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ELECTION 2022

IFMIS should be mandatory in counties to boost transparency

OPINION
By Linus Kimaru and John Kamau | Dec 14th 2021 | 4 min read

President Uhuru Kenyatta and Deputy President William Ruto during the launch of the IFMIS electronic Procurement (E-Procurement) at the Kenyatta International Convention Centre in 2014. [File, Standard]

Since the advent of devolution, the state of counties’ procurement management has been a cause for concern. Phrases like “pending bills” have become common. This arises from the fact that many counties have to allocate a vote for payment of long-outstanding bills, some of which date back as far as 2013. This is despite the fact that procurements should only have been done where funding was already earmarked and available.

Counties are supposed to use the Integrated Financial Management Information System (IFMIS) to automate their procurement and payment processes. IFMIS is a Public Finance Management (PFM) system that is aimed at improving transparency and accountability. It supports core PFM functions of budget formulation and execution, public procurement and financial reporting.

However, some counties have continued to rely on manual processes despite a requirement to process all transactions using IFMIS. This results in most counties lacking transparency in their procurement and payment processes. This creates a risk of the procure-to-pay process being compromised at various points.

For example, unnecessary procurement may be carried out, specifications may be tailored to meet the requirements of favoured bidders, bidders may be irregularly pre-qualified, bids may be manipulated, goods/services single-sourced, and/or bid data may be leaked.

In addition, manual systems used by county governments inhibit the implementation of county service charters. The charters stipulate the duration that the various stages of the procure-to-pay process should last. In particular, the possibility that payments can be delayed leads to the risk of staff having to be incentivised to facilitate the progression of payments from one stage to another.

Service delivery

Given its potential benefits, the government should consider enforcing a 100 per cent shift to IFMIS in all county governments. The resulting automation of service delivery will help to improve transparency in the use of public resources, improve efficiency and integrate the finance and procurement management of various government agencies.

This will significantly improve service delivery as the time taken to complete the entire procurement process should be greatly reduced. Enforcement of the service charter will lead to delays being accurately and promptly attributed to specific county staff. This will help reduce the risks of deliberate delays being caused to invite inducement.

The use of IFMIS in procurement would also result in higher transparency in the bid evaluation system as it will be easier to ensure that only bidders that meet the predetermined conditions are considered for evaluation. This will reduce the risk of favouritism in awarding of tenders.

If properly implemented, the use of IFMIS should also reduce the risk of payment for non-delivery of goods and services due to the accountability that can be embedded in the system; suppliers would be required to attach valid proof of work done that can be assessed before payment can be initiated.

Automation would also grant real time access to accurate information that can be used by the county management to identify areas that require managerial intervention. For example, it would help to identify supplies that have been done but for which payments have been delayed, so that management can take appropriate corrective action. It may also help to reduce avenues for money being diverted to different accounts.

The implementation of IFMIS could also help in identifying red flags indicative of fraudulent transactions. These include transactions done outside office hours and those authorised by personnel from a different department.

Availability of supplier information in the database would assist in identifying suppliers with better experience who can provide certain goods and services at lower price and of high quality. It would also make it easier to vet suppliers as there would be access to reliable information regarding previous supplies.

It would also be a repository for data that could help county staff assess trends over time to reduce costs.

County governments have complained of delays in the allocation of resources within IFMIS and system downtime and used this as a justification for using the manual process. Whereas there may be cases where there are delays in resource allocation as well as genuine system downtime, such reasons may in many cases be merely an excuse from staff who are not willing to adapt to the current changes in technology.

Improving IFMIS uptime, timely resource allocation and training of the staff in all the departments on the use of IFMIS may help address this problem.

The wider use of IFMIS would immediately provide a range of intriguing opportunities. Beyond the reduction of operational ineffectiveness and the risk of fraud, the widespread application of IFMIS will open up data analysis possibilities that, among other benefits, can make budgeting and planning easier and more effective.

As such, we would encourage that the use of IFMIS be made mandatory and any challenges that limit its adoption be dealt with promptly.

Kimaru is Associate, Forensics Advisory services, PwC East Africa region. Mr Kamau, Associate Director, Forensics Advisory services, PwC East Africa region.

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