Broke tycoons: When tenders send people to an early grave

Kenya is ranked as one of the most painful places for suppliers in Africa due to the time it takes to pay for goods delivered. [iStockphoto]

Public sector bidding for the supply of goods and services has always been lucrative.

Government tenders have changed the lives of many businessmen who spend millions or billions of shillings with the hope of great returns.

In recent times, however, things have changed for the worse, even for those who bag lucrative tenders. The bitter-sweet deal has left some suppliers depressed or nursing suicidal thoughts, after the government failed to pay them.

And Kenya has today turned into one of the most painful places for suppliers on the African continent. This is due to the long time it takes to pay for goods delivered according to a report by Duplo, a payment platform for African businesses, released early this year.

According to the report, only 19.7 per cent of Kenyan companies process invoices within 24 hours, with 57 per cent of them taking up to a week to prepare them for payment.

Similarly, only 69 per cent of payments made to businesses in Kenya are received within a week of sending out an invoice, whereas 21.5 per cent of these are settled within a day.

Cases abound of suppliers who secure government contracts to supply various services to government agencies, only for it to be cut short with little effort to explain the situation - despite pending bills rising to over Sh567.5 billion by the end of June this year according to Treasury data.

George Yogo used up all his entire investments to fund a tender he had been awarded for services during the construction of the Green Park terminus, Nairobi. Yogo said he is yet to be paid his dues of Sh98 million. 

He says in October-November 2020, upon finalising a project in railways, he was approached by an individual who was apparently attached to Nairobi Metropolitan Services to work on the project. He says he later got a call from Director of Roads, Nairobi Metropolitan Services Michael Lucien, informing him of an Executive Order by the President then (Uhuru Kenyatta) for immediate relocation of the railways terminal to Green Park and an award letter was handed over to him with a strict timeline of three months.

“Yes, we’ve worked on this terminal from inception,” he said.  “We started from excavation. This place was very swampy. It is not what you see now. We had first of all to level this ground before we could do the shades, so every structure standing in this facility was built with tonnes of material.” 

Yogo showed us a letter that awarded him a supply contract (tender) with clear instructions on what was to be done and the timelines.

“The tender sum is Kenya shillings Ninety-eight million (Kshs 98,000,000). You are required to move in immediately and deliver within the next three (3) weeks…..’’ reads part of the letter.

Improve livelihoods

In 2016 when the National Youth Service (NYS) put out a tender advert for the slum upgrading programme, one Rina Nano was over the moon to have secured the lucrative tender of supplying NYS with materials that was conducted in Nairobi County. 

The actual target of the project was to improve the livelihoods of at least 1.6 million households in Kibera, Mathare, Korogocho and Mukuru slums.

“I did the dumpsters, the gumboots, the wheelbarrows, the training materials. I am not surprised that the students who used the materials I supplied back then are already out of that institution. They have jobs and are married with children but I have been left with nothing,’’ she said.

She says the State owes her Sh57 million, with some of the bills having accumulated from as far as eight years ago. She has now been left homeless and her children are under the care of her friends.

“At the moment, I don’t even know my fate. I am now waiting for the creditors to come and take the remaining things that I have. I always wonder why we are not paid yet these people receive money every year yet they don’t pay us,’’ she said.

The debt she incurred has caused her a lot including friends who had lent her money and everything she owns. “It’s sad because currently I am on medication. Sometimes I cannot afford my medication. I have no money or health insurance. I have no friends. They no longer talk to me. Even when I die I don’t know who will bury me, sometimes, when I see NYS naskia kama nitapata ugonjwa wa kifafa (I feel like I have epilepsy,’’ she said.

The slum environmental improvement project was meant to bring dignity and respect to slum dwellers by improving their living environment.

Another supplier who sought anonymity said he secured the tender after NYS expanded its reach to other slum settlements, thereby increasing the amount of work to be done.

“I did so much in Kibra constituency, yet I have never been paid to date. I continued to do business with the government. The business was growing until 2017 when payment stopped coming for the supply that we had made to government institutes on NYS “.

Another supplier told The Standard that amidst all this, he had taken about Sh20 million from microfinance institutions which have been on his neck.

“The security that I had given them was a piece of land that we had inherited from my father and they wanted to dispose of the security but I talked to them to give me some time,’’ he said. “I organised a family meeting. I called my two sisters and told them I needed them to allow me to sell that piece of land and it brought a lot of disharmony because it’s inherited from our father - they refused.’’

A supplier who sought anonymity due to the sensitivity of the services he rendered to a government agency told The Standard that the taxman is on his neck. He is supposed to pay a business tax of 30 per cent for the services he supplied to various government entities.

“KRA are on my neck on why I failed to file my returns. I have shown them my documents of the huge amount I am yet to be paid by the government and the only feedback I got is that they have written to the government to pay. It pains a lot,” he said. “There was a time my house was about to be auctioned,’’

The case is one among many that once thrived in supplying both national and county governments with services worth millions of shillings but now live in agony.

Early this year, a shocking video of the late Samuel Nyakado aka “Samtec” made rounds on social media while partially naked and shouting next to an office in Nairobi demanding his payment. “Why can’t you pay? Where is the permanent secretary?’’ a visibly emotional Nyakado is seen in the video lamenting.

Government agencies

He was among hundreds of contractors who are yet to receive a penny from county governments in Nyanza and State agencies. At the time of his death, creditors were on his neck while payment for several contracts he had executed for various government agencies was yet to be settled.

Sadly he is one of the many who committed suicide over the same.

During an interview with Spice FM, Simon Gichuki, Secretary General of the Association of Public Suppliers painted a sad picture of how some of his members are choosing to end their lives over debts after government agencies failed them.

He cited a case of how one supplier rammed through the two rivers roundabout in Nairobi following a phone call by his wife that debtors had raided his home threatening to take his household items should he not clear his bills.

“He was owed, I think Sh15 million for cabling, computers and software he did to a county government,’’ Gichuki said.

He also spoke of a woman in Mombasa who opted to close her business and become a housewife after her push for payment bore no fruits. He however said suppliers suffer most during the change of government.

“If a new governor comes into office today and you were working for the county, that money, forget. We have suffered the most because of a regime change and you are reduced to nothing,’’ he said.  

After years of delaying payment, a multi-agency team comprising officials from the National Treasury, Directorate of Criminal Investigations, Ethics and Anti-Corruption Commission and Attorney General’s office were given the task of verifying all the pending bills.

The committee verified all the pending bills which amounted to Sh15.5 billion out of which in May last year (2022), then President Uhuru Kenyatta’s cabinet approved 5.4 billion to be paid to suppliers.

According to a Cabinet dispatch sent out, the payment was supposed to address the plight of micro, small and medium-sized enterprises that made supplies to NYS.

The dispatch said in part: “To address the plight of micro, small and medium-sized enterprises who have made supplies to the National Youth Service, cabinet approved the payment of the NYS historical pending bills that have been verified and authenticated by the pending bills multi-agency team”.