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Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI

Magufuli steps in to address loopholes in Procurement Act


Daily News

CHABY BARASA,  DECEMBER 31, 2015

In his inaugural address to the 11th Parliament in Dodoma in November this year, President John Magufuli, spoke against wasteful spending of public funds on procurement of luxury goods and called for immediate amendment of the procurement law to address its shortcomings. Our Staff writer CHABY BARASA reports.

TO prove that he is determined to walk the talk, President Magufuli has intensified the anti graft crusade and embarked on a series of austerity measures aimed at checking wasteful government spending.

Accounting for more than 70 percent of government expenditures, it is no wonder public procurement has been in the spotlight, which has seen the suspension of chief executive officers of RAHCO and DART as the institutions are being investigated on allegations of flouting the procurement law

The Managing Director of the Reli Assets Holding Company (RAHCO), Mr Bernhard Tito, has been suspended to pave the way for investigations into allegedly gross procurement flaws in awarding tender for building standard gauge railway line linking Dar es Salaam and Kigoma as well as neighbouring countries of Burundi and DR Congo.

The Executive Officer of Dar es Salaam Rapid Transit (DART). project Ms Asteria Mlambo has also been suspended for similar procurement irregularities regarding the reported dubious process in awarding a tender to an interim service provider of the DART project.

During his inaugural speech, Dr Magufuli spoke at length how the public procurement law was being abused by unscrupulous suppliers who quote inflated and unrealistic prices of commodities, causing massive losses of public funds.

“Under the current law, a house that would normally cost 30m/- could end up being constructed for 200m/-,” he noted and stressed the need for value for money in implementation of public projects, saying that embezzlement of public funds and sub standard projects were among the concerns that the public needed immediate solutions for.

The President’s concerns have stirred to action the Law Reform Commission of Tanzania, which is now seeking recommendations from members of the public, government agencies, private entities and other stakeholders to facilitate the Commission’s research aimed at identifying the practical shortcomings in implementing the Public Procurement Act, 2011 and its regulations.

The research also seeks to identify repercussions on implementing the law to the government and its institutions.

“In order to facilitate the study and for the Commission to comply with the provisions of Section 10(1) (2) of the Law Reform Commission Act, Cap 171, the Commission calls for the public, government agencies and private entities involved to give suggestions, recommendations and opinions regarding the provisions of the Public Procurement Act, Chapter 410 and the Public Procurement Regulations,” says the statement released by the Commission recently.

The comments and suggestions, as per the Commission’s statement, may be general or about specific provisions of the Act or institutional system created by the Public Procurement Act, Chapter 410, based on; market fundamentals and dynamics of law, procurement process and procedural and institutional requirements, value for money, conflicts of laws and human factors such as unethical conduct, personal interest and corrupt practice.

To accomplish the research on time, the Commission has set 30 days, starting 15th December, this year, within which to receive the recommendations, which have to be submitted to the Executive Secretary of the Commission.

Study on the law follows difficulties experienced by the government and its institutions during implementation of the law, both in terms of costs, value for money and management of timelines.

“Experience has shown that since 2001 when the Act was enacted for the first time, there have been difficulties in the implementation of the law so much that objectives for its enactment have not been achieved.

This phenomenon has persisted even when Parliament repealed and re-enacted the new Public Procurement Act in 2004. The procedural requirements before making the actual purchase are both cumbersome and costly,” the statement further notes.

The Commission’s move has been welcomed by scores of stakeholders interviewed, however, most of them are of the view that the problem is not with the law but rather with unethical conduct of some individuals and Procuring entities that deliberately bend rules for their selfish motives.

“Indeed continuous improvement of the law is crucial and that is why we had the 2001 Act replaced by the new Public Procurement Act in 2004,” says Mawazo Mosses, a procurement officer with a Dar es Salaam logistics firm.

According to Mawazo, the country may boast the best procurement law, but unless the society learns to truly abhor corruption and other unethical tendencies, such legislation may not help much.

However a retired public servant, said the Procurement law needed immediate amendment as it currently encourages what he termed as ‘ten percent syndrome’, which he says is to blame for the inflated prices of commodities quoted by suppliers.

He called for stakeholders to air their views so that all shortcomings of the current law could be addressed and called for authorities to especially investigate local government authorities where he claimed procurement irregularities are rife with most tenders being dished out without any proper procedures being adhered to.

“It’s free for all kind of thing,” he observed, but conceded that having the law in the first place, albeit its weaknesses, is better than not having one at all.

He called for the Law Reform Commission to work closely with the ministry of finance, which said had earlier embarked in the process of collecting stakeholders’ views to address shortcomings in the procurement law.

While there are misgivings about the procurement law from some quarters, the Public Procurement Regulatory Authority (PPRA) stated recently that the overall compliance level of audited Procuring Entities (PE’s) in the country has increased from 65 percent last year to 69 percent this year.

