How Mbadi's Sh5 billion mess risks government shutdown

Cabinet Secretary for National Treasury and Economic Planning John Mbadi before The Standing Committee on Devolution and Intergovernmental Relations to deliberate on the commercial bank accounts operated by county governments contrary to the law at Bunge Towers, Parliament, Nairobi. July 17th,2025. [Elvis Ogina, Standard] For two months, government agencies have not been able to procure even the most basic of goods and services as a stalemate ensues over the rollout of a multibillion electronic procurement system. From essential services such as health, books for schools to mega projects, everything has stalled as it emerges that the new electronic Government Procurement System (e-GPS) being pushed by the National Treasury was not ready for rollout. On Thursday, the government stood its ground that the new system must be rolled out despite MPs rejecting it and a strong pushback by the Council of Governors who have also threatened to go to court. And now, all State entities are grinding to a halt. But even with the firm stand by government, questions are emerging over the efficiency and reliability of the Sh5 billion system. This follows audit queries of similar investment on systems to digitise government services, and also used to siphon money, such as the e-Citizen and the recent Social Health Authority's digital infrastructure. "You must implement e-procurement. This resistance that I have seen, you will have to stop. I am not buying the narrative that it is not working. You better embrace the system and get going, otherwise you will not procure," National Treasury CS John Mbadi said. The Saturday Standard established that Sh1.6 billion has so far been pumped into the e-GPS since 2022. This financial year alone, Treasury has allocated Sh700 million to the project. This is in addition to Sh560 million over the 2024/25 financial year and an initial investment of Sh374 million in 2022. It emerged that the initial payment was made when the government procured the services of a joint venture between Sybyl Kenya and iSourcing Technologies PVT India. The investment is expected to reach Sh5 billion when the system is fully rolled out. The bone of contention, however, is that procuring entities, which range from ministries and State corporations to county governments, have been unable to use the system to procure goods and services. This is despite a directive by the Treasury that all procurement should be done using the new system. The new digitised procurement system is facing major defective setbacks, with sources interviewed indicating that they have not been able to get onboard the system that took effect on July 1. Under the new system, procuring entities are required to upload their budgets and procuring plans for the financial year. But this is yet to happen. This has meant that ministries and government offices have not commenced implementation of the 2025/26 Budget two months into the financial year. A senior official with one of the State corporations said the e-GP system was hurriedly rolled out, without piloting it at any of the government entities. The end-users, the official said, were quickly taken through what they termed as very basic training. "Nobody seems to understand the mischief that the e-GP System is trying to cure but it has ended up creating more problems for the different procuring entities," said the official, further noting that currently, the only thing that State agencies can procure are goods and services that are offered by other government agencies, which are however limited to few items. Insiders now claim that the e-GPS may be another scandal in the making, adding to a set of digital systems that have since had numerous audit queries. E-Citizen has been subject to controversy, with a most recent audit by the Auditor General querying over Sh9.6 billion questionable transactions in a report on the system for the financial year to June 2024. The Social Health Authority (SHA) digital system, on which the government spent Sh104 billion to develop, has also collapsed and now authorities cannot account for Sh24 billion, even as Kenyans are turned away from hospitals. The e-GPS aims to do away with the big tender boxes that appear prominently in government offices and, in their place, suppliers will send their bids electronically. It will complement the Integrated Financial Management Information System (IFMIS) that laid the groundwork for electronic procurement. IFMIS automated budgeting, payment processing, expenditure tracking and reporting, but did not digitise the tendering process. The system that is supposed to digitise the tendering process is however off to a faltering start. "Since July, nothing has been going on," a Nairobi County government official said, explaining that while the county is able to make payments using the IFMIS system, it has been unable to upload its budget and procurement plan for the current financial year on the e-GPS and hence cannot procure anything. It has affected our operations in a great way because we are not able to procure even the smallest of things to keep different departments running. This is slowly starting to paralyse operations. It looks like our procurement teams are on holiday and, if it persists, it will be the same across all departments," the official said. And the pinch is already being felt with education institutions among the hardest hit by setbacks affecting the e-GP system. Reports show the learning institutions are struggling to secure essential supplies for daily operations. Deputy President Kithure Kindiki on Thursday admitted the paralysis. "It is not just county governments that are experiencing these challenges. Even national government agencies, including my office, are experiencing the same challenges. However, we must resolve those challenges and implement e-procurement. Nobody is disputing that it increases transparency and accountability of public resources," Prof Kindiki said. Mbadi also acknowledged that the system had been experiencing challenges. "We note the challenges the MDAs are having