Value for money strategy saves Govt $ 500bn: Minister

CLOSE to $500 billion has been saved through Government insisting that its suppliers give value for money with no over pricing and forward pricing in the procurement processes by ministries, departments and agencies, Finance and Economic Development Minister Professor Mthuli Ncube has said.

Since August last year, Treasury and the Procurement Regulatory Authority of Zimbabwe have developed a National Price Index to guide public sector institutions on price ceilings in all procurement categories.

Prof Ncube was giving an update on the value for money exercise that was adopted restore market discipline and deal with unethical behaviour exhibited by suppliers and contractors who had been manipulating the foreign exchange market.

“Observations from the reviews conducted by Treasury revealed that overpricing and forward pricing, has been a rampant practice across public sector contracts,” he said.

“In this regard, under the value for money exercise, MDAsministries, departments and agencies have been tasked to mainstream due diligence processes aimed at plugging loopholes in the existing procurement systems.

“To this effect, Government has registered significant savings in expenditures amounting close to half a trillion Zimbabwean dollars, thus providing the leverage to channel more resources towards capital expenditure. Further, Treasury and PRAZ have developed a national price Index to guide all public sector institutions on the price ceilings in the various procurement categories and to date, three categories have been issued relating to hotels and conferencing facilities, groceries and office provisions and stationery products and paper raw materials.”

Following the Ministry’’s blacklisting of companies involved in illegal activities on the black market, Zimra is now conducting tax audits and assessments, checking for the full tax compliance of all large transactions.

Since the value for money exercise began at least 32 companies have been blacklisted for fuelling the black market by channelling into it what they receive as payment from Government.

The fuelling of the black market had resulted in the depreciation of the local currency and a rise in the prices of basic commodities.

“At the same time, continuous strict monitoring by the Financial Intelligence Unit on all transactions these companies undertake has also been instituted. So far three companies have been removed from the blacklist having satisfied ZIMRA and settling their tax penalties as well as satisfying the FIU of the integrity of the financial transactions,” he said.

Prof Ncube also said Treasury had observed that some ministried, departments and agencies had made advance payments for the procurement of goods and services without following the statutory provisions for advance payments resulting, in some suppliers ending up not delivering the paid for goods and services.

“To this end, Treasury has developed a framework to deal with defaulting suppliers and contractors where advance payments have been made. Such contractors and suppliers risk being blacklisted and debarred from supplying Government in future.