However, the rise is still below the 75 percent target set for the Financial Year 2014/15. Procurement Audit Report based on procurement audits and verification audits of 80 PE’s, that included local government authorities, public authorities and Ministries, Departments and Agencies (MDAs).

“The objective of the audits was to determine whether the procedures, processes and documentation for Procurement and contracting were in accordance with the provisions of Public Procurement Act , Public Procurement Regulations and the standard documents issued by PPRA.

“ In addition, the audits sought to determine whether contracts had been or were being implemented in accordance with stipulated contract terms and conditions and whether value for money was achieved in spending public funds in selected construction contracts,” revealed the PPRA Board Chairman, Ambassador, Matern Lumbanga While the overall compliance level of the audited institutions had increased, the average compliance level for MDAs had dropped from 71 pc to 69 pc compared to last year’s results.

On the other hand, public authorities and local government authorities have shown improvements from 68 pc and 62 pc recorded last year to 71 pc and 67 pc respectively this time around.

As per Report, while 27 out of 80 PE’s were assessed to have satisfactory compliance levels above the target of 75 pc, the remaining 53 entities’ performance was below the set compliance target.

On the other hand, the overall assessment of corruption red flags indicated that nine out of the 80 audited entities were assessed to have corruption red flags of 20 pc and above, giving an indication that there is corruption likelihood in the audited projects.

In the course of Procurement audits, the auditors also observed serious delays on contractors payments. Notable delays were observed in road works contracts under Tanroads and water projects under local government authorities.

The delayed payments were mainly due to delays on non disbursement of committed funds from Treasury.

In the wake of the audit findings, accounting officers and heads of the entities with poor performance had been directed to appear before the PPRA Board to show cause why disciplinary and legal action should not be recommended to the competent authority.

On the other hand, the audit reports for all procuring entities and specific projects with detected likelihood of corruption with scores of 20 pc or above are to be submitted to the Prevention and Combating of Corruption Bureau (PCCB), for further investigation.

Other directives require accounting officers of procuring entities where overpayments had been verified to have been made to contractors or suppliers; to recover the overpaid amounts while for ongoing projects, a report on the final account has to be submitted to the Authority for verification.

As the Law Reform Commission continues to receive recommendations from stakeholders, the expectation of many is that whatever loopholes in the current procurement law as directed by President Magufuli would finally be plugged.

Ethiopia: High Court Suspends U.S.$34.3 Million Bid Outcome


AllAfrica

November 9, 2015

By  Dawit Endeshaw

Yet another bidding process in dispute; this time over PPPDS’ handling of tender process.

A 34.3 million dollar technology contract between the Public Procurement & Property Disposal Service (PPPDS) on behalf of the Information Network Security Agency (INSA) and a US company, has been suspended by a Federal High Court order following a complaint by a Chinese company that was bidding for the contract.PPPDS was handling the tender process for INSA, which wanted to procure Digital Video Broadcasting Second Generation Terrestrial (DVB-T2) Network Rollout solutions. There was a minimum precondition for bidders that the purchase should be on a vendor financing basis, where competent bidders would bring partners who would facilitate the credit service with a minimum repayment schedule of 10 years.

The overall purchase was divided in two lots; for the procurement of system, subsystem, equipment & goods and the remaining and, for the supply of signal measurement & monitoring systems. Nine bidders came forward in June 2015, four of which made it through the technical evaluation. Three of them offered for Lot One, consisting of installing the infrastructure that would serve the implementation of the system, and one bid for Lot Two to supply the measurement & monitoring systems. The sole bidder for Lot Two, Giga Communication Ltd. from the UK, got its contract worth 214.7 million Br uncontested. However, the award of the contract for Lot One to GatesAir, an American company known for its work on over-the-air analog and digital radio/TV stations and networks worldwide, which was said to have offered the lowest price of 34.3 million dollars, was not pleasing to Star Software Technology, a Chinese company, which took its case to court.

In its civil suit filed at the Federal High Court’s First Civil Bench, Star Software Technology claimed that it had offered the lowest price and proposed competitive terms of repayment. The Bench then suspended the contract from November 5, 2015, coinciding with the scheduled contract signing, until December 1, 2015.

The claim by the Chinese company mainly revolved around the loan and its respective offer, said Yigezu Daba, director general of PPPDS, while declining to discuss the issue further, saying it is now up to the court.

Lot Two bidder, Giga, is a subsidiary of Ultra Electronics Group, which boasts of “a portfolio of specialist capabilities, generating highly-differentiated solutions and products in the defence and aerospace, security and cyber, transport and energy markets, by applying electronic and software technologies in demanding and critical environments to meet customer needs.” Its clientele includes such media institutions as BBC, CNN and Al Jazeera, according to its website.