on the use of the e-GP system. Treasury has therefore set a support mechanism," he said. The support includes a call centre to support procuring entities and suppliers onboarding on the system as well as assigning trainers of trainers to the MDAs. The setbacks now threaten the smooth transition to senior secondary school in January 2026 as the procurement of textbooks has stalled. Kenya Publishers Association chairman Kamau Kiarie warned that while the new platform promises transparency and efficiency in the long run, the current disruptions could plunge the sector into a crisis. "We cannot proceed to print because that would be jumping the gun. If the delay persists, the January 2026 deadline is at risk since we might not be able make the books available by then," Kiarie told The Standard. The government is expected to spend over Sh10 billion on Grade 10 textbooks, which must be delivered before the new academic year begins. According to publishers, printing should start at least 60 to 90 days in advance yet no contracts have been issued under the new system, putting the exercise on the edge. Grade 10 will introduce 27 learning areas, with 19 publishers contracted to supply textbooks and literary texts for both English literature and Fasihi ya Kiswahili. But the disruption is not confined to secondary schools. Primary and junior secondary institutions have also been paralyzed by the directive requiring all schools to onboard the e-GPS system by September 1. School heads say the transition has left them unable to procure even the most basic supplies. National Treasury Cabinet Secretary John Mbadi. [File, Standard] "We are opening schools with empty stores because we cannot buy items such as chalk, lab chemicals, or even food for boarding students without clearance from the system. The process is completely stuck," said one principal, who requested anonymity. Kenya Secondary School Heads Association (KESSHA) chairman Willy Kuria warned that schools are being set up for failure if the government does not urgently smoothen the system. "As it stands, learning is at risk of serious disruption. Schools depend on timely procurement to run seamlessly, and any paralysis in supply chains affects learners directly," Kuria said. Despite the paralysis, DP Kindiki on Thursday said the government would not go back to the "manual procurement system whatsoever". Similarly, CS Mbadi stated that the e-GP system must work and even alleged sabotage attempts by people who have been manipulating the procurement processes. The Council of Governors (CoG) has complained to the Treasury. The governors said they want a system that works. CoG chairman Ahmed Abdullahi said if the challenge persists and counties are not given a way out to start procurement, they could start shutting down in the coming weeks. This threatens key services including health and education. "We are yet to see one place where e-GP system has been adopted seamlessly... where the entity, be it a county, a ministry, a State department has migrated successfully to this e-procurement system," said Abdullahi in an interview on Thursday, expressing concerns that with the first two months off the financial year gone, county governments had started lagging behind in service delivery and project implementation. On Thursday, CoG had a meeting with DP Kindiki and CS Mbadi where they raised the issue with the electronic procurement system. Abdullahi added that the government also needed to ensure there is a legal framework backing the system annulment by MPs. In early August, the National Assembly annulled the circular by Treasury to procuring entities on the exclusive use of e-GP System noting that it was in contravention of the Constitution and the Public Procurement and Asset Disposal Act 2015. The MPs also argued that the directive was an attempt by the Kenya Kwanza Kwanza administration to change laws while bypassing Parliament. They also noted that electronic procurement was discriminatory as there are areas in the country that do not have Internet and even mobile phone coverage, which would lock out many Kenyans in such areas and where access to e-GPS is intermittent or even non-existent due to lack of connectivity. Mbadi dismissed the move noting that only Cabinet can revoke it. Abdullahi has asked the government to sort the mess on several occasions in recent weeks. On August 21, he wrote to Mbadi asking him to have Treasury resolve the challenges facing the new system, including the lack of legal framework, or allow procuring entities to use the procurement system that was in place earlier. "The implementation challenges associated with the system have continued to paralyse operations thereby denying service delivery to citizens in critical areas such as health," he said. The CoG boss said counties would be seeking legal redress if the government does not resolve the mess. Mbadi said that by Monday, every State department as well as counties whose budget had been approved would have been onboarded into the system. He said he had directed his team at Treasury to make sure this happens and "if they are not ready, I will deal with my team which is supposed to make sure that happens". The CS had, earlier this week, defended the system with fervour, lashing out at the bosses of procuring entities and dismissed their claims that the system has not been working as baseless and insisted that e-GPS must work. He had noted that the new system would save government resources estimated at 10 per cent of the procurable budget. He said the e-GP System would do away with tender manipulation where the lowest financial bidders have been "denied the opportunity to do business with the government because you want another person to win that tender." He said there were instances where staff of procuring entities would "manipulate the documents, pluck pages" so that the firms offering value for money would be disqualified as they didn't have proper documentation. "That is what we are trying to cure with e-procurement," he said. (Additional reporting by Ndung'u Gachane)

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