Corruption SPECIAL: Cleaning up Harare of corruption

17 Aug, 2014 - 06:08 0 Views
Corruption SPECIAL: Cleaning up Harare of corruption TENDERPRENEURS

The Sunday Mail

TENDERPRENEURS

TENDERPRENEURS

MINISTER Patrick Chinamasa has become the second successive Finance Minister to let rip at Government’s procurement system, which has morphed into as a money-spinning business for tenderpreneurs, while hemorrhaging the fiscus.

In his strongest statement yet to describe the plague crippling the tendering system, Minister Chinamasa called it “the capital city of corruption” at a Procurement Conference organised by Buy Zimbabwe on August 6, 2014.

Similarly, on February 20, 2012 then Finance Minister Tendai Biti told the Portfolio Committee on Budget, Finance and Investment Promotion that there was deep-seated rot at the State Procurement Board — a statutory body that came into being in 2001 after the enactment of the Procurement Act of 1999.

He cited the example of a company that had been blacklisted by Government for incompetence but had somehow won a tender to repair elevators at Kaguvi Building.

Again, the company failed to timeously fulfil its undertaking, forcing ministers and their staff to use a flight of stairs to scale up and down the 21-floor building.

Huge cash outlays appropriated through the National Budget are usually allocated for the local procurement of goods and services by central Government and its various departments and agencies.

Often such outlays normally attract the interest of “briefcase entrepreneurs”.

Under current regulations, for purchases that are below US$10 000, referred to as competitive quotations, only three quotations — sourced even by telephone — are required.

For purchases between US$10 000 and US$300 000, the accounting officer or chief executive officer is required to adopt informal tender procedures, where tenders are invited through the Press.

Most procurement of goods, services and consultancies falls under this category, but interestingly, such tenders are not referred to the State Procurement Board, and the permanent secretary or chief executive officer has the final say.

It is estimated that more than 80 percent of all non-salary related expenditure falls under this category.

Tenders above US$300 000 (at less than 20 percent of total non-salary expenditure) are determined by the SPB.

Despite the procurement reforms introduced after 2000, complaints of corruption are mounting.

Recently, Government was forced to cancel a multi-million-dollar tender that had been awarded to China Machinery Engineering Company for expansion of Hwange Thermal Power Station — a critical national project.

The decision came after an inordinately long tendering and adjudication process.

Government first invited expressions of interest on Hwange Thermal Power Station expansion and Kariba South Hydro extension projects in July 2011.

The decision to switch the tender to Sino Hydro, another Chinese company that was the second highest bidder for the project, only came last week.

Such delays often increase project costs and have a negative bearing on economic growth.

Plugging the loopholes

Government has, however, committed itself to reforming the system.

In a letter written by Minister Chinamasa and Reserve Bank of Zimbabwe Governor Dr John Mangudya on July 1 this year to IMF managing director Mrs Christine Lagarde, Goverment said it would make the Procurement Act more transparent.

The Finance Ministry individually intimated on the imminent review a fortnight ago.

“We have to enhance the public procurement legislation and governance structures to minimise distortions, that is, the role of middlemen and collusion (with SPB) that increases the cost of doing business and also reach out to a broader supplier base,” said Minister Chinamasa at the recent Procurement Conference.

But experts contend that any initiative to address present flows has to be holistic by dealing with all faulty aspects along the procurement chain.

Experts say that for the procurement system to be as efficient and effective as it should be, attitudes within Government and the private sector need to change, while efforts should be made to ensure that the responsible offices are staffed with skilled personnel.

Often chief executive officers and heads of organisations usurp the function from procurement professionals, thereby compromising the integrity of the process.

Dr Marian Tukuta, a lecturer with Chinhoyi University of Technology’s Faculty of Business Sciences, and Mr Fanny Saruchera, who is a researcher in service delivery, logistics, procurement and distribution management, noted in a recent presentation on challenges affecting procurement professionals that nepotism and unprofessional conduct were blighting the tendering process.

“In various developing economies, procurement (mostly public procurement) has not been viewed as having a strategic impact in the management of public resources. It has been largely treated as a process-oriented, ‘back office’ support function often implemented by non-professional staff of the buying agencies.

“Little efforts have been put to ensure that the policies and rules and the institutional framework governing the procurement system are maintained in a manner that ensures that especially public funds were used in the most efficient and economic way and that the system delivers the best value for money,” said Dr Tukuta and Mr Saruchera.

But for parastatals the problem is much deeper and more complex.

Added the experts:

“In high growth-oriented and State-owned corporations, the situation is a bit different . . . though some firms are able to attract the requisite procurement skill, it is disheartening to realise that the profession is not being fully recognised to an extent that only executives (non-procurement) would go for purely procurement issues such as supplier visits and audits, only for the sake of claiming travel and subsistence.

“State-owned corporations were reported to be ruled by individuals who are politically imposed thus lacking integrity on the selection criteria. Corruption has been identified as a major barrier in tendering especially in these State enterprises.

“Tenders to supply components to these firms were not properly awarded to the most suitable supplier who meets the requirements outlined in the tender.

“Nepotism is being singled out for reducing the level of professionalism where tenders or contracts to supply goods and services were given as first priority to friends and relatives of those issuing the tender.

Like many other public institutions, the SPB has in the past 14 years suffered massive brain drain as the economy deteriorated. Efforts are presently being made with the assistance of co-operating partners such as the Zimbabwe Institute of Public Administration and Management to train procurement personnel. But while the country’s Procurement Act through Section 30, Section 31 (tendering proceedings), Section 32 (procedure of procurement services) and Section 34 (eligibility of suppliers) is considered to be reasonably watertight, the major challenges are related to the lack of modern procurement processes, lack of an effective sound regulatory framework, increasing procurement costs, dishonest practitioners and long-standing suppliers that have gone out of business.

CHALLENGES affecting local procurement

– Technological developments – Modern procurement is now taking place online, yet many companies in Zimbabwe are still lagging behind;

– Lack of an effective and sound regulatory framework;

– Increasing procurement costs;

– Dishonest practitioners;

– An unpredictable business landscape, business instability;

– Supply disruptions; getting the right qualified and experienced people to run organisations;

– Unsophisticated management;

– Excess, unqualified staff;

– Long-standing suppliers going out of business hence strangling organisational operations.

Regional initiatives

on e-Procurement

There are efforts at regional level to improve procurement capacities.

The Common Market for Eastern and Southern Africa, with support from the African Development Bank, launched the Comesa Public Procurement Reform Project in 2002 aimed at harmonising public procurement rules and regulations, as well as building capacity of national procurement systems in the region. A subsequent project was launched in December 2004.

It is envisaged that harmonisation and standardisation will allow users of the system, especially the buying and selling organisations, to predict tender bidding processes, selection and adjudication methods, and the manner in which tenders are awarded. However, there is a much deeper problem, especially in Zimbabwe, as the e-Government programme that is supposed to bring all State departments and agencies online hasn’t taken off.

e-Government systems are key in e-Procurement, which is essentially the sourcing all goods and services online. Through this, it is possible to evaluate tenders, compare prices and effectively monitor procedures.

South Africa has been able to implement reforms and monitor procurement through such systems.

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