The procurement was meant to transform the current analog based television broadcasting systems into digital systems. The purchase was intended to be made while attached with credit schemes where each bidders was obliged to come up with a third party that would facilitate a loan for the purchase.

Established under a mandate of strategic and framework purchase, the service in the past four months has conducted three billion Br worth of purchases. From this, one billion Br was dedicated to the purchase of wheat, 873 million Br for construction and 935.6 million Br for the purchase of iron bars.

Problems persist in the management of the supply chain in Ghana: OIG audit


Aidspan

November 3, 2015

Stéphanie Braquehais

Weaknesses in data collection and reporting affect decision-making

An audit report on Global Fund grants to Ghana released on 27 October by the Office of the Inspector general rated financial and fiduciary controls as effective but identified weaknesses in the management of programs and health services, and in data and risk management.

The audit covered four active grants for HIV, TB and malaria, all implemented by the Ministry of Health (except for one HIV grant jointly implemented with the AIDS Commission). For this report, the team visited 27 health facilities in seven out of the 10 regions of the country to assess access to treatment, programmatic data, and assurance mechanisms to mitigate risks.

The OIG found “significant weaknesses” in the supply chain and in inventory management methods (e.g. poor storage conditions; lack of use of stock cards and stock ledgers; lack of a functioning computerized information system; and no in-country drug testing for HIV and TB drugs). In January 2015, a fire at the Central Medical Store resulted in important losses of drugs which were not covered by external insurance. According to the report, quantifying those losses has been a challenge in the absence of a strong inventory management system.

Although a supply chain master plan had been in place since 2012, it was never fully implemented. Thus, the OIG recommended the integration of all supply chain initiatives from partners and the government and the revision of the master plan.

For the majority of the facilities visited, the OIG team found a greater than 10% error rate in HIV and malaria data. According to the report, the poor data collection is due to the lack of staff capacity, to the fragmented data systems and limited use of automated systems, and to the lack of a differentiated approach to assess the data.

These factors contributed to a weakening in the ability to detect data errors – despite an investment of $8 million in 2014 for monitoring and evaluation. The OIG said that the challenges in reporting have an impact on decision-making.

Following the report, the Secretariat agreed to take several remedial actions, including supporting the PRs to develop a plan to solve the main problems in the supply chain and to deliver an accurate accounting of ART patients in the HIV information system. It also agreed to support the Ministry of Health to produce an action plan for quality data collection in the malaria program.

OIG report provides details of its investigation into the use of two million counterfeit bed nets in Burkina Faso


Aidspan

November 3, 2015

Stéphanie Braquehais

Secretariat now requires pre-shipment testing of bed nets 

On 30 October, the Office of the Inspector General released a report on its investigation into the procurement and distribution of nearly two million bed nets in Burkina Faso which did not meet the requirements of the World Health Organization.

The existence of the counterfeit bed nets – they were not properly treated with insecticide – was revealed by the Global Fund in 2012 (see GFO article).

According to the OIG’s report, two local wholesalers, Liz Telecom/Azimmo and Disgefa provided counterfeit nets which they obtained from a manufacturer in Shanghai, China. The OIG said that the principal recipient, PADS (Programme d’Appui au Développement Sanitaire, created by the Ministry of Health) and the Global Fund Secretariat bear some responsibility for what happened.

The investigation was initiated by the OIG after it received a tip by email. The publication of the OIG’s findings was postponed pending the results of a U.S. criminal investigation by the USAID Office of the Inspector General and the U.S. department of Justice. (USAID also provided funding for the bed nets.)

In October 2009, PADS launched a tender, split into 13 lots, for 6.6 million DAWAPlus 2.0 brand-name insecticide-treated bed nets for a planned 2010 mass distribution campaign. The six winning bidders had to procure and deliver the nets in-country up to the district level.

According to the investigation report, only 50,000 out of the 1,876,000 bed nets delivered by Liz Telecom/Azimmo, and only 100,000 out of 869,000 bed nets supplied by Disgefa, met the WHO requirements. The total value of the substandard nets financed by the Global Fund was € 9 million.

According to the OIG, the PADS tender did not require that the bidders prove they had experience in executing large tenders nor did it require a declaration from manufacturers saying they had the capacity to produce the specific number of nets within the requested time-frame. The OIG said that Tana Netting, a company in Thailand which is the sole authorized manufacturer of the brand DAWAPlus 2.0 bed nets, did not, in fact, have the capacity to produce the necessary quantity of nets on time.

The OIG said that the requirement for local delivery of the nets to the district level “significantly impeded” the awarding of contracts to international bed net manufacturers (who could have provided a brand other than DAWAPlus).

The OIG found that the Secretariat did not exercise sufficient oversight of the PR during the tendering process. Nor did the Secretariat have a mechanism in place “that would trigger enhanced oversight, such as requiring the review and guidance of a procurement expert” for large-value procurements like the PADS tender.

