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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.

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

Rwanda: Parliament Defers Procurement Bill


The New Times (Kigali) via AllAfrica
January 20, 2015

The parliamentary Standing Committee on Budget and Patrimony, yesterday, sent back to the drawing board a new draft law that seeks to professionalise the procurement sector.

Legislators said the Procurement Bill had “a few issues” of unclearly stipulated legal assertions that required amendments.

Further examination of the Bill could not continue until the issues were sorted, said Constance Mukayuhi Rwaka, the chairperson of the committee.

“We need efficiency and value for money in the procurement sector. To attain that, we need clearly stipulated laws that will call off all the issues that have existed, for well functioning and sustainable procurement in the country,” said Rwaka.

Her concern was echoed by MPs Jeanne d’Arc Nyinawase and Fidèle Rwigamba, who said they could not start examining the Bill when there are some issues that needed to be clarified.

“The Bill still provides for two different entities; one segment that seeks to govern the procurement profession, and another that establishes Rwanda Association of Procurement Professionals. We have to harmonise the two and come up with one legal framework,” said Nyinawase.

This was the second time legislators are sending back the Procurement Bill for further streamlining.

OLYMPUS DIGITAL CAMERA

The Bill was drafted to streamline activities of the procurement sector following repeated anomalies and incidents of corruption-related undertakings, especially as captured by various financial year reports by the Office of the Auditor-General.

However, Augustus Seminega, the director-general of Rwanda Public Procurement Authority (RPPA), said the government wished to draft one law to avoid risks identified in drafting two separate laws; like diverting from a standard format of other laws on professional associations, as well as putting interconnected provisions in two separate documents.

It was agreed by all stakeholders, Seminaga said, that the Bill would entirely focus on the mechanisms governing procurement profession, with other provisions included in one Bill.

“We have agreed that the title reflects properly the content of the law. It will focus on procurement profession,” said Kampeta Sayinzoga, the permanent secretary at the Ministry of Finance and Economic Planning.

Scrutiny of the draft law is expected to commence in February after legal advisors from relevant institutions make the required changes.

Once enacted, the law is expected to help close the loopholes that have been prevalent in the sector, especially in public procurement, where, according to the Auditor-General, about 30 per cent of tenders awarded by public entities do not comply with procurement guidelines.

The report that covered the period between August 2012 and June 2013, said that more than Rwf23 billion was lost in poor contract management procedures, while nine contracts, worth Rwf908 million, were abandoned by contractors.

Procurement loopholes were noticed in project design and study, bidding documents as well as enforcement of contracts, among others.

In a recent interview with The New Times, Seminega blamed procurement errors on low skill levels, lack of experience and laxity among procurement officers.

“Public procurement has improved. We are coming from a time when all public procurement was done by one central entity. Now, the government has built capacities, institutions can manage to do own procurement. It is a process to achieve efficiency in the sector, that is where we are headed,” said Kampeta.

Will Bill close gaps in procurement?

Rwanda: Latest – Minecofin PS Appears in Parliament Over Draft Procurement Law


The New Times (Kigali)  via AllAfrica
January 19, 2015

 

Professional procurement officers in the public and private sector will add value to Rwanda’s procurement sector, Kampeta Sayinzoga, the Permanent Secretary in the Ministry of Finance, told The New Times.

She was appearing before the Parliamentary Standing Committee on Budget and Patrimony to defend a draft law that seeks to professionalize procurement this morning.

“The added value of this [new] law is that, it actually brings standards and professionalism in the procurement sector for both public and private circles,” said Kampeta.

Once enacted, the law is expected to close the loopholes that have been prevalent in public procurement sector where, according to the Auditor-General, about thirty percent of tenders awarded by public entities do not comply with procurement guidelines.

The new law will strengthen the existing legislative framework that governs public procurement by streamlining all the institutional and legal frameworks governing procurement management.

