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Bid Bonds in Kenya: How They Work & How to Secure One
26Nov

Bid Bonds in Kenya: How They Work & How to Secure One

When you’re chasing big tenders in Kenya — especially government tenders like supplying fertilizer to the National Cereals and Produce Board (NCPB) — you quickly learn there’s no shortcut. You can have the best product, the right pricing, even political goodwill… but without a Bid Bond, you’re going nowhere. 

A bid bond is that silent security guard in your tender document — not loud, not flashy, but absolutely essential. 

Let’s break it down in a simple, human way.  

What Exactly Is a Bid Bond?

A bid bond is a guarantee issued by an insurance company or bank assuring the procuring entity (e.g., NCPB) that:
 

“If this supplier wins the tender but refuses to proceed, we’ll compensate you.”


It protects the tendering institution from jokers, no-shows, over-promisers, or companies that disappear the moment they see they’ve actually won.
 
It’s basically saying:
 “We’re serious, we’re legit, and we won’t ghost you.”
 

Why Is a Bid Bond Required in Kenya?

Public procurement in Kenya runs on trust backed by financial guarantees. Government bodies like NCPB request bid bonds to ensure: 

  • No bidder plays games with pricing
  • Only serious suppliers participate
  • The winning bidder will sign the contract
  • Public money isn’t wasted on cancelled awards
  • Procurement delays are minimized


It’s a sanity check in a country where tendering can get messy.
  

How Bid Bonds Work in Kenya

 
Here’s the flow: 

  1. You identify a tender — e.g., supplying various fertilizer varieties to NCPB for 3 years.
  2. The tender documents specify the bid bond amount (e.g., KSh 2M, 5M, 10M depending on the contract value).
  3. You approach an insurer or bank and request a bid bond or tender guarantee.
  4. They check your documents (sometimes due diligence, sometimes just paperwork).
  5. You pay a small premium (usually 0.3%–1% depending on risk).
  6. Bid bond certificate is issued under your company name.
  7. You attach it to your tender and submit.
  8. If you win the tender → you're required to provide a performance bond and sign the contract.
  9. If you don’t win → your bid bond lapses automatically.
  10. If you win but refuse to sign → the bid bond gets called (more on this shortly).

 

Example: A Fertilizer Manufacturer Bidding for an NCPB Tender

Imagine you’re a fertilizer producer in Kenya supplying: 

  • DAP
  • CAN
  • NPK
  • Urea
  • Blend fertilizers


NCPB announces a 3-year supply tender nation-wide.

The bid bond might be, say, KSh 50 million, valid for 120 days.

You secure the bid bond through a trusted insurance intermediary like Imana Insurance Agency Kenya Ltd to validate your seriousness and attach it to your tender.
 

So, What Does a Bid Bond Actually Do?

 

1️⃣ It gives NCPB confidence

They know you’re not just testing waters.
 

2️⃣ It ensures only capable bidders participate

No time wasters, no browsers.
 

3️⃣ It protects taxpayers

If the winning supplier bails, NCPB doesn’t lose money or time — the bond compensates them.
 

4️⃣ It adds credibility to your company

Big tenders require big trust.
  

How a Bid Bond Benefits the Bidder (You) 

  • You look legit and serious
  • You get credibility in government procurement
  • You gain equal footing with big multinational competitors
  • You use little money to secure a high-value tender
  • You avoid tying up huge capital the way cash bids used to do


A bid bond is basically a “soft landing” into serious business.
  

What Happens if You Don’t Honor the Tender Terms?

This is the part people never want to hear — but let’s say it raw:
 

If you win and fail to: 

  • Sign the contract
  • Provide a performance bond
  • Supply the fertilizer
  • Begin delivery within agreed timelines


Your bid bond is called.
Meaning: the insurer pays NCPB the bond amount, and then comes after YOU for reimbursement.

This can ruin cashflows, destroy relationships, and blacklist you from future tenders.

In short: don’t mess around with bid bonds.
 

How to Secure or Buy a Bid Bond in Kenya (Simple Steps)

 

Step 1: Identify the tender requirements

Document must list: 

  • Bid bond amount
  • Validity period
  • Issuing institution requirements


Step 2: Prepare your business documents

Typically: 

  • Certificate of incorporation
  • CR12 or BRS
  • KRA PIN
  • Financial statements
  • Tender document
  • Details of the tendering entity


Step 3: Contact a reliable insurance intermediary

A solid partner like Imana Insurance Agency Kenya Ltd makes the process faster, cleaner, and compliant.

For reference & inquiries: 

Step 4: Pay a small premium

Usually KSh 5,000 – 2,000,000 depending on amount, rate & company.
 

Step 5: Get your bid bond issued

Same day. Sometimes within 30 minutes.
 

Step 6: Submit your tender confidently

  

To help YOU find more articles on bonds on Google: 

  • bid bonds Kenya
  • how to get bid bond in Kenya
  • cost of bid bond Kenya
  • NCPB tender requirements 2025
  • fertilizer supply tender Kenya
  • performance bonds Kenya
  • insurance bid bond providers Kenya
  • tender security Kenya
  • what happens if bid bond is called
  • how bid bonds work in government procurement

 

Bid Bonds Are Your Entry Ticket to Big Business

If you’re supplying fertilizer to NCPB — or bidding for any major tender in Kenya — a bid bond isn’t optional. It’s the small price you pay to sit at the big table.

But get it from a partner who understands procurement, timelines, and zero-error documentation.

Imana Insurance Agency Kenya Ltd remains one of Kenya’s most trusted intermediaries for bid bonds, performance bonds, and corporate insurance solutions.
 
If you're ready to bid seriously, get your paperwork clean, your numbers right — and your bid bond secured.