As soon as the Secretariat was informed about the problem in 2012, the distribution of the bed nets was suspended and some actions were taken, including the creation of a task force to mitigate the damage; the procurement of 150,000 new nets to replace the counterfeit nets still in storage; and the acceleration of the planned 2013 mass distribution campaign.

“Enhanced” precautionary measures were also taken, as follows:

  • health products for HIV and malaria had to be procured through the Fund’s pooled procurement mechanism, and TB products through the Global Drug Facility;
  • an independent international fiscal agent was required to check all of the PR’s expenditures and advance payments; and
  • a restricted cash policy was put in place in September 2013.

As a result of the OIG investigation, the Secretariat will now require pre-shipment testing for nets and will identify criteria to trigger enhanced oversight at all levels (i.e. Secretariat and implementers).

It is now up to the Secretariat to determine how much money should be recovered from the responsible entities.

The two suppliers and the PR (PADS) were given the opportunity to respond to the findings of the investigation. Liz Telecom/Azimmo did not provide a response. Disgefa responded, and the OIG made some changes to its final report to reflect the comments from Disgefa.

PADS stated that the PADS Tender was conducted in compliance with the public tender regulations in Burkina Faso and that prior to the launch of the tender, its terms were reviewed and approved by the Secretariat. PADS added that it didn’t have the means to test the nets prior to distribution.

Ethiopia: Sedgman selected as preferred contractor for Tulu Kapi Gold project


Mining Technology

October 14,  2015

UK-based KEFI Minerals has selected Sedgman as the preferred contractor for plant construction and start-up for its Tulu Kapi Gold project in Ethiopia. Situated 28km east of Ayra-Gulliso town in the state of Oromia, the mine lies in the Tulu Kapi-Ankore license area and has a surface area of 8.44km².

Under the contract, the Australian company will provide services such as detailed equipment specification and procurement. The plant will be built at a cost of $63m and has an estimated capacity of up to 1.7 million tonnes a year depending on ore-type from year to year.

The contract also included a fixed-price lump sum contract, with performance guarantees.Based on the proposal from Sedgman, expected production at the project in the first five years has been increased to an average of 105,000oz a year. KEFI said its peak funding requirement will be maintained at $120m.

As part of the project’s next phase, KEFI plans to start the FEED stage of plant planning, involving detailed engineering and procurements during the quarter. In addition, KEFI will appoint the contractor for mine establishment and operation, with plans to complete legal documentation for approval by all syndicate members, including the Ethiopian Government.

Next year, KEFI will initiate drill-out of potential satellite deposits to identify any opportunities to further production expansion. Production is planned to be increased to 105,000oz a year from the initially anticipated 80,000oz.

KEFI Minerals COO Wayne Nicoletto said: “The intense competition during the contract tendering process, culminating in today’s appointment of Sedgman as preferred contactor for the plant, demonstrates the industry’s recognition of the potential of Tulu Kapi and of its successful overhaul by KEFI.”

Has SA lost R700bn to corruption?


IOL

01 October 2015 at 2:20pm

Sintha Chiumia and Anim van Wyk

Has SA lost R700 billion to corruption since ’94? Africa Check’s Sintha Chiumia and Anim van Wyk explain why the calculation is wrong.

Durban – It’s been stated as fact that South Africa has lost R700 billion in public money to corruption since the advent of democracy in 1994. But how does one measure the cost of hidden crime?

One of the Unite Against Corruption march organisers and former general secretary of trade union Cosatu, Zwelinzima Vavi, used the R700 billion figure widely. To talk radio show host, Tim Modise, Vavi said: “R700bn could have been used to address the principal challenge of South Africa.”

Vavi also reportedly cited the number to urge Nissan assembly plant workers and a gathering of National Union of Metalworkers of South Africa members to join the march.

When he tweeted the R700bn figure, a Twitter user replied: “No ways. Lucky guess?”

Is it a guess or the result of thorough research? Africa Check got out the calculators.

On social media, Unite Against Corruption attributed the claim to the Institute of Internal Auditors. This likely refers to the January launch of the Anti-Intimidation and Ethical Practices Forum, an association of different organisations fighting corruption.

At the event, the forum’s chair and head of the Institute of Internal Auditors South Africa, Claudelle von Eck, reportedly said: “The cost of corruption in the last 20 years… we have lost R700bn.”

Von Eck confirmed to Africa Check she had made the claim, but said she was quoting the Institute for Accountability in Southern Africa. The institute’s head, Paul Hoffman, was quoted using the R700bn figure last year. (Updated from R675bn he cited the year before and in 2012.)

But Hoffman passed the buck to Tendersure, a web-based tendering tool, owned by a company called Sentigol.

