14/04/21
We, Civil Society Organisations are of the view that Public Procurement is an important tool for achieving socio-economic development in Zambia. It is one of the most important components of expenditure by the Government of Zambia as it accounts for an estimated 10 percent of the Gross Domestic Product (GDP) and should therefore be based on the principle of “value for money” resulting in the best quality of goods and services.
We are also of the view that public procurement should lead to sustainable improvement in consumer welfare in Zambia. Key to achieving consumer welfare is the consideration of how procurement processes within vital sectors such as education, health and various social services and social protection programs play a vital role with regards to livelihoods options for the ordinary citizens of Zambia. Yet, the Auditor General’s (AG) annual report has shown continued misuse of public funds as it discloses issues such as failure to follow procurement procedures, wasteful expenditure and undelivered materials among other issues, particularly within these sectors. The last three AG reports highlight over ZMW34 million in undelivered materials alone. This money has however not been recovered.
Despite laws and regulations being in place to guide public procurement, there are still a number of challenges that weaken our public procurement system and result in loss or wastage of resources. Some of the challenges CSOs have observed are:
Anti-Competitive Bidding: Anti-competitive bidding seen in abuses such as inadequate timelines, no compulsory publishing of tender results and restrictive tendering practices. An efficient procurement system also needs to be competitive as competition will lead to the production of better-quality products and services for the average Zambian citizen at low prices. According to research conducted by the Consumer Unity and Trust Society (CUTS), the procurement process is marked by significant departures from competitive bidding which is seen through the absence of standard contracts and tender document, absence of public access to tender documents and pre-qualifying criteria, short timelines and no enforced publishing of tender results. Therefore, there is an urgent need for the government to follow transparent open procurement procedures that are aimed at ensuring fair conditions of competition for suppliers.
Procurement of goods and services at exorbitant prices: The government procuring goods and services at exorbitant prices above the market value, implies that despite adhering to the correct procurement procedure in accordance with the law, goods and services are being procured at highly inflated prices that do not reflect value for money. Consequently, the inflation of prices by suppliers deprives the country of resources that could be directed to other projects and programs that require government funding.
Limited legal Framework: Despite the various laws and regulations that lead the procurement system in Zambia, the system needs keen policy coherence which is critical in ensuring the sound management of public finances whilst maximising impact for consumers or the Zambian citizens. For instance, there is policy incoherence in terms of public procurement being aligned to provisions for beneficial ownership disclosure provided for the 2017 Companies Act which is vital to protect public funds from corrupt practices of politically exposed persons and public officials.
Additionally, there is the aspect of ineffective implementation of existing laws for instance implementation of sanctions provided for in the Public financial management Act and the gaps in institutional strengthening, especially when it comes to sub-national Ministries and Spending Agencies (MSAs).
Lack of Transparency and Accountability: The procurement system is hindered by poor procurement procedures which lead to corruption and lack of transparency when procuring goods using public funds. However, issues of non-compliance in procurement regarding procedures, rules and regulations have also led to fraud and misuse of public funds in the procurement process. The Auditor General’s annual reports reveal non-compliance of procurement procedures which is seen in the undelivered goods, misuse of public funds and wasteful expenditure. Some weaknesses in law that have continued from the repealed 2008 Act, for instance, limited independence of Zambia Public Procurement Authority (ZPPA) prevents the authority from functioning autonomously and this makes it difficult to have a transparent procurement system.
Limited monitoring Mechanisms: With the increase in public sector expenditure, there is a need for accountability and transparency in government procurement as it involves huge sums of money as earlier mentioned. Hence the need for the development of monitoring mechanisms in procurement activity as it is faced by procurement fraud. According to research conducted by Transparency International Zambia (TIZ) a key challenge with the public procurement system in Zambia is the inherent institutional framework weaknesses, which further pose challenges of weak oversight and internal control mechanisms. This allows for bureaucratic corruption where duty bearers manipulate the procurement system leading to the government losing huge sums of tax payers’ monies and revenue.
Recommendations
The law should require that the people found wanting from the misuse of public funds are punished stiffly. Also, the government must address issues of competition by broad basing of bidders through satisfactory publicity on procurement opportunities or objective pre-qualifying criteria for bidders, fixing timelines for processing the bids to obviate interference in the procurement process. Additionally, the government must ensure that it sources and procures quality affordable goods and services from suppliers to ensure value for money thus significantly reducing the misuse of public funds. The government through the Ministry of Finance, must strengthen and come up with monitoring mechanisms such as good procurement procedures and internal control systems and the development of a fraud prevention programme to reduce fraud and non-compliance.
There is a need to keep pushing the government to expedite the electronic Government Procurement system (e-GP) to be rolled out countrywide. This will promote open procurement and allow for stakeholders to monitor and participate in the procurement processes. The Zambia Public Procurement Authority needs to show commitment to the e-GP implementation by ensuring that the Procurement Entities within the country have the capacity to keep the e-GP system fed with relevant data to promote open contracting. Open Contracting is the practice of publishing and using accessible procurement cycle information to ensure that vast sums of public money are spent honestly, fairly, and effectively. Transparency in open contracting transcends at each stage of the procurement cycle, from pre-tendering to service delivery. As CSOs, we, therefore, recommend that since each stage of the public procurement process is vulnerable to corruption and mismanagement, it follows that each point in procurement must be opened up for analysis and reform in order to enhance the integrity, fairness and efficiency of public contracting and procurement.
Furthermore, the Government must ensure policy coherence when it comes to public procurement in the country for the appropriate management of public finances while maximising impact for citizens. The government must also develop provisions in the regulatory and legal framework to adequately enforce as well as promote accountability and transparency. Finally, the government must foster the engagement of citizens and Civil Society Organisations (CSOs) in procurement oversight. We would like to commend the Government for progressively improving the legal framework guiding public procurement, for instance, the positive provisions in the new Public Procurement Act No. 8 of 2020 such as the piece indexing which if implemented is key to value for money and reducing the practice of over-pricing projects. However, there is a need to ensure that this is indeed implemented. Public funds should not be abused but used as a tool to deal with Zambia’s developmental challenges and achieve poverty reduction and economic development. There is a need to work together as stakeholders to ensure that the current oversight and control mechanisms in the public procurement system are strengthened. This can only be done by holding to account for their actions public officials that are responsible for certain decision making in procurement processes.
This statement is endorsed by:
Alliance for Community Action (ACA)
OXFAM Zambia
Transparency International Zambia (TIZ)
Consumer Unity and Trust Society (CUTS)
This statement has been made available to you by:
Njavwa Wilanji Simukoko
CUTS Communications & Advocacy