Gatwiri Kithinji is an award-winning entrepreneur and the managing director at HMG Works Ltd.
The Karatina University alumna has made a career out of winning government tenders.
She was recently interviewed in the Business Hour Kenya podcast, and this is her journey as told by WoK:
How did you get into the tendering business as a young entrepreneur?
Before co-founding my business, I was a banker at GTBank Kenya. There, I learned the ways of the corporate world and the government.
I felt the urge to work with the government and NGOs, so I looked for people in my corporate banking portfolio who were already working there.
They advised me that the best way to work with the government was through the tender system, and I settled in well.
The perception in Kenya is that tenders are awarded to the big guns and their advertisement is just a formality. Is this true?
This is a total misconception Kenyan youths have about how tenders work. One of the things the government has done is making sure that they pool youths into the tendering system.
There are various agencies that protect young people working with the government. One of them is the Access to Government Procurement Opportunities (AGPO) program.
As a young entrepreneur, you are protected by AGPO in terms of the tenders you can apply for. All you need is the AGPO certificate, which covers the youth, women, and PWDs.
When applying for a tender, attach the certificate, go through the technical requirements and legal trading documents that are required for you to trade with the government, and you’re good to go.
There are no favors.
Of course, you also have to talk to people, because business is a social culture. That’s how you win tenders.
Must you know people in high places to connect you with the tender?
Winning a tender is like seeking power. You know power has godfathers. The moment you want to ascend into power, you have to look for people with the instruments of power.
The first things you need are the legal documents that will allow you to trade with the government. From there, now look for the godfathers.
What about those who don’t have these connections/ godfathers?
You do not need to have the connections per se.
The moment you pass the technical test, pick an organization you would like to work with and seek the procurement officer or accountant of that organization.
You have to then create your own cartels in these organizations. Remember that power is not given. You have to take it.
What do you mean by the term cartels?
Let us call them linkages.
Tell us your journey in terms of the first tender you applied for.
It was hectic. The first thing was that I needed to come up with my own company if I wanted to trade as an independent entity. The process of acquiring these documents from the government is not cheap.
I registered my company in June 2019, immediately I quit my corporate job. But it was not until five months later that I won my first contract of sh 3,900. I made a loss, but I was happy because I was making progress.
Today, I am comfortable with where I am. The numbers are okay and I am looking to grow further.
As a young person, how does one get the tender documents and the required paperwork?
I will start with the paperwork. You’ll need a certificate of incorporation, a tax compliance certificate, and the AGPO certificate which then places you in favor as a young person who is trying to work with the government.
You’ll also need to have a business permit and physical premises.
From there, you’ll need to have a very keen eye for detail when it comes to applying for tenders because failure to follow simple instructions can easily take you out of a good deal.
How do you finance the tenders?
For me, it was difficult raising money when I was starting. What did I do? I constituted a board of people with financial muscles to support me because I had the ideas and the clients.
Besides private funding, there are avenues to fund your tender as a young person. One of them is through the banks. For me, the banks have been very supportive in terms of the short-term loan facilities they offer to young people who are in the tender system.
If your account shows traction that you have regular clients and cheques coming in, they can give you a 90-day facility loan.
But approaching banks is not easy, and it calls for plenty of consistency as they’ll want to see what you’ve been doing. If you are not consistent, they will not give you loans.
When doing your research, what are the things you consider when determining the best tender to apply for?
The first thing I look at is the credit days that the organization is asking for. Bills that go past 90 days can really be a headache.
Secondly, are the credit days really warranted in terms of the profit margins I am going to make out of the contract?
For instance, if I am making ksh 100 000 profit, it does not make sense for you to stay with my money for 90 days.
Comparing corporates and the government, which tenders are safer for a young entrepreneur?
Any serious entrepreneur can never refuse to do business with the government, because it is the biggest driver of the economy.
On the issue of security, the government will always pay you even if it delays for years. However, if a private entity falls, there is no security to back you up.
For me, when it comes to the private sector, I target high-quality clients because they are stable. Most of them, especially NGOs, pay within 30 days.
However, having a mixture of small, big, private, and public clients neutralizes the risk that comes with having one stream of clients.
Do you think there are tenders that people should stay away from?
Absolutely. Capital-intensive tenders are not ideal for young entrepreneurs. For instance, going into construction can hurt you easily.
However, there are many jobs that the government has opened up for young people, such as the supply of stationery, branding wax, t-shirts, mugs, etc.
These come with very heavy budgets but are good avenues and will not give you a lot of headaches. It is better to do small projects and accumulate your money slowly.
How did you make your first million?
I remember it was a contract I did for a vocational and technical Institute. I made it within my first year of operation. It was very exciting.
