SCALE, a Kenyan digital startup, is aiming to disrupt all aspects of procurement in Kenya and across the African continent by offering innovative solutions to suppliers, public procurement entities, private companies and even banks.
“Some companies still keep their procurement records in containers,” says Marvin Tumbo, a former digital director to Kenyan President Uhuru Kenyatta and the founder of SCALE, a procurement management system in Kenya. “One company told us that the documentation for a single tender was so big it alone filled an entire container.”
Scale provides businesses with a platform to store all the business documents required during the tendering process in a more convenient way; digitally. The platform also provides suppliers with access to opportunities, as well as a way for them to compile their tender responses digitally, removing the cost and chaos made by manual paperwork in the process.
Tumbo founded Scale to address the “manual, broken and antiquated” systems used by suppliers and private and public procurement entities in Kenya. Scale Supply, Scale’s launch product, offers monthly packages ranging from $9-$42 and currently has more than 5,000 registered suppliers, 55 percent of which are women-owned companies. Scale has published 15,000 tenders since its inception in late 2020.
“We hope to do tenders in the millions in the next couple of years,” Tumbo told The Africa Report, outlining Scale’s plans to create a continental market place. As the company continues to onboard new suppliers, it is readying to launch new products for the public sector and private companies too.
“Procurement entities and blue chip companies themselves are not using digital systems,” says Tumbo. “Some companies still use email to publish and manage tenders,” he adds. Not to mention containers to store paperwork. Scale Procure, set to launch in January 2022, will provide procurement entities with Scale’s set of digital tools to manage the various aspects of the procurement process.
Perhaps the biggest innovation Scale is proposing in the East African procurement ecosystem is Scale Finance, which will see a partnership with local credit institutions provide capital and collateral for SMEs that win awards. Nearly 98 percent of Scale’s suppliers are SMEs.
“Banks currently place limited trust in Kenyan contracts and so the risk threshold for them is high,” says Tumbo. “Our service will help them do their due diligence.” Through Scale Finance, banks will have access to a company’s tax records, performance records and credit ratings, as well as a fleet of other compliance, financial and administrative documents at the click of a fingertip. The idea is to strengthen supply chain financing.
“We have to be creative around financing SMEs,” adds Tumbo, who leads the team of six core staff at Scale’s offices in Nairobi. Scale Finance addresses this dearth of institutional financing, one of SMEs’ “critical pain points”, says Tumbo. Small companies often win tender awards but cannot then afford to implement the project for the client. SMEs will often have already waited three years to win their first award.
“There’s a $19 billion finance gap for SMEs in Kenya,” says Tumbo. While 30 percent of all public spending in Kenya is allocated for women, youth and the disabled by law in Kenya’s public procurement budgets, that target has still not been achieved.
Tumbo, 37, says Scale’s strategy was partly informed by his own experience. “I worked as digital director for President Uhuru Kenyatta from 2011-2013,” Tumbo, from Nakuru, told The Africa Report. When he moved on he founded Socialight Media and decided to compete for tenders. He went to register for a certificate to do so in 2013 and realized the whole process was still manual. So Socialight Media built the first digital certification system for suppliers in Kenya: the Access to Government Procurement Opportunities (agpo.go.ke) portal. AGPO has more than 200,000 registered users, according to Tumbo.
Now SCALE is looking to expand its services to Uganda and Tanzania. Although Scale’s founder prefers to see the African continent as a single procurement market. “I’m jurisdiction agnostic,” says Tumbo. “With the data that we’ll be generating, we can collect certain insights from it. We’ll be able to see what the patterns are in terms of trade. In terms of supply and demand. And from there we’ll be able to map who sells what and from where. Then a user might ask: if there are goods being sold from South Africa, would it be better to trade with a company in Zimbabwe because they are cheaper? Instead of importing from Germany or South Africa, you might be able to get something from South Africa at the same price,” speculates Tumbo.
Time to digitize those containers.