Sh200bn tenders offer youth firms a shot in the arm

Most youths have often shied from going after the Sh200 billion worth of tenders reserved for them. Not so Steve Wambua. Whereas his peers have opted to give this opportunity a wide berth, he has taken the bull by the horns and is today earning a tidy income for himself, so much that he has been thinking of taking on the big boys in the ‘tenderpreneurs’ world. 

Since it became public policy for at least 30% of government business to be reserved for young people, Mr Wambua, 27, says he has appeared before numerous tendering committees and each time he is baffled by the opportunities that are going to waste as many youths cry over unemployment. 

His introduction into the world of bidding was accidental. Like many youths, once he finished his undergraduate studies in 2011, he walked from office to office, CV and degree certificate in hand in search of formal employment. He says his mindset back then was that having walked into the job market with his Bsc Biotechnology degree from the University of Nairobi, the world owed him.   

It took a few months to disapprove this. “The realisation was like a kick in the gut and I will forever be grateful that I didn’t waste a lot of time knocking on more doors,” he says. His mother had just registered Jolive General Contractors and incorporated him as a director alongside his elder sister and her husband.  “She was one of the most entrepreneurial-minded people I have ever known. She always emphasised that if you have a particular set of skills there is no reason why you should look for employment, make a lot of money for someone else when you could earn it all,” he says.

And so he took her advice and delved into the family business. On this day, he had just come from overseeing some road maintenance works in Western Kenya after winning a county government tender.  “I had to be there to supervise the work,” he says, adding that it was a lesson he learned the hard way. A few months after the company was registered, he explained, they won a contract to supply building stones for a multi-million shilling church construction site in Mombasa.  

“I was tasked with getting stones at one of the famous quarries down there. But instead of going personally, I called some transporters and asked them to go to the site and ferry 900 pieces. I then went about making merry. The trucks got to the construction site very late at night and I was woken up very early the next morning by phone calls complaining about the poor quality of the stones. Sh40,000 went down the drain just like that,” he explains.

Looking back, he says the lesson has served him well. By supervising the work, he ensures that it is done to the client’s satisfaction and in turn ensures that the company is in a better place to clinch the next tender. 

 

Vetting is no walk in the park

“Before your bid is considered by the organisation’s tendering committee, some of the key documents that the prospecting bidder is expected to present are references by three previous clients. If they find them to their satisfaction, you are awarded three points,” he elaborates.

The next phase of the vetting evaluatesregistration and tax compliancy. “Nobody wants to deal with briefcase companies,” notes Mr Wambua. The committee then looks at the technical competence of the company to perform the work and, if based on the evaluation of all the key areas the firm garners more than 70 %, the bid goes to the final stage where the money quoted is considered.    

One of the biggest reasons that perhaps scares the youth from participating is the perception created by media reports on cancellation of various tender awards for irregularities, painting the whole process as inherently prone to manipulation. But even though Mr Wambua acknowledges that the process is not flawless – sometimes officials of the tendering committees ask for as much as 30% of the tender price to guarantee a win – he says that there has been a slight improvement. 

“Nowadays it is harder to cheat the process. They have come up with a formula to ensure fairness. It has not completely made the process free from manipulation, but it has instilled some level of confidence,” he points out.

There is therefore no reason why youth can’t fight for tenders with other seasoned players, he says. Besides, Mr Wambua adds that with the introduction of youth and women certificates by the government, they stand a better chance of winning the bids.

But according to the entrepreneur who now runs the company alone after his sister and husband left the country, the biggest problem that faces young people is ignorance. “It is unfortunate many youths don’t know the opportunities out there. When I go to submit tender documents there are few of us,” he says. That most young people don’t have mentors has also not helped them. 

To ensure that he gets the right advice, he says, he always hangs around older people. That way, he learns from their experience. Often they retort “when I was young, I wish I did this and that,” he observes. 

Besides the imperfect tendering process, he has had to contend with putting up with clients who are reluctant to pay dues in full. Government institutions are most notorious for defaulting on payments because often the pay is dependent on the prevailing political environment. However, he explains it is always best to solve the problem amicably because when lawyers are involved, they often end up cutting a big chunk of the money recovered.

Mr Wambua adds that having adequate working capital to sustain a project once he secures a tender contract is also a challenge. 

He says that even though banks are always ready to finance LPOs provided there is security, he has learned that you should have at least 40% of the required capital when signing a tender contract. “If you don’t have guaranteed capital, the moment you sign a contract you run many risks including auctioneers disposing of your property to recover the money you owe debtors,” he says.

 

The best piece of advice he can give any youth wishing to venture into the business is the need to network.  “If you are going to start, start with a small capital. But most importantly, you need to look for people with money. Money looks for money.”

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