“(Tendersure) worked that out as a percentage of the DP… 20% of the GDP over the last 20 years works out to that,” Hoffman told Africa Check.

An October 2011 article in Engineering News quoted the head of Sentigol, Werner Coetzee, as saying research by international anti-corruption bodies showed Africa to lose “about 25%” of its gross domestic product (GDP) to corruption.

Coetzee then explained that 25% of South Africa’s GDP of R2 700bn (likely 2010s) came to R675bn and that this figure was potentially lost to corruption.

But he told Africa Check he was misquoted: “I don’t know how anyone would arrive at that number.” The businessman said he once attempted to calculate the cost of corruption in the past 20 years, but gave up because it would “ignore the corruption during apartheid”.

Coetzee didn’t pluck the corruption formula out of thin air, but he got the wrong end of the stick.

Global civil society organisation Transparency International published a handbook called Curbing Corruption in Public Procurement in 2006. The very first paragraph states “damages from corruption” are usually estimated at “between 10% and 25%, and in some cases as high as 40 to 50%” of a country’s public procurement contracts – not its GDP.

Yet the bibliography does not contain any reference to studies showing how this share was arrived at. Africa Check contacted the organisation’s public sector integrity programme head, José María Marín, who said he’d look into it, but we haven’t yet received a response.

Since then the statement has become a tumbleweed claim: rolling along year after year, from one report to another, without source or context, supposedly holding true wherever it goes.

So how did do we end up with “R700bn lost to corruption in South Africa in the last 20 years”? Here is Africa Check’s theory, give or take R5bn:

1. The formula from Transparency International, or the various other organisations that quoted its information, made its way to South African treasury official, Sonwabo Tshoko, who stated in a 2010 presentation: “It has been estimated that R30bn per year, which is 20% of the overall government procurement budget of R150bn, is being lost or is disappearing into a black hole of fraud and corruption.”

(Tshoko has since left and Africa Check could not get hold of him or more information on the calculation via Treasury spokeswoman Phumza Macanda.)

2. South Africa’s then head of the Special Investigating Unit, Willie Hofmeyr, used this information when asked to estimate the cost of corruption in Parliament in October 2011.

According to the minutes, “Hofmeyr responded that it was difficult to do so, but one suggestion by National Treasury was that it might amount to about 20% of the annual procurement budget, or about R25bn a year.”

(Hofmeyr confirmed to Africa Check he got the information from Treasury, but couldn’t remember the exact source.)

3. The head of the Institute for Accountability, Paul Hoffman, attributed the figure of R30bn per year to Hofmeyr in a 2012 conference report. However, it seems that when the time came to present the report, he used R675bn as a total figure lost to corruption since 1994.

A news report said: “Hoffman based the figure of R675bn on government’s admission that the economy loses R30bn a year to corrupt activities. The disclosure elicited visible shock among conference goers.” (A quick calculation shows that R30bn times 18 years is R540bn, not considering inflation.)

So how much has SA really lost to corruption?

The frustrating – and logical – answer is we just can’t say for sure.

Macanda said South Africa’s Treasury does not attempt to calculate the cost of corruption. “Our observation is that people speculate and also tend to use the word corruption when what they are talking about is irregular, unauthorised or wasteful expenditure,” she said.

Africa Check spoke to Hennie van Vuuren, research associate at the Institute for Justice and Reconciliation (IJR) and writer of a 2005 Transparency International country study report on South Africa.

He said the idea that corruption costs 20% (or 10% or 25%) of public procurement came from the assumption that middlemen involved in corruption demanded 8 to 10% of a contract’s value.

“But this differs from transaction to transaction and industry to industry,” he said.

Ways to gauge trends in corruption included perception surveys and tallying detected cases.

Van Vuuren said one could even include illicit outflows – where private companies moved money to tax havens abroad – in the broader ambit of corruption, which was estimated to be in the region of R300bn in 2012 alone.

“Our need to define corruption in monetary terms ignores the much more fundamental costs of corruption – carried by individuals in weakened forms of government,” he said.

The head of governance, crime and justice division at the Institute for Security Studies, Gareth Newham, told Africa Check “we simply don’t know what the actual amount is because corruption is a crime in which both parties benefit and will seek to hide”.

However, Newham said he thought a “considerable” amount had been lost to corruption “given the large scale of the problem and the high level involvement of our political elite in corruption”.

It’s “impossible to know” how much money South Africa has lost to corruption, the executive director of non-profit organisation Corruption Watch, David Lewis, told Africa Check.

“Various people, various institutions have come up with estimates. I don’t know how they arrive at these figures,” he said.

“I am comfortable to say there is a high level of corruption in SA but you can’t rely on those estimates.”

Conclusion: the figure of R700bn is a thumbsuck.

Although a firm figure helps spur citizens to action – in a country where experts agree that it’s a big problem – this specific estimate is not reliable.

The amount probably stems from a claim that about 20% of a country’s public procurement budgets disappears into back pockets, attributable to Transparency International as far as we could tell, but not backed up by research studies. Since then it’s been mangled beyond recognition in South Africa.

* This article first appeared on Africa Check (http://www.africacheck.org), a non-profit organisation run from the Journalism Department at the University of the Witwatersrand, which promotes accuracy in public debate, testing claims made by public figures around the continent

** The views expressed here are not necessarily those of Independent Media.

Daily News

Policy Coherence To Boost East Africa Pharmaceutical Industry


Intellectual Property Watch

02/10/2015 BY  FOR INTELLECTUAL PROPERTY WATCH

KAMPALA, UGANDA – The pharmaceutical industry in the East African Community is approaching a higher level of production quality and manufacturing practices. To benefit the industry and increase access to medicines, stakeholders are working towards a united regulatory policy framework aimed at harmonising industrial, health and regulatory policies. 

“The main objective of the industrial policy is to develop a viable local industry which is competitive, reliable, innovative, productive and responsible,” said Ermias Biadgleng, legal affairs officer, United Nations Conference on Trade and Development (UNCTAD). “While the main aim of the health policy is to promote health for all through universal health coverage in terms of prevention, treatment and rehabilitation.”

Biadleng was moderating a panel of experts attending a regional pharmaceutical workshop on policy coherence for local production of pharmaceutical products and other means to improve access to medicine and medical products in the East African Community, held in Kampala, Uganda from 21-23 September. The workshop was organised by UNCTAD, Deutsche Gesellschaftfür Internationale Zusammenarbeit (GIZ) and the East African Community (EAC) Secretariat.

EAC has so far adopted the Regional Pharmaceutical Manufacturing Plan of Action, 2012-2016, the Regional Intellectual Property Policy on the Utilisation of Public Health-Related WTO-TRIPS Flexibilities and the Approximation of National Intellectual Property Legislation, 2013. TRIPS is the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights, which contains flexibilities for developing countries in enforcing the agreement.

“The East African Community Regional Pharmaceutical Manufacturing Plan of Action, 2012-2016, (RPMPOA) is a regional roadmap to guide the East African Community towards evolving an efficient regional pharmaceutical manufacturing industry that can supply national, regional and international markets with safe, efficacious and quality medicines,” said Jennifer Gache, Senior Industrial Engineer, EAC Secretariat.

The RPMPOA is divided into six strategic intervention pillars, which if effectively implemented are expected to lead to a strong local pharmaceutical industry. Implementation of RPMPOA is part of the EAC Industrialization Policy and Strategy, which has prioritized the development of regional pharmaceutical industry among regional industries through collective efforts of the EAC partner states.

According to Thomas Walter, “The implementation of RPMPOA has been much more successful than anticipated. It will be revised next year for the next five years. The next action plan will have a bigger scope, focusing on those areas which have been a bit neglected in the ongoing plan.”

Walter is the senior adviser Industrialization, TRIPS and Pharmaceutical Sector Promotion, EAC-GIZ Programme on Regional Integration.

“We have not had any significant utilization of the TRIPS flexibilities neither by companies nor by governments in the EAC,” said Thomas. “The reasons are complex. One of the main reason companies are not utilizing TRIPS is because all the pharmaceutical products produced locally are generics, and production of generic medicines do not require utilization of TRIPS flexibilities. This situation may change in future as we are moving to new treatment regimes.”

Utilization of TRIPS flexibilities towards improved local production of pharmaceuticals is pillar 5 of the RPMPOA.

World Health Organisation describes a generic drug as “a pharmaceutical product, usually intended to be interchangeable with an innovator product that is manufactured without a licence from the innovator company and marketed after the expiry date of the patent or other exclusive rights.”

In a presentation from the private sector perspective titled, The State Of EAC Internal Market And ECT: Implications For Drug Policy (pdf), Pierre Claver Niyonizigiye from Siphar Pharmaceutical Manufacturers, in Burundi, revealed that according to 2014 RPMPOA estimations, the market share of locally produced pharmaceutical drugs per country is: Kenya 30% of the estimated 558 USD million market, Tanzania 31% of the estimated 350 million USD market, Uganda 5% of the 270 million USD market, Rwanda 0.00% of the 75 million USD market, and Burundi 3% of the 75 million USD market.

The region has about 65 pharmaceutical companies, with Kenya having 42 of the companies.

With the enactment of the EAC Common Markets Protocol, the pharmaceutical industry now has a regional market of over 143.5 million people. Trade between EAC partner states in pharmaceutical products in 2011 was estimated at USD 264 million. This situation presents both opportunities and challenges to the pharmaceutical sector in the region given that only 30 percent of the medicines demand is met through local production.

According to Thomas, “the main cause for this is lack of access to a competitive market. Once the manufacturers have access to a bigger market, not only the national public procurement but also the international procurement agency, the utilized capacity will shoot up.”

Article 35, of the Common Market Protocol calls on partner states not to discriminate against suppliers, products or services originating from other partner states, for purposes of achieving the benefits of free competition in the field of public procurement.

“Many of the procurement laws of the partner states have not adapted to the regulation of the common market protocol even though the heads of state have committed to this protocol,” Thomas said. “It’s up to the heads of government to enforce the required approximation of the legal framework in order to actually create this market. National procurement laws and regional common market still have elements of incoherence which need to be eliminated.”

The EAC governments are the largest clients for the region’s local pharmaceutical products. The preferred method of procurement is international competitive bidding. Other methods used are restricted procurement, direct purchase and local tenders. The source of funds for this procurement comes from revolving funds, government funding from the central government and complementary financing, and grants from Global Fund for AIDS, Tuberculosis and Malaria and development partners.

To assist the manufacturers develop their capacity, EAC governments have provided a number of policy incentives. These include: tax and customs exemption, price control, preferential procurement and import classification.

In the EAC treaty, Chapter 21, Article 118 provides for developing a common regional medicines policy, which includes establishment of quality control capacities, good procurement practices and harmonisation of drug registration procedures.

Benchmarking

Regional economic communities can borrow from each other aspects of regulatory framework. The EAC is borrowing from the Ghana model, whose government has established a very supportive system to develop the local pharmaceutical industry over the last 20 years.

Kwabena Asante-Offie represented the Pharmaceutical Manufacturers Association of Ghana at the conference. “In East Africa,” he said in a panel discussion, “the industry sector is leading the development of the pharmaceutical sector. While in West Africa, it was the ministry of health that led the development of a robust pharmaceutical industry”. This is because the industry started more as a public health concern rather than an industrial development strategy.

Other Policies

Other key policy and regulatory initiatives of EAC are at the working stage. These include an EAC Anti-Counterfeit Bill (2013) which is being modelled into the Competition Act, the proposed African Community Medicines and Food Safety Commission Bill, the Medicines Registration Harmonization initiative, launched in 2012, and the procurement of essential medicines and health supplies.

Zambia: Prosecution witness in Masebo case says corruption should get a minister concerned


Sunday Post

By Namatama Mundia   |   Updated: Aug. 22, 2015

A PUBLIC procurement expert on Thursday testified in the Sylvia Masebo abuse of office trial that a government minister should get concerned when something goes wrong in a ministry.

Testifying before Lusaka magistrate Ireen Wishimanga, in a case where Masebo is facing allegations of cancelling wildlife hunting concessions and dissolution of ZAWA management whilst serving as tourism minister, Ministry of Community Development, Mother and Child Health head of procurement, Kenneth Mapani also said the public procurement law does not say the minister had no role in procurement issues.

Mapani, who until March 30 was the principal officer-in-charge of inspections and standards at the Zambia Public Procurement Authority (ZPPA), told court during cross-examination by defence lawyer Robert Simeza that he was ignorant on how the ZAWA issue started and ended.

He said he never played a role in the ZAWA procurement process and did not follow the proceedings concerning the case.

Mapani said a procurement process could be cancelled, adding that that was why he referred the ACC officers that approached him on October 8, 2014 wanting to get clarity on the procurement of hunting concessions as well as the applicable process in procuring such a service, to section 22 and Regulation 24.

Mapani earlier testified during evidence-in-chief led by ACC prosecutor Boniface Chiwala that the process was supposed to be advertised in the public media to would-be bidders.

“I drew them [ACC officers] to section 22 (1) F of the Public Procurement Act of 2008 as well as regulation 24 of the Public Procurement regulation of 2011. I further did indicate that what the Act and Regulation indicate is that such a mandate is vested in the approvals authority,” he said.

Mapani explained that the approvals authority was an individual or board that grant prior authorisation before any award is undertaken in public procurement matters.

Asked if a Minister of Tourism and Arts had authority to cancel a tender, Mapani said such cancellations were vested in the approvals authority.

“The honourable minister does not have a role in procurement proceedings, including the aspect of cancellation,” Mapani said.

He said the approvals authority under ZAWA was the procurement committee and the chief executive officer.

But during cross-examination, Mapani agreed that the law was silent on the role of a minister in procurement.

Further put to him that the law does not say that the minister had no role in procurement, Mapani again said that was correct.

Asked what he would expect a minister to do if something was going wrong in the ministry, Mapani said he would expect a minister to be concerned.

When told that a minister was not a passenger in the ministry or a ceremonial person who would just watch corruption take place, Mapani responded that a minister was part of the ministry and in that sense would be interested to know what was going on.

