Public Procurement and Growth of Micro and Small Enterprises in Counties in Kenya

Abstract

This study sought to explore the relationship between public procurement and growth of Micro and Small Enterprises (MSEs) in Kenya with focus on the County Governments. It is universally acknowledged that MSEs stimulate economic growth and development. They account for over 80% of employment opportunities and over 70% of many countries’ Gross Domestic Product (GDP). Although governments are biggest spenders globally, estimated at 9%-45% of GDP, public procurement supply market is dominated by large enterprises. MSEs struggle to compete against stringent discriminative procurement requirements besides other technicalities. The specific objectives include; to establish relationship between public procurement procedures and growth of MSEs in Kenya, to ascertain the relationship between procurement contracts administration and growth of MSEs in Kenya, to examine the relationship between e-procurement technology and growth of MSEs in Kenya, to assess the relationship between bidding capacity of the MSE’s and their growth in Kenya, to evaluate relationship between procurement oversight agencies and growth of MSEs in Kenya, to determine the relationship between the intervening effect of MSE participation in public procurement and growth of MSEs in Kenya. The study was conducted at the County governments of Trans Nzoia, Bomet and Kajiado. It adopted descriptive design approach. The respondents were sampled from the MSEs registered with the MSE Authority in the Counties. They populated to 771 firms. The study sample was 155 respondents determined statistically using Cochran formula. The study utilized self-administered questionnaires in data collection. It adopted both qualitative and quantitative data analysis. Both descriptive and inferential statistics were utilized in analyzing and presenting the data. The study established that there exists strong relationship between public procurement and the growth of MSE in the Counties at 92% response rate. 93% reported that inequitable distribution of public procurement opportunities is significantly related to the MSEs poor growth. Another 91% indicated that availability or lack of the ICT infrastructure has significant determination on whether MSEs participate in public procurement or not. On the relationship between MSEs bidding capacity and their growth, 79% of the MSEs reported high level of incompetence. The relationship between procurement oversight agencies and the growth of MSEs, 75% of respondents posited unsatisfactory performance. The study established that only 37% of MSEs frequently participate in public procurement processes. The study concluded that there exists strong relationship between public procurement and the growth of MSE in the Counties in Kenya. This phenomenon could be construed to be the case across all the counties in Kenya. It recommended that County Governments should utilize consortia buying to support MSES, MSEs to establish bidding caucuses, MSEs should raise their participation rate, government should align MSE Act 2012 to PPAD Act, 2015 and also County Governments should establish ICT hubs across the Counties.