By James Anyanzwa

Five commercial banks are angling to cash in on the Sh75 billion worth of Government contracts allocated to the youth. This follows an agreement between Treasury, banks and the Youth Enterprise Development Fund (YEDF) to provide financial security for the qualified youth.

According to Treasury’s Directorate of Public Procurement, the banks which have expressed interest to finance local purchase orders (LPO) for the youth-led enterprises include Ecobank, Biashara Bank, Family Bank and Equity bank. “These banks have accepted to finance LPOs for this youth,” Celestine Otunga, a director in-charge of Public Procurement Directorate at Treasury told the Business Weekly.

Ms Otunga noted various public procuring entities such as Government agencies and parastatals have shown enthusiasm in awarding contracts to the youth.

Kenyan youth started enjoying 10 per cent of the procurement contracts in all government institutions from July 1, following President Mwai Kibakis’ directive in February this year. Kibaki, also, directed the Attorney General and the Minister for Finance to remove the legal bottlenecks that hinder the youth from accessing Government contracts.

Biggest Recipient
The Government is the biggest recipient of supplies meaning youths can bid to offer goods and services including supplying of goods like airtime, newspapers, journals and magazines, printing services, branding of T-shirts, banners, caps and bags, cleaning and fumigation services, garbage collection and courier services,

Others include supply, delivery and installation of electronics, computers and computer accessories, Cab/Taxi Services, events organising, ICT services, Photography and Video coverage, beverages, consultancy and other common user items.

The policy would not have come at a better time when youths and SMEs are struggling to keep their businesses afloat as inflation and a weak economy continue to erode consumers’ purchasing power.

SMEs have keenly been looking out for strategies to expand their revenue base, an opportunity offered by President Kibaki’s directive.

LPO Financing is designed for contractors and vendors of reputable organizations to meet up with the financial capability required to execute work orders and local purchase orders from these respective companies. Last month the Directorate of

Public Procurement launched the ‘Youth Access to Government procurement Opportunities (YAPO)’ program to provide the youth with access to these contracts.

Treasury will be running a pre-qualification exercise for a period of one month, in all counties across the country, which will include training, creating awareness and putting every youth in categories according to their occupation.

For any youth to qualify for these government contracts, he or she must own an enterprise, have professional qualifications and be between 18 to 35 years old.

“They must also own at least 70 per cent of the business,” added Otunga.

So far, Treasury has registered about 3,000 youth enterprises in Nairobi and targets this figure to reach 5,000.

In addition, Treasury expects to register 1,000 youth enterprises in each of the remaining 46 counties. Otunga pointed that the Government is working on reforms in the payment mode after the delivery of good or services in government, which have continued to discourage many companies from applying for tenders in government offices.

“Currently, it goes to even six months which is quite a long time especially for a starting company. But I am negotiating with my bosses to see how to work on it,” Otunga said.

The Youth Fund is already working to introduce a credit guarantee scheme that will make credit available to the youth, even from the private sector.

Among the legal barriers, which have previously locked SMEs out of government business include requirements in the Public Procurement and Disposal Act of 2005 on the qualification of tenderers. One such provision requires that tenderer’s must have “the legal capacity to enter into a contract for the procurement.”

This has locked out thousands of small businesses who were unregistered by law. Other legal barriers to be eased include lowering the cost of bid documents and reducing or scrapping bidding bonds.

In tendering, bonds are a cash deposit, which guarantee that should a bidder win a particular tender, they would be able to execute the contract as provided.

The reserving of the 10 per cent quota for youths is the latest in a string of initiatives the government has rolled out over the past six months with an eye at tapping the SME sector and creating jobs for youths.

The government is also rolling out the Sh3.8 billion SME Fund set up in 2010 to help finance small businesses.