The National Social Security Fund (NSSF) has allocated a budget of Shillings 1.761 trillion for the procurement of various services and equipment in the upcoming financial year 2023/24.
The money includes expenditures related to new real estate projects, consultancy works, insurance services, office furniture, IT services, and advertisements and promotions. Currently, the NSSF has an investment portfolio of over Shillings 17 trillion, with 78 percent invested in fixed incomes (both local and offshore), 15 percent in equities, and 7 percent in real estate.
During discussions with suppliers and service providers Tuesday, Gerald Mugabi, the Head of Procurement at NSSF, revealed that out of the allocated budget, 1.7 trillion Shillings will be dedicated to real estate, 36 billion Shillings to IT systems and computer equipment, 12 billion Shillings for professional consultancy, 2.7 billion Shillings for furniture, fixtures, and office equipment, and 5 billion Shillings for insurance services, advertisements, and promotions.
Despite the budget allocation for local procurements, NSSF data indicates that only 90 percent of the suppliers to the fund are local companies, receiving a mere five percent of the budget, while the remaining 5 percent is awarded to foreign companies.
“The truth is that the capacity of the local firms is still very low, and we don’t put in enough effort to build it sustainably, and fail to invest in bigger challenges which require bigger money, and the second thing, we do not pool resources together. We are all pigmies and at the end of the day, we are short of resources all the time, and we need to come together and do big projects,” he said.
Mugabi further explained that although local companies participate in supplies and some consultancies, they face challenges in construction projects due to inadequate equipment, personnel, and initial investment capital.
While the Public Procurement and Disposal of Public Assets Authority (PPDA) policy reserves procurement projects below 10 billion Shillings for local companies, Mugabi believes that for substantial development, local firms should aim for projects worth 50 billion Shillings or more.
“We want to see local companies take up projects worth Shillings 50 billion, 100 billion, and more, for us to boast that we have built the capacity of the local firms,” Mugabi explained.
During the engagement, Patrick Ayota, the Acting Managing Director of NSSF, expressed the fund’s commitment to supporting the development of local firms and encouraged them to embrace technology to improve their operations and competitiveness.
“As today’s engagement theme goes, “Adapt to International Trends”, and this means embracing technology. There is no way it can compete fairly, without embracing technology, and this is one of the advantages the foreign companies have over the local ones, yet we need them to become better,” he said.
A supplier who preferred to remain anonymous shared her experience of losing a waste management contract at NSSF due to the use of plastic materials and the absence of a recycling plant. The supplier acknowledged the importance of environmental responsibility and stated that her company is currently working on meeting the required standards.
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