What needs to change?
September 04, 2014
Lately, the East African Community (EAC) heads of state have been walking the talk of the integration of the regional bloc.
The governments of Kenya, Uganda and Rwanda have committed to undertake an ambitious project; the Standard Gauge Railway (SGR) that will snake her way from Mombasa to Kampala and finally end in Kigali.
The proposed project is also supposed to connect to the South Sudan’s capital Juba, from Tororo. The world’s youngest nation has expressed her willingness to join the EAC regional bloc. The project is aimed at easing the pressure on road transport infrastructure along the northern corridor, which shoulders 94% of all freight movement.
Similarly, Kenya, Ethiopia and South Sudan are executing another audacious infrastructure development project, the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) corridor project. Uganda is also keen in the project, as evidenced from President Yoweri Museveni joining counterparts Uhuru Kenyatta, Hailemariam Desalegn and Salva Kiir from Kenya, Ethiopia and South Sudan respectively in a recent Nairobi summit to explore joint financing options for the $22b LAPSSET project.
Strategic role of procurement in delivering these projects
These projects were masterminded to promote and advance the East African Common Market Protocol by boosting linkages that facilitate the movement of goods and services across regional borders.
What rarely pops up in discussions is the role procurement will play in pulling off these mega strategic projects. If the procurement processes for these projects are not managed with the utmost professionalism and scrutiny, these projects will be delayed due to administrative reviews.
Prof. Benon Basheka, a procurement expert and the Dean of the School of Business and Management at the Uganda Technology and Management University says that the procurement will play a role in the success of these projects.
“All these developments have an implication on the core function of these governments. And because procurement is one of the facilitators of this kind of work, it becomes a key input as far as integration is concerned,” he says.
Already, the procurement process for a contractor to undertake Uganda’s part of the Standard Railway Gauge project is in shambles, with the China Civil Engineering Construction Corporation (CCECC) and China Harbour Engineering Company (CHEC) involved in a long and bitter fight over the tender to do Uganda’s part of the job.
The upgrade of Uganda’s existing railway infrastructure to standard gauge will cost $8b. Kenya is proceeding well on the project which has a completion deadline of March 2018.
Hedwig Nyalwal, the Chief Executive Officer (CEO) of the Kenya Institute of Supplies Management (KISM) concurs with Basheka on the significance of procurement and why it should be given more attention.
“In these projects, procurement, through various strategies, will be supporting initiative towards achievement of value for money by implementing the project economically, efficiently and effectively,” he says.
Nyalwal argues that attitudes towards procurement need to change with the furthering of the integration initiatives, so that East Africans can have more opportunities of doing business across borders.
“EAC partners must realign to view procurement as a strategic function within organisations with potential to contribute to proper selection of projects, cost management, successful delivery, completion of projects, goods and services,” he says.
Nyalwal argues that with more multinationals setting up camp in the region, the right procurement framework would create more opportunities for East Africans in the supply chain as the investors seek for local raw materials.
“Some of these entities have a sourcing strategy including regional sourcing as well as outsourcing in some aspects of manufacturing. These procurement strategies act as tools that promote trade and therefore contributing to regional integration,” he says.
Nyalwal says the ripple down effect will boost trade further in The Common Market for Eastern and Southern Africa (COMESA), which all EAC member states are part of.
“COMESA members are predominantly agricultural countries who rely on strong value chains to meet individual countries food requirements. These value chains are established through national policies and implemented on sound supply chain strategies to manage the pendulum conditions of scarcity and glut,” he reasons.
What needs to change?
Harmonise legal regimes
Experts agree that procurement legal regimes in the East African member states need to be harmonised. Basheka says while the philosophy and vision is integration, the laws have not yet trodden a similar path.
“There is no procurement law that is applicable in all East African countries. Kenya has her own procurement law, so does Tanzania, Uganda and the other partner states. While we have the East African Procurement Forum, we have yet to agree on a common legal framework to facilitate integration,” reasons Basheka.
Colline Mpaata, a procurement specialist working with Strategic Insights Consult Management, Strategy and Business Development consultancy firm says attempts at harmonisation should take a multi-sectorial approach.
“This will enhance the participation of key private and public sector players. In a bid to enhance private sector led economies it will be important for the participation of the private sector and civil society in the harmonisation of the regimes. In as much as the member states involved have committed themselves towards the harmonisation of policies it’s success will greatly depend on the speed with which policies, rules and regulations, standards and the institutional frameworks can be harmonized,” he says.
Mpaata also says standardization from harmonisation will greatly reduce on the cost of doing business and brings about competition.
“With the harmonisation public procurement will provide a breeding ground for national and regional businesses to grow and compete globally. This will encourage partnerships across the region in the execution of public contracts without any limitations. For instance this will see the increased participation of Small, Medium and Micro Enterprises in public contracting.”
Nyalwal says harmonized regulations will further make it easy for the free movement of goods and services across the borders.
“Therefore a harmonized legal regime that governs procurement will facilitate trade and integration by allowing suppliers to trade freely with no legal bottlenecks arising from overlaps or inconsistencies in the individual nation’s legal regimes,” he says.
Governments being the biggest spender in each of the EAC economies, opportunities are rife for private sector players to take part in public procurement.
However, Basheka fears that individual interests of countries, if not handled well in any move to harmonise the legal regimes, could jeopardise such efforts.
“To strike the national balance, a special clause can be put, in terms of the preference, that while we are agreeing to work together as the five East African countries, on matters of particular nature, each country can have a reservation scheme for its nationals,” he says.
Need for EAC procurement secretariat?
There have also been calls from certain circles for the establishment of an EAC procurement secretariat. In fact, one of the resolutions at the recent EAC procurement forum in Kigali was that it be fast tracked.
Mpaata says that a secretariat will improve national procurement systems which will strength the member states within the East African Region.
“One of the greatest challenges faced within the region is the difference in reporting of data estimating public procurement. However with the creation of a secretariat, harmonization in reporting can be achieved where data on estimates is available from official government publication from member states can be accessed at one point,” he says.
Legalising professional bodies
Experts have also been calling for the legalization through acts of parliament of professional bodies that bring together procurement practitioners in the different East African countries.
Proponents of this idea say that all this would promote professional ethics by accrediting their members—the way the law and engineers’ societies do.
“Further, national procurement associations need to develop regional standards, including national certifications that are recognized regionally to enable skills exchange and knowledge transfer. These will further promote regional integration,” says Nyalwal.
Even on this, the EAC member states are not on the same level. In Kenya, KISM was established in 1976 as an umbrella body for those in procurement and supply chain management field.
The passing of the Supplies Practitioners Management Act in 2007 gave KISM the legal mandate to regulate the conduct of professionals under her tutelage.
In East Africa’s largest country, Tanzania, the Procurement and Supplies Professionals and Technicians Board (PSPTB) was established in 2007 by an Act of Parliament.
In Uganda, the Institute of Procurement Professionals of Uganda (IPPU) was formed in 2008, spearheaded by the Uganda’s finance ministry and industry regulator, Public Procurement and Disposal of Public Assets Authority (PPDA).
However, the IPPU bill, a legal framework to govern procurement function in Uganda is just in the works, yet to be presented to parliament.
Rwanda and Burundi are yet to come up with such bodies.