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Ethiopia: Is ECX at it again? ECX’s upcoming procurement bid


Nazret.com November 29, 2012


By Wondwossen Mezlekia, 

The Ethiopia Commodity Exchange (ECX) is currently conducting a high-ticket international procurement – the first of its kind since a multi-million dollar bid was busted in 2010 due to alleged fraud and corruption during the bidding process.

The bid for the supply, installation, and maintenance of a futures trading software that ECX floated back in 2010 was marred by dishonest maneuvering, seemingly to favor the Sri Lanka based company, Millennium IT, and World Bank withