Govt’s tough stance to eliminate tender corruption
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.