3. Public Procurement

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3.1 Government Policy on Public Procurement

The public procurement policies of the surveyed countries can be classified into two distinct groups:

  • in Malawi, Tanzania, Zambia and Zimbabwe, public procurement is based upon the application of ‘objective’ competitive factors such as price and quality
  • In Botswana, Namibia and South Africa, procedures have been introduced to favour certain categories of small and/or local business in the tendering process.

3.1.1 Botswana

In Botswana, the vast majority of central government contracts are placed through a tendering process supervised by the Central Tender Board. Suppliers of goods and services to government usually succeed in their tenders due to the weighing of competitive factors such as price, reliability and quality of goods or services. However, the government’s public procurement policy also seeks to encourage local small and medium sized manufacturing enterprises through the Local Procurement Programme (LPP) which was introduced in April 1997, to replace a Local Preference Scheme. In terms of the LPP, up to 30% of Government’s annual budget for supplies are reserved exclusively for local SME manufacturing enterprises (irrespective of the nationalities of the owners of the enterprises). In order to benefit under the Programme, a SME must achieve 25% local content and meet at least two of the following criteria:

  • The firm must have an annual turnover of between P200,000 and P5,000,000 and be licensed under the Industrial Development Act.
  • The firm's total employment must not exceed 200 (two hundred) people, and the total investment in plant and machinery must range between P50,000 and P5,000,000.
  • There must be at least one other completely independent firm,

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    which produces the same products as those of the firm. The directors, as well as the shareholders of the firms, must be different

3.1.2 Malawi

Malawi does not have an Act regulating procurement, and there are a lot of allegations of corruption in connection with procurement procedures. The Government policy on public procurement is that of competitive tendering system using the Central Tender Board, which reports to the Ministry of Finance. Ministries/Departments are allowed to undertake their own procurement for contracts of up to a maximum of K100 000. Anything above that figure must go through the Controller of Stores who also has a limit, beyond which the Controller of Stores goes to the Central Tender Board. The process of tendering used by the Central Tender Board is extremely transparent.

3.1.3 Namibia

The Tender Board Act 1996, 16 of 1996, outlines present public tender procedures in Namibia. Prospective tenderers are invited to tender by the Tender Board (either directly or via a newspaper). The most significant changes occurring since the implementation of the new Tender Board Act are the inclusion of the affirmative action preference. This has gained further momentum by the introduction of the Affirmative Action (Employment) Act, which now only requires the President's signature to be promulgated, and which is targeted at firms operating in depressed areas and at programmes which support the training and general upliftment to women, the disabled and persons previously disadvantaged. This preference is probably designed to increase the number of tenders from SME.

The tender documents enquire about the size of the business, the involvement of foreigners and the particulars of affirmative action programmes undertaken. This and other criteria play a role in the consideration of the tender. A detailed central government tender board preference scheme breaks down the respective preference

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given to the different factors.

The informal sector is excluded from public tender. In the construction industry, small entrepreneurs are forming consortia to muster some competition against foreign firms. Namibian firms (small or large) face problems of competition from South African and other foreign suppliers/contractors. The South African firms benefit from their own Government’s incentives (especially the General Export Incentives Scheme -GEIS-, and the Regional Industrial Development Programme -RIDP) which produces an uneven playing field.

3.1.4 South Africa

Procurement procedures require that, as a general rule, government and public bodies must invite tenders for all contracts entered into by them. In order to redress the imbalances of the past, the government has sought to adjust the public procurement practices of central, provincial and local governments, and of parastatals, in order to facilitate the granting of a certain proportion of public contracts to black-owned or controlled enterprises, and to encourage small-business tendering for such contracts. In this context, the efforts of the Public Works Ministry and other government and/or provincial departments within the Reconstruction and Development Programme ("RDP") framework, to address unemployment through labour-intensive construction, are also relevant to the small-enterprise sector. Such tender procedures therefore require that attention must be given, wherever practically possible, to the involvement of small and/or emergent (sub)contractors in procurement contracts.

The Department of Trade and Industry also encourages co-operation between relevant government departments, as well as private-sector institutions and non-government organisations, in order to promote small businesses and to mobilise training and mentoring support for small contractors, so that they are able to tender successfully. It is recognised that a concomitant effort is also required on the part of such small contractors to raise their standards to an acceptable level of performance in order to ensure

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value for procuring agencies.

3.1.5 Swaziland

Information regarding public procurement in Swaziland is not available, except that a 10% local preference on public tenders is allowed.

3.1.6 Tanzania

Government policy on public procurement is that all procurement is done through the Central Tender Board which is under the Ministry of Finance. Requests from ministries and government institutions for the supply of goods and services are normally forwarded to the Tender Board which advertises the tender in local newspapers for individual local and foreign companies to apply. Current government policy does not say anything about the respective merits of awarding tenders to small/large contractors or local/foreign contractors.

3.1.7 Zambia

The policy of the Zambian Government on public procurement is set out in the Zambia National Tender Board Act, Cap 394. This Act establishes the Zambia National Tender Board which is empowered, among other things, to formulate rules and regulations governing the procurement of goods and services for the Government and parastatal bodies and to regulate the procedure relating to the award of contracts on behalf of the Government and parastatal bodies. The Board exercises its functions through various tender committees (the central tender committee, the provincial tender committee, the parastatal tender committee and the ministry tender committee). Applications are invited by the relevant tender committees for the supply of specified goods and services. Tenders are initially scrutinised by the tender committees for completeness, and thereafter they are evaluated as to their merits. There appear to be no regulations, which favour enterprises on the basis of their size or local ownership. Suppliers to government of goods and services usually succeed in their tenders

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due to market factors such as their proximity to the supply point, or other factors related to the competitiveness of their bid.

3.1.8 Zimbabwe

The report on public procurement in Zimbabwe suggests that procurement is based purely upon competitive factors such as price and quality.

Tendering procedures for the public procurement of goods, services or construction work are laid down in the Procurement Act of 1998. These procedures require that tenders must be submitted in writing and sealed in an envelope or other container. The procuring entity is required to accept whichever valid tender offers the lowest price, unless other criteria are specified in the solicitation documents. The bidder is also required to furnish, as part of his bid, a bid bond of ZW$10 000. This must be a cash deposit, a guarantee from a bank or a bond issued by an insurance company or bonding company and it must be deposited by the bidder with the relevant council.

The procuring entity may also require suppliers to pre-qualify before they participate in procurement proceedings. The procedures require that suppliers should possess the necessary professional and technical qualifications and competence, financial resources, equipment, facilities, personnel and experience to perform the procurement contract. Suppliers should also have paid all taxes, duties and rates for which they are liable in Zimbabwe.

3.2 Efficiency of Government Payments System

Government payments systems are generally regarded as efficient in the surveyed countries, except in Botswana, Zambia and Zimbabwe.

In Botswana, the inefficiency of government payment systems has provoked much controversy. Some research studies have suggested that delays in receiving payment on government contracts is a significant factor in the failure of many small businesses. Procedures were changed approximately two years

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ago, with a view to improving matters, but the Ministry of Finance and Development Planning has recently acknowledged that government departments have not properly implemented the new procedures, and that little improvement has been made. At the time of writing this report, a further attempt is being made to improve matters.

In Malawi, it is reported that Central Tender Board will only call for tenders when the Ministry of Finance has assured it that funds for that purpose have been committed. Once the tendering process has been complied with and a contract awarded, there are no problems of payment by the Ministry of Finance.

In Namibia, the government payment system is regarded as reliable. The government payments system in South Africa is reported to be generally efficient, although practical differences between various departments and geographical locations are apparent. In Tanzania, there has been a big improvement in the efficiency of the government payment system despite the requirement that all payments have to go through Central Tender Board for Certification, and are then passed to the computerised central payment system where all the Ministries and government institutions have a radio link to the central procurement office. It can now take a maximum of 24 hours from the date payments have been approved to their being ready for collection.

In Zambia, the payment system for the supply of goods and services to Government is reported to be generally inefficient and in some cases suppliers are not paid for over a year. Similarly, in Zimbabwe the government payment system is also inefficient due to the centralisation of the paper work. All payment for any work is carried out in the office of the Minister of Finance, which is overloaded. Decentralisation is an option being studied, whereby each ministry would handle its own paperwork.

© Friedrich Ebert Stiftung | technical support | net edition fes-library | November 2000

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