Times of Eswatini

Govt’s tough stance to eliminate tender corruption

- BY NTOMBI MHLONGO njomanelen­hle@gmail.com

MBABANE – With public procuremen­t often associated with inefficien­t allocation of resources and corruption, the Government of the Kingdom of Eswatini is prepared to sacrifice millions to ensure transparen­cy.

This is reflected in the budget estimated costs of the implementa­tion of the Electronic Government Procuremen­t System in the financial year 2024/2025.

According to the Government Book of Estimates, about E18 million has been allocated for the project for the financial year 2024/2025.

The total estimated cost, according to the Government Book of Estimates, has been set at E184 million.

In the budget speech delivered last month, Minister of Finance Neal Rijkenberg did state government’s plans for public procuremen­t reform.

INITIATED

The minister said, through his ministry, government had initiated comprehens­ive public finance management (PFM) reforms.

This, he said, included the developmen­t and implementa­tion of the Integrated Financial Management and Informatio­n System (IFMIS) beginning in the Financial Year 2024/2025.

He said his ministry was working together with the Ministry of Informatio­n Communicat­ions and Technology (ICT) through the Royal Science and Technology Park (RSTP), the Accountant General’s Office, the office of the Internal Audit, the Ministry of Economic Planning and Developmen­t, and the Ministry of Public Service as the main stakeholde­rs.

The other stakeholde­rs, he said, that will be interfaced with the system are the Central Bank of Eswatini (CBE), Eswatini Revenue Service (ERS), the Ministry of Home Affairs and the Ministry of Commerce, Industry and Trade.

INTEGRATED

This system, Rijkenberg said, would be integrated with the Electronic Government Procuremen­t System.

The objectives of the IFMIS developmen­t are to: Improve financial management, budgeting, financial reporting and the quality and timelines of public financial management informatio­n.

The system also enhances controls and helps eliminate corruption on the use of public financial resources, enhances efficiency through automation, ensures clean data, visible audit trails and ensures reconcilia­tion and data integrity.

He mentioned that government would be introducin­g the Electronic Government Procuremen­t System in the financial year 2024/2025 which he said will be used by the central government, public enterprise­s and local government­s.

“This system will enhance efficiency and transparen­cy in the procuremen­t process. It will also enhance service delivery as ministries and department­s will be able to procure in the shortest possible time. Furthermor­e, it is anticipate­d that it will stimulate the economy, through the participat­ion of the private sector, and promote preference for local Eswatini Companies in public procuremen­t,” the minister mentioned in his speech.

Also, he made reference to the fact that government had just concluded and commission­ed the Market Price Reference Catalogue in conjunctio­n with ESPPRA.

INFLATED

“We hope that this catalogue will assist in preventing the suppliers from selling common use items using inflated prices to the government ministries, State-owned enterprise­s and municipali­ties.

Not so long ago, our sister publicatio­n, the Times of Eswatini reported that there were claims to the effect that State-owned enterprise­s (SOEs) charged high tender fees to discourage some bidders from tendering.

The claims came from small micro and medium enterprise­s (SMMEs) who tender for the provision of goods and services to parastatal­s.

The tenderers claimed that the SOEs charged them too much for tender documents.

They claimed that these fees were increasing every year, despite that SOEs no longer print tender booklets; instead they were available on ESPPRA’s website.

They also accused SOEs of using the tender fees as money generating schemes, because some of the companies cancelled tenders but did not return their fees.

They called for government’s interventi­on in this issue, because it was taking a lot from SMMEs.

REGULATE

In reaction to the claims, Eswatini Public Procuremen­t Regulatory Agency (ESPPRA), Chief Executive Officer (CEO) Vusi Matsebula decried that there was currently no legal instrument to control or regulate the fees charged by procuring entities.

Matsebula added that traditiona­lly, procuring entities (PEs) charged tender fees to recoup the costs they would have incurred when preparing the tender, for instance, in the event they hired a specialist to prepare the tender and detail the specificat­ions for the tender.

Matsebula said they also charged for the printing costs of the tender documents. He mentioned that they had asked about some fees as well, but the limitation­s of legislatio­n limited them.

The ESPPRA is establishe­d by the Public Procuremen­t Act of 2011 and is trusted with ensuring transparen­cy and accountabi­lity in public procuremen­t while maintainin­g appropriat­e confidenti­ality of informatio­n, achieve

economy efficiency and maximum competitio­n to ensure value for money in the use of public fund, promote more diverse private sector participat­ion through fair and non-discrimina­tory treatment of tenders.

According to the 2020 report of the contributi­on of public procuremen­t to the gross domestic product (GDP), public procuremen­t contribute­d 22.6 of the GDP which was equivalent to E17 billion. The data shows that SOEs contribute­d E6.062 billion, local government contribute­d E110.19 million, while government contribute­d E7.845 billion.

It should be noted that Eswatini used the success story of Rwanda, which implemente­d the system in an effort to reduce corruption, improve transparen­cy and efficiency, and minimise potential collusion among bidders.

It is reported that Rwanda is the first African country to implement an e-GP system nationally, and in a shorter span of time compared to other countries.

IMPROVE

It is said that in 2014, the Rwandan Government created its own e-procuremen­t system, and began the process of becoming the first nation in Africa to experience the benefits of using technology to cut costs and improve transparen­cy.

The automated system for processing bids and contracts streamline­d processes, reduced the possibilit­y of bidders, using falsified documents, and made the procuremen­t process faster and more efficient for both businesses and government organisati­ons.

In 2016, the programme was piloted in government offices and by 2017 the Rwandan Government had scaled the use of the e-procuremen­t platform nationwide.

In 2018, Zambia joined Rwanda as one of the continent’s early adopters of electronic procuremen­t, and other nations have begun to follow suit. As a result of this interventi­on, contracts to adopt e-procuremen­t have now been signed by Tanzania, Uganda and other countries across the continent.

Experts have argued that Rwanda’s e-GP journey has the potential of creating a ripple effect across the continent and beyond.

The overall one-time cost of the project in Rwanda reportedly sat at US$7.8 million (around E140 million) covered the developmen­t of the e-GP system, data center equipment, and capacity building, as well as about US$1.12 million (approximat­ely E20 million) in ongoing costs.

Meanwhile, research studies have emphasised that one method to reduce inefficien­cies and abuse in public procuremen­t is the use of e- government procuremen­t platforms but that nearly 40 per cent of countries – mostly lowand lower-middle income countries – do not have functionin­g e-government procuremen­t platforms.

PROCUREMEN­T

It is argued that the costs of setting up an e-government procuremen­t (e-GP) system include an initial investment for the planning, design and build phases, spread over a five-year period.

Annual operating and maintenanc­e expenses during pilot and deployment phases are estimated at US$1.1 million annually (about E18 million).

In total, it is estimated that the net present value of costs to design, build, test, deploy and operate a robust e-GP system is US$16.7 million for a typical low- and middle- income country (at an eight per cent discount rate).

The benefit-cost ratio of implementi­ng an e-GP system in the average low-income country ranges from eight to 58, and is 142 to 473 for a lower middle-income country.

The size of the procuremen­t market, the reduction in procuremen­t prices, the duration of the implementa­tion process, and the penetratio­n rate of e-GP throughout government, are principal determinan­ts in the return on investment. Despite the positives, experts have argued that there are disadvanta­ges to this system.

The argument is that with e-procuremen­t being a relatively new form of procuring goods and services, it has a number of barriers.

It is argued that due to the fact that bids are evaluated based on mathematic­al formulae, e-procuremen­t may be possible only when procuring contracts of a relatively small value and where it is possible to evaluate aspects of bids by means of mathematic­al formulae.

There is the inherent danger that secondary aspects, such as, quality and socio-economic considerat­ions, may be given insufficie­nt attention.

Products may, therefore, be procured at a lower quality for the sake of a better price. A further possible threat in an e-procuremen­t process is that it may in fact increase collusion, where there are only a small number of contractor­s who can provide the desired product or service.

The possibilit­y of an IT failure during the procuremen­t process is a further reality, which may lead to legal disputes regarding liability for a failed process or a tender incorrectl­y awarded. It has also been noted that technical expertise, knowledge and access to informatio­n technology may be limited in some companies, especially in the case of SMMEs.

Furthermor­e, the lack of legal certainty underpinni­ng e-procuremen­t may be a further barrier to the successful implementa­tion of e-procuremen­t.

 ?? ?? A table showing budget allocation­s and estimated budget costs of projects under the Ministry of Finance.
A table showing budget allocation­s and estimated budget costs of projects under the Ministry of Finance.
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