According to the Auditor General’s report covering the period between August 2012 and June 2013, more than Rwf23 billion was lost in poor contract management procedures, while nine contracts, worth Rwf908 million, were abandoned by contractors.

In a recent interview with The New Times, Augustus Seminega, the Director General of Rwanda Public Procurement Authority, blamed procurement errors on low skill levels, lack of experience and laxity among procurement officers.

Article 2 of the new draft law say that the profession of procurement shall be entrusted with persons who have knowledge, governed by ethical rules and international best practices and those who have chosen to practice it under supervision of a professional body in charge of establishing a code of professional practice.

The role of procurement in EAC integration


Billy Rwothungeyo
September 04, 2014
The role of procurement in EAC integration                                          
 
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.
Trade enabler
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.

Uganda: Procurement Challenges Dog many Local Governments


NTV Uganda

The Public Procurement and Disposal of Public Assets PPDA, says that the procedures on contract awards and executions at local government levels remain weak. PPDA’s Director for Procurement Audit and investigation Benson Turamye  notes that the gap needs quick redress considering the Trillions of shillings in procurements handled by both the Central and Local governments.

Tanzania: ENOC Africa Wins Another Tender to Import Fuel


Tanzania Daily News via AllAfrica 

A TANZANIAN oil company, ENOC Africa, has won a tender to import fuel under the Petroleum Bulk Procurement System (BPS) for the month of October, this year.

The tender that attracted six oil companies including five foreign and international companies, was awarded to ENOC Africa after offering the lowest Weighted Average Premium per Metric Ton of 45.771 US dollars per MT.

Other companies (all international) that participated in the tender include Addax Energy SA which quoted 49.18 US dollars per MT, Augusta Energy SA (48.854 US dollars per MT) and Gapco (K) Ltd (47.543 US dollars per MT).

Speaking about the tender results at the weekend of which the company will import 299,872 Metric Tons of fuel, Petroleum Importation Coordinator (PIC) General Manager, Michael Mjinja, said ENOC Africa was pronounced the winner after meeting all the tender requirements and proving that its offer would benefit the country, traders and consumers.

“Among the six oil companies, only four returned the tender documents and finally the winner (ENOC Africa) was picked. ENOC Africa is the only locally registered company and the consignment it will import will be enough to serve the country for a period of one month and two weeks,” he said.

Mr Mjinja said it was delighting to see local companies like ENOC Africa coming up to pose a challenge to giant foreign international oil companies which had previously dominated the sector by frequently winning such tenders.

“BPS is the most transparent way of public procurement where the winning bidder is decided in the open before representatives of all bidders, everyone endorses the winning bidder,” said Mr. Mjinja.

 
 

ENOC Africa will import 156,863 MT of Automotive Gas & Oils (AGO), 115,490MT of Premium Motor Spirit (PMS – gasoline), 26,269MT of Jet A1 and 1,250MT of Kerosene.

“With the transparent manner in which the winning bidder is picked, oil marketing companies are satisfied with the process. They do accept decisions made openly and unanimously in picking the winning bidder,” said Mr Minja.

When contacted via phone on Monday, the Energy and Water Utilities Regulatory Authority (Ewura) Head of Communication and Public Relations, Titus Kaguo said that BPS has proved to be a system which both consumers and suppliers are happy with and has helped lowered pump prices for fuel, increased government revenue and restored some sanity in the oil trading business.

“The system has helped in improving quality of petroleum products, stabilized cup prices, improved taxation and has helped to reduce demurrages at the port.

Apart from transparency and increasing government revenue, the BPS has also assisted the country to save foreign currency used to purchase petroleum products,” he said.

ENOC Africa, which recently expressed its intention to heavily invest in storage facilities in Tanzania and neighbouring countries, has proved its ability to ensure sustainability in oil supply in Tanzania by winning the tender for the third time. Tanzania consumes about 1.54 million cubic meters per annum of petroleum products.

Op-Ed: We’re withdrawing from the Arms Procurement Commission, and here’s why


Daily Maverick

By A FEINSTEIN, P HOLDEN AND H VAN VUUREN

August 29, 2014

The Arms Deal was a uniquely damaging moment in our young democratic history. It was concluded after decades of uncontrolled spending on foreign and internal wars by the apartheid regime. From the signing of the contracts in 1999 up to R70 billion of public money continues to be spent on weapons of questionable utility. The country was not and is not facing any meaningful military threat. But rather the most pressing problems that faced us then as they do now are inequality, poverty and unemployment

Since its inception the Arms Deal has been dogged by well supported allegations of corruption. We together with many other activists have consistently challenged the State to fully investigate and prosecute these allegations. Four previous investigations have failed to fully probe the Arms Deal.

We have engaged with these matters in different capacities over many years and we have done this out of the commitment to the primacy of the Constitution and the rule of law in our democracy. Given this commitment we believe that all allegations of corruption must be investigated and prosecuted without fear and favour.

After careful consideration, with great disappointment we have decided to withdraw all participation in the Seriti Commission of Inquiry into the R70 billion Arms Deal.

The appointment of the Commission raised great expectations that the truth would finally be established, and that this would challenge the interests of politicians, middlemen and large corporations in one of the most corrupt industries in the world. The Commission had the prospect of serving not only South Africans but all people across the globe campaigning against the devastating impact of corruption in the arms trade.

The Commission has failed on both accounts. It has missed a historic opportunity to support the struggle for transparency and accountability of the powerful.

We have not made our decision lightly. It follows nearly two years of actively trying to support the work of the Commission, assisted by an exceptional pro bono legal team led by Lawyers for Human Rights.

We have taken our decision due to serious and fatal concerns we have regarding the manner in which the Commission has conducted itself. There are four key reasons why we have decided to withdraw:

  1. The Chairman, Judge Willie Seriti, indicated that he was not interested in hearing evidence from witnesses about documents that they had not themselves written. Judge Seriti made this ruling during the testimony of Member of Parliament Mr David Maynier. This prevented Mr Maynier from giving any substantive evidence, as he was not the author of documents that emanated from investigations or government departments. This is particularly disturbing as this limitation was not applied to previous witnesses who were supportive of the Arms Deal. The implication of this ruling is that only those who have been involved in the Arms Deal can introduce evidence. How the Commission intends to discover the truth by only hearing from participants in the Deal is a mystery.

The Chair has also ruled that witnesses should only speak to corruption allegations of which they have personal knowledge. The logical conclusion of this ruling is that only those who have been corrupted, who have corrupted others, or who were intermediaries in such corruption, can give evidence of it. It is obvious that all of these parties have an interest in hiding the truth. Why would the Chair choose to rely solely on their opinions?

We have conducted extensive research into the Arms Deal. We have analysed thousands of documents, and interviewed people who are able to point to where evidence of corruption is likely to be found. We were not direct participants in the Arms Deal. If we are not allowed to talk to documents that we have not written, nor speak to corruption allegations based on documentary evidence, there is no point in our appearing as witnesses. This process will serve to undermine the critics without addressing the evidence they have accumulated. This can only serve to protect the corrupt and compromised.

In response to our attempt to resolve this issue, the Commission has informed us in their correspondence of 27 August 2014 that “The decision [to admit evidence of which a witness not the author, nor facts within a witness’ personal knowledge] will be influenced by the circumstances of each case, including the document’s relevance to the terms of reference and the purpose for which it is sought to be used.” There is no basis on which we can have any expectation that we will be permitted to give evidence on matters not within our personal knowledge, and rely on documents we are not the authors of. The Commission’s rulings to date in respect of other ‘critic’ witnesses, and the Commission’s rulings to date in respect of our cross-examination of other witnesses, clearly indicate the contrary. The Commission has not undertaken that it will now reverse its previous approach. (If it did so, procedural fairness would require the recall of a number of witnesses). Read more here.

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