The state did not re-examine Mapani and the matter was adjourned to September 15.

Count one alleges that Masebo, between December 1, 2012 and June 30, 2013, in Lusaka, being tourism and arts minister, abused the authority of her office by cancelling the procurement process of tender number ZAWA/DG/002/2/12 for hunting concessions without following laid down procurement procedures, an act which was arbitrary and prejudicial to the rights or interests of the government.

In count two, it is alleged that Masebo, during the same period, in Lusaka and while serving in the same capacity, abused the authority of her office by terminating contracts of employment for senior officers employed by the Zambia Wildlife Authority without following laid down disciplinary procedure, an act which was arbitrary and prejudicial to the rights and interests of the government and other persons.

And after court adjourned, Masebo, in the company of UPND vice-president Dr Canisius Banda, addressed a huge crowd of supporters that turned to offer her solidarity outside the Lusaka Magistrates’ Court Complex.

Masebo said people were concentrating on wrong things.

“So you can see that people are concentrating on wrong things; instead of fixing the blackouts, tavutika ma light kulibe mu mayadi yathu, bathu basiliza time witch-hunting and prosecuting or persecuting political opponents,” said Masebo.

THE NEW SNAKE OIL? The violence, threats, and false promises driving rapid palm oil expansion in Liberia.


Global Witness

July 23, 2015

Urgent reforms needed to protect citizens and regulate plantation companies.

As Liberia emerges as a new frontier market for the cheapest, most popular vegetable oil globally, Liberians report being beaten, threatened, and arrested for taking a stand against one of the world’s biggest palm oil plantations in the southeast of the country.

State officials are said to be helping the palm oil company Golden Veroleum (GVL) harass communities into signing away their land and crush dissent. Global Witness reveals how GVL accelerated its operations at the peak of Liberia’s 2014 Ebola outbreak, holding meetings with hundreds of people and encouraging illiterate citizens to sign away their land rights when community support groups were staying home for risk of contagion. At this time GVL almost doubled the size of its plantation.

This behaviour hasn’t discouraged the world’s major banks from offering their services. Standard Chartered, HSBC, and Citibank alone hold shares in GVL’s parent company – Golden Agri-Resources (GAR) – worth nearly US$ 1.5 billion.

The case of GVL risks becoming the first chapter of a longer narrative of dispossession and abuse. Liberian President Ellen Johnson-Sirleaf has made agriculture a central pillar of the country’s development strategy, making repeated – yet so far unfulfilled – public assurances that palm oil will lift poverty in rural areas. In response to early protests at GVL’s plantation she called those who spoke out against the company “unpatriotic” as they risked discouraging future investors.

Hear from communities about signing deals with GVL, called Memorandums of Understanding (MoUs).

GVL has bought the rights to convert 2,600 km2 of southeast Liberia into an oil palm estate – an area the size of London and Barcelona combined. Its contract is valid for up to 98 years, affecting some 41,000 people.

Public meetings where landowners were encouraged to hand over their land to GVL were watched over by powerful local officials, and in at least one case armed police. Global Witness also documents several accounts of violent assaults and arbitrary arrests of those who voiced their concerns.

The benefits offered by GVL to communities in return have been negligible. Those willing to work for the company are promised access to free medical support and schools. For non-employees, the most tangible negotiated benefits Global Witness could find evidence of were six toilets.

The violence and intimidation documented in Liberia parallels a disturbing global trend of increased attacks on human rights activists who protect the environment and defend their land. Activists are being killed in record numbers, threatened and criminalised for standing in the way of so-called ‘development’. 

Ten percent of Liberia is now earmarked for agricultural plantations – an area three times the size Beijing. This rapid expansion is taking place in a legal vacuum. There are no laws in Liberia to govern how agriculture companies should be awarded contracts, how they should operate, or how they will be held to account.

Global Witness is calling on Liberia’s government to investigate acts of violence, pass a law recognising that rural communities own their land, and regulate the country’s agriculture sector to bring an end to the impunity enjoyed by plantation companies.

Watch the rate of GVL expansion in Liberia from 2011 – 2015 here.  

GVL and GAR have denied wrongdoing. GVL stated that it has played no part in the intimidation of community members in its plantation area and that its operations between August and October 2014 – when the Ebola outbreak was at its peak – were part of its long-term plan. GAR has acknowledged that its operations have experienced “challenges” but that it is working to improve its procedures. Representatives of HSBC and Citibank stated that its shares in GAR are held “in custody” for other ultimate (beneficial) shareholders.

Read full responses from GVL here and here, from GAR here. Communication from one of GAR’s investors Kopernick Global Investors, can be found here.

Read The New Snake Oil report here

Download the press release here 

FIND OUT MORE

Alice Harrison, Communications Adviser

aharrison@globalwitness.org

+44(0)7841 338792

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