By EDGAR BRANDT, 2 MAY 2013
Windhoek — Despite a significant increase in public expenditure, public procurement has not brought about the desired outcomes, such as increased employment, improvement in the distribution of economic opportunities, enterprise development and economic growth and development, the Minister of Finance, Saara Kuugongelwa-Amadhila, told a Tender Board meeting held recently in Windhoek.
According to the finance minister the desired outcomes have not been reached for the most part because of leakages out of the economy. “Many tenders are awarded to foreign companies even where local companies have the capacity to perform these tenders. Goods and services procured under these contracts are sourced from outside, and too many expatriates perform work on the projects under these contracts even where locals have the skills to do so. So resources leak out of the Namibian economy as a result of this and opportunities for learning and enterprise development are forfeited,” said Kuugongelwa-Amadhila.
She added that setting tenders aside for local companies and special target groups such as women and youth for economic empowerment could address these challenges.
Additional tools recommended by Kuugongelwa-Amadhila to address these issues include a policy that some tenders should require mandatory sole contracting of Namibian companies and SME‘s, that there should be requirements for local participation in all companies to be awarded tenders and that there should be a mandatory requirement for sourcing of supplies and labour services from within Namibia.
With specific regard to procurement, the finance minister noted there is a significant increase in expectations from the public for the system to help the country overcome the challenges of unemployment and inequities and to support sustainable economic growth. With public expenditure having increased significantly in the recent past, the government’s role in the economy has grown much bigger. “We should also put in place monitoring and evaluation systems to ensure that compliance with bidding commitments are enforced and that the impact of the procurement programmes is evaluated. Companies that fail to honour their bidding commitments should be held to account,” said Kuugongelwa-Amadhila, adding that the current allegations of corruption and court challenges against the decisions of the board do not augur well for the public image of the board.
Also, she encouraged the Tender Board to look at ways to delegate the adjudication of some tenders to state-owned enterprises, local authorities and regional authorities.
She also revealed that a dedicated procurement reform project office has been set up and recruitment of staff is in progress. “The office will help drive the reform process including assisting with the drafting of the regulations for the new (tender) law once passed, and operational guidelines, as well as the setting up of the procurement advisory office and the new secretariat. I encourage the board to ponder on all the challenges and ways and means of overcoming them,” concluded Kuugongelwa-Amadhila.
by Nyasha Chizu
May 6th, 2013
Public procurement is generally recognised as reactive, responding or processing purchase requisitions as they are raised, thereby relegating the activity to a clerical level.
This is mainly because the public procurement systems are very complicated and are very difficult to innovate for many reasons.
Some of the reasons could be lack of knowledge and expertise of the leaders, rigidity causing failure of the system to adapt to ever-changing business environment. Despite all these limitations, public procurement needs to be efficient to support public finance management systems. How then do we maximise the efficiencies of government budget execution?
A budget is a plan for a specific period that allocates resources to departments and divisions of the state in order to acquire the required goods and services. It is, therefore, a tool for allocation of funds to accomplish national or organisational objectives. In order to maximise the efficiency of budget execution, public procurement must minimise procurement costs through centralised decision making and decentralised execution.
To show innovation, public procurement must facilitate procurement of commonly used supplies by establishing annual unit price contracts for products in continuous demand.
This inevitably raises efficient budget execution when economies of scale achieve savings at a national level. Institutions such as hospital and local authorities have commonly used supplies that can be procured using this system.
The move, if adopted, will not only save on procurement expenditure itself, but also set a budget saving pattern for all government agencies promoting best practices.
Spooling of commonly used supplies would ensure that the public procurement system puts in place appropriate quality management techniques. Lower priced acquisition or reduced budgets will not compromise quality given the implication of poor quality on a national supplier. The volume of the business becomes attractive that no sane businessman would want to lose the contract due to compromised quality.
While the objective of public procurement is to improve efficiency, the systems need to be transparent and fair. There is generally a conflict of efficiency and transparency in public procurement. Private sector procurement systems are generally regarded efficient because of the elimination of bureaucractic procedures that characterise public procurement.
In the private sector, decisions are made fast and buyers are made accountable for their decisions. It might, therefore, be necessary to train in the public sectors to acquire private sector procurement methods for the efficiency of public procurement systems.
Training alone will not be enough, appropriate systems that promote ethical behaviour are necessary. Public procurement officials need to subscribe to a professional organisation recognised by the government so that moral of buyers is upheld.
This is necessary because public procurement requires that personnel are ethical, as it operates amidst commercial interests of numerous bidding participants. Abiding to a set code of ethic will then be mandatory and appropriate punishment for offenders will be enshrined in the system.
To show innovation, public procurement must facilitate procurement of commonly used supplies by establishing annual unit price contracts for products in continuous demand
Procurement can, therefore, assume a leadership role in the efficient use of budgets through adoption of strategies that minimise costs of inputs in the public sector.
By ESTHER MSETEKA
May 6th, 2013
THE Economics Association of Zambia (EAZ) has advised Government to revise the oil procurement process by making it more transparent and efficient.
Last week, Government increased the price of petrol and diesel by KR1.75 (K1, 750) per litre and KR1.63 (K1, 630) litre respectively while kerosene has been adjusted upward by KR1.68 (K1, 680). But, EAZ president Isaac Ngoma said fuel, being a key factor in production and delivery of goods has a significant bearing on the cost structure of consumer prices. Mr Ngoma said there is need to curtail middle-men in the procurement process of for the commodity to be bought at a reasonable price.
“EAZ is of the view that the oil procurement process must be revised to make it more transparent and efficient so that we can procure the product at a good price from credible sources without middle men being involved,” he said.
Mr Ngoma said this in a press response in Lusaka recently. He said the association stands to support economically sound measures that may seem to hurt the nation in the short-term but have pronounced benefits in the long-run.
He said Government has explained the rationale behind the increase, thus the removal of the subsidy which has been in place for a long time.
“We all must know that such subsidies are unsustainable for a small economy like ours and has for a long time imposed significant pressure on the treasury.
The meager resources available are much needed to meet other social needs like in health and education,” he said. Mr Ngoma, however, said due to the raise in fuel prices there is an anticipated increase in the prices of goods and services while the cost of transport will directly affect enterprises and the travelling public.
Mr Ngoma said ultimately, the effect will impact on the inflation rate as price adjustments are inevitable.
What’s a cash-tight government to do when it wants to modernize a hospital, build a railway, or expand the power grid to reach underserved areas? It might explore outside, private sources of financing—that’s where public-private partnerships (PPPs) come in. The acronym has a promising ring to it, yet going back to the 1970s, its impact has been mixed. At their best, PPPs can provide rapid injections of cash from private financiers, delivery of quality services, and overall cost-effectiveness the public sector can’t achieve on its own.
But at their worst, PPPs can also drive up costs, under-deliver services, harm the public interest, and introduce new opportunities for fraud, collusion, and corruption. Our experience at the World Bank Integrity Vice Presidency is that because PPPs most often are geared toward providing essential public services in infrastructure, health and education, the integrity risks inherent in these sectors also transfer to PPPs.
On April 17, the Integrity Vice Presidency convened a public discussion on corruption in PPPs (pdf) bringing together finance, energy, and fairness-monitoring perspectives. Looking at the landscape, in the last eight years, 134 developing countries have implemented PPPs in infrastructure, and in the last decade the World Bank has approved some $23 billion lending and risk guarantee operations in support of PPPs.
Opening the event, World Bank Managing Director Sri Mulyani recounted examples from her previous life as Indonesia’s Minister of Finance. She reminded the audience that while fraud in PPPs can seem abstract, the quality, safety, and human costs are very real—such as when a bridge crumbles after only five years, though it was supposedly built to last 15.
CBS News State Department correspondent, Margaret Brennan, moderated the discussion and did not let panelists get away with being too polite. She tried to pinpanelists (pdf) down on which countries consistently faced the biggest corruption problem, and how we can fix it. As my colleague Rashad Kaldany, Vice President and COO at IFC said, “This happens everywhere in the world, all countries, bar none.” The problem is global, which is why the solutions also should be similarly global and applicable in diverse situations.
If there was a theme to the discussion, it was the desire to level the playing field with global standards on PPP transparency. Roger Bridges, president of Knowles Consulting in Canada, suggested the World Bank design a certification system for transparency and governance. Receiving that certification would be completely voluntary, but also demonstrate a credible commitment and capacity for internal governance. Roger said that ultimately the certification could be rolled into an overall grading system for PPP participants. Participants might, for example, receive 10 out of a possible total of 100 points for being certified. A carrot—not a stick.
Rashad suggested an initiative in the integrity area modeled on the Equator Principles. Start with a few, major international players who agree to standardized practices and principles in PPPs. Once established, media and civil society groups can help mobilize others to sign on, gradually expanding adherence to the principles until they become a broadly accepted norm of conduct.
Establishing new norms sounds like it could take forever, but attitudes and norms can change faster than you think—Paul Clifford said in the past 8 to 10 years he has seen “difficult conversations” with clients about conforming to the Equator principles’ environmental and social standards become accepted as “automatic.”
Corruption is deliberate, serious and bad business. Based on the discussion yesterday, I believe there would be broad support for what I like to call Global Integrity Principles. PPPs are inherently opaque and risky because they are often long-term, complex financial arrangements. Those risks can be reduced if the terms, costs, and benefits are made more understandable and accessible to governments, private parties, and consumers.
The questions we want to address at the World Bank are, specifically: How should integrity due diligence be adapted for PPPs? What do integrity principles in national PPP laws look like? What should regulators do to review concession and other related arrangements for red flags? Are additional disclosure requirements needed to flush out politically exposed persons? And finally, how do we obtain more effective public scrutiny of PPP deals throughout the PPP project cycle?
No doubt, we have a number of difficult and complex issues to sort out. The way forward is to embrace optimism, even though in 1911 Ambrose Bierce described it as an intellectual disorder.
- Public to bear costs of state-guaranteed profits in LRT privatization (bulatlat.com)
- Public-private partnerships a winning strategy (miamiherald.com)
- PPP Law Panel: ‘The state needs the investor and not the other way round’ (dailynewsegypt.com)
- Corruption, time and indispensability (kaieteurnewsonline.com)
- Ministry of Finance promotes PPP agreements (dailynewsegypt.com)
- Japan bank targets PPP acceleration (vietnamnews.vn)
- Stephen King: PPPs need better ways to handle risk (nzherald.co.nz)
By Odidison Omankhanlen – Lagos
April 22, 2013
The Director-General, Bureau of Public Procurement (BPP), Mr Emeka Eze, has said over N420 billion had been saved for Federal Government in the last 15 months through the activities of the bureau on contract valuation.
Ezeh, who was speaking at the opening of a retreat for Chief Executive Officers in Federal Government’s Ministries, Departments and Agencies (MDAs) organised by the Bureau, in Lagos, at the weekend, explained that the said fund was recovered after valuation of contracts that were submitted by contractors, stating that the reduction in contract sum further emphasized the core value of BPP as the drive of public procurement and prudence in public expenditure.
He assured that the bureau would continue to ensure that there was transparency in the bidding process for contracts in the country, stressing that all competent contractors would be given a level playing field to demonstrate their capacity and pass through open competitive bidding process enshrined in the Act.
He explained that the BPP would continue to work hard to ensure the cost of doing business in the country was reduced through the elimination of multiple registration and pre- qualification as well as tendering process that should be increased to give chance for equal competence and capabilities.
“It is important to highlight the Bureau’s effort in promoting transparency, accountability, efficiency and fairness in public sector procurement and the Transformation Agenda of the present administration. The default procurement method remains competitive Tendering, as it is, is the surest guarantee for quality and transparency which PPA 2007 envisages. The direct procurement and selective tendering are the exception rather than the norms,” he said.
On the relevance of the retreat, the BPP boss said it was to identify the deficiencies in the 2012 budget implementation process, so that this year’s budget could be more successful, adding that the participants would also have opportunity to know the procurement process.
He noted that through similar retreats for other public officers, they were now beginning to see public funds as monies to be spent with care, and with high sense of responsibility, adding that these gains were a resultant improved budget implementation and performance in terms of project delivery.
“The benefits of the programme cannot be over emphasized because as it develops, the cost of doing business in the country would reduce through the elimination of multiple registration and pre-qualifications in the various MDAs. The quality of prequalification and tendering process should increase at the end of the day coupled with the better grouping of contractors, consultants and service providers of equal competence and capabilities,” he stated.
Ezeh noted that with the classification of contractors and consultants by the bureau, there will be increased discipline in the Federal procurement process, noting that only capable and competent contractors and service providers would become identifiable and considered for deserving jobs.
He was optimistic that the bureau was working assiduously to consolidate on- going collaboration with the World Bank, the United Nations Development Programme (UNDP), the Washington based International Law Institute (ILI) and the Federal University of Technology (FUTO), Owerri, to establish a public procurement research centre.
Also speaking at the event, Chairman, House of Representatives Committee on Public Petitions, Hon Uzor Azubuike, explained that efficient public procurement is vital to the development of the country as it regulates the developmental capital component of the annual budget.
“Contracts should not be awarded at inflated prices. We should stop giving specific contractors more contracts than they can handle.
Contractors that have records of abandoning contracts should be blacklisted. The BPP should not stop at procurement, but go ahead to monitor contracts awarded to ensure Nigerians get value for money,” he advised.
April 23, 2013
The African Development Bank (AfDB) and the European Bank for Reconstruction and Development (EBRD) are jointly organizing the North Africa and Southern Eastern Mediterranean (SEMED) Regional Public procurement Conference on Morocco on April 22-23 in Marrakesh, Morocco to launch a report on the assessment of the public procurement system of Tunisia.
The conference, which will provide Tunisia an action plan to improve its public procurement system will include discussions on public procurement initiatives, reforms and assessments in Egypt, Jordan, Mauritania and Morocco.
Key Speakers at the conference will include experts and representatives from the AfDB, EBRD, Organisation for Economic Cooperation and Development (OECD), United Nations Commission on International Trade Law (UNCITRAL), World Trade Organisation (WTO) and the European Union Delegation to Ukraine.
The AfDB collaborated with the World Bank, the European Union and the Tunisian Government to complete the assessment of Tunisia’s public procurement system in 2012, as part of the Bank’s efforts to promote sound and efficient business practices in Africa.
April 18, 2013
The size of the African surveillance market is expected to increase dramatically over the next five years, notably due to unrest affecting the continent.
As unrest and security threats continue to escalate, particularly in Northern Africa, it is reasonable to assume that there will be an increased demand for surveillance technology within the next six months, from various security forces across the region as new opportunities for companies providing surveillance solutions are being created, according to Vislink, a global company specialising in the design and manufacture of secure video communications systems.
Vislink, with offices in South Africa, the UK, USA, UAE, Australia and Singapore, said that the African military and surveillance sectors are still not mature in terms of the technology available to them and so considerable investment in this technology will be required.
“Vislink is ideally situated to capitalise upon this demand, providing the high-quality but affordable equipment necessary to deliver an all-encompassing security effort,” stated Ali Zarkesh, Business Development Director at Vislink.
Globally, the company is doing well in the surveillance and military markets – in 2011, Vislink’s activity in the military field represented 16% of the company’s total revenues and the global market for Vislink’s surveillance products currently sits at around £200 million. Vislink’s activity in the law enforcement sector, which represents 70% of total surveillance revenues, is specifically driven by the growing need for robust video surveillance.
At present, the biggest opportunities in the military and surveillance space are coming from the Middle East, Far East and Latin America, Zarkesh said. Growth in the Middle East is driven by the volatile geopolitical environment and subsequent rising trend in upgrading military communications systems and networks. Vislink is also seeing significant opportunities from coalition forces deployed around the world. These bodies require a reliable means of communication to connect foot patrols, airborne units and command centres.
North African countries, in particular, are currently investing in surveillance solutions in order to help return a level of stability to the region. The political and security situation that has escalated in the past two years has created several opportunities for Vislink in this sector.
“It is also important to consider that several other countries in this part of the world have a heavy military focus. Wide ranging budgets are allocated to the defence sector in order to secure the country’s borders and protect its inhabitants. As a result, Vislink’s main opportunities across developing regions stem from growing covert surveillance demands,” Zarkesh said.
However, the future is not all bright as there are big challenges as well as opportunities in the defence industry. For instance, the UK spends around £34 billion on defence each year, yet the armed forces have recently seen the biggest budget cuts to their sector since 1991. This presents a unique challenge in itself, with military personnel requiring the same high-quality surveillance solutions as before, but now without the premium price tag, Vislink pointed out.
Vislink specialises in the production of satellite, wireless, video and IP solutions and targets government, surveillance, broadcast and news markets. For instance it delivers news gathering tools for the media and surveillance options for the government and military.
The company recently launched its Mantis MSAT, which it claims is the world’s smallest and lightest satellite data terminal, weighing 12.5 kg (27.5 lb). “Following a successful launch, the product has been deployed by several military forces around the world,” Vislink said. The Mantis MSAT can deliver voice, video and data communications, including HD video. Initial military orders have been filled and Vislink’s MSAT terminals are currently undergoing field trials for battlefield, command centre and special operations implementations.