By now, you might have seen a Public Notice by The Public Procurement Regulatory Authority inviting comments and feedback on the Proposed Public Procurement Capacity Building Levy. Walk with me as I take you through the origin of this levy.
Section 8 of the Public Procurement and Asset Disposal Act (PPDA) establishes the Public Procurement Regulatory Authority (PPRA). The Authority has various functions as outlined under section 9.
Whenever a statute (An Act) creates a public body, it goes ahead to outline the functions of the body and its workings. It will also provide for aspects such as management of the body where it may go ahead to stipulate the positions, qualifications, removal & term of office. An important aspect is the funds of the body created. The Act creating a public entity has to specify where that body shall get its funds from.
Relating this to our present scenario, the Public Procurement and Asset Disposal Act under Section 24 (5) outlines where the Public Procurement Regulatory Authority shall get its funds from. Of importance is Section 24 (5) d which now talks of the Capacity Building Levy;
𝘥) 𝘤𝘢𝘱𝘢𝘤𝘪𝘵𝘺 𝘣𝘶𝘪𝘭𝘥𝘪𝘯𝘨 𝘭𝘦𝘷𝘺 𝘰𝘧 𝘴𝘶𝘤𝘩 𝘱𝘦𝘳𝘤𝘦𝘯𝘵𝘢𝘨𝘦 𝘰𝘧 𝘵𝘩𝘦 𝘱𝘳𝘰𝘤𝘶𝘳𝘦𝘮𝘦𝘯𝘵𝘴 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵 𝘱𝘳𝘪𝘤𝘦 𝘣𝘺 𝘱𝘶𝘣𝘭𝘪𝘤 𝘦𝘯𝘵𝘪𝘵𝘪𝘦𝘴 𝘢𝘴 𝘮𝘢𝘺 𝘣𝘦 𝘱𝘳𝘦𝘴𝘤𝘳𝘪𝘣𝘦𝘥 𝘣𝘺 𝘵𝘩𝘦 𝘊𝘢𝘣𝘪𝘯𝘦𝘵 𝘚𝘦𝘤𝘳𝘦𝘵𝘢𝘳𝘺.
I hope we now understand where that Capacity Building Levy originates from. The initial 2016 proposal was to have the levy charged at the rate of 0.01% of the contract price for taxpayer-funded contracts amounting to KES 10 million and above.
The 2023 Draft Legal Levy Order proposes a 0.03% of the value of all Government financed (read Taxpayer funded) contracts. The same shall be paid to the Public Procurement Regulatory Authority (PPRA) by the Procuring entity during payment to the supplier/contractor.
If the proposal is approved as is, it simply means that it is the supplier who will shoulder the burden of this new levy. For instance, if a supplier/contractor supplies goods or services worth KES. 1,000,000/- during payment, the Procuring Entity shall deduct 0.03% of the KES 1 Million equivalent to KES. 300/- which shall be remitted to the Public Procurement Regulatory Authority (PPRA).
The purpose of the proposed Levy is to provide adequate funds to facilitate the provision of sustainable capacity development, technical support, and mentoring of all persons participating in the public procurement and asset disposal system, facilitate the realization of value for money, and fiscal savings and ensure quality service delivery.
Regulation 6 (1) of the Public Procurement and Asset Disposal Regulations, 2020 provides that, the National Treasury shall be responsible for training and capacity building for procurement and supply chain management services at the national government level.
To ensure that the funds generated from the proposed Levy achieve the intended outcome, the Public Procurement Regulation Authority, in liaison with key stakeholders, will develop a national public procurement capacity development framework. The framework will guide in assessing capacity needs, designing and sequencing of appropriate interventions, and determining and documenting the outcomes of the interventions. In addition, the framework will ensure uniform distribution of capacity development services to the public and private sectors for enhanced delivery of services to the citizens.
The Authority has in accordance with Article 10 of the Constitution of Kenya on National Values and Principles of Governance, the Authority hereby invited comments from members of the public, public entities, suppliers, professional bodies/ associations, non-state actors, development partners, and all interested stakeholders to submit comments and feedback on the proposed Levy Order to operationalize The Public Procurement Capacity Building Levy. Details of the same can be found here.
I would love to hear your thoughts and comments on this issue.