting July 1st, from the prevailing "50 to 60 per cent".

The mandatory roll out of the IFMIS at the national government level and the 47 counties will be integral in realising this ambitious target.

The procurement component of the IFMIS is designed to "increase control and visibility over the entire life-cycle of a procurement transaction, from planning to payment", according to the IFMIS department.

It is expected to block massive financial leakage in public procurement processes through corruption and gross overstating of prices of goods and services supplied.

The government has adopted a UN Standard Product and Services Code that will create and give a supply item a code for indicative pricing.

The PPOA will routinely conduct market survey for common user items and price them for use in procurement planning and requisition.

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Source: AllAfrica

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