PPRA Report: Half of State Tenders in Kenya Hide Beneficial Owners

Companies that secured over 57 percent of tenders across Kenyan ministries and parastatals kept their beneficial owners, addresses and office locations undisclosed, breaching disclosure requirements meant to curb corruption in public contracting.

Figures in the Public Procurement Regulatory Authority's (PPRA) annual report show 14,819 of 25,994 contracts were awarded to firms that failed to disclose their beneficial owners, pointing to persistent gaps in unmasking shareholders who benefit through nominee arrangements.

The disclosure requirement, entrenched through amendments to the Companies Act in 2019 and subsequent regulations issued in 2020 and 2022, was designed to expose individuals who secretly control or profit from firms winning state contracts.

The International Monetary Fund (IMF) had pushed for the law's enactment as a condition tied to loan access, part of broader efforts to align Kenya with global anti-corruption standards set by the Financial Action Task Force (FATF).

PPRA said 316 of 411 procuring entities reviewed complied with beneficial ownership disclosure rules during the period, leaving 95 entities in breach of the requirement.

PPRA Director-General Patrick Wanjuki said enforcement gaps partly stemmed from limitations in the public procurement information portal, which only supports beneficial ownership disclosure for open tenders.

Contracts awarded through other methods, including direct procurement and requests for quotations, have proceeded without such disclosure, since the portal lacks full visibility over every stage of the procurement lifecycle.

"The portal could not automatically prevent the progression or completion of procurement processes where beneficial ownership information had not been disclosed," Wanjuki said, adding that compliance depended largely on manual adherence by procuring entities.

The report also found the top 10 suppliers were collectively awarded 20 contracts worth KSh93.09 billion (approximately $720 million), accounting for 42 percent of the total value of contracts reported during the period.

Open tender accounted for 73 percent of the total contract value, while the remaining 27 percent was procured through other methods, including direct tendering, according to the report.

Under the Companies Act 2015, a beneficial owner is defined as anyone who holds at least 10 percent of a company's shares or voting rights, or who otherwise exercises significant control over it, whether directly or through intermediaries.

The gaps extended beyond ownership disclosure, with PPRA also flagging incomplete contract information, delayed reporting and inaccurate data entries across the procurement portal.

PPRA chairman Mwangi wa Iria said the regulator is pushing for a review of the Public Procurement and Asset Disposal Act, 2015, to grant it administrative sanctioning powers so that noncompliance carries consequences.

The Business Registration Service has also pushed companies to file beneficial ownership registers separately, though uptake there has remained similarly slow, mirroring the challenges evident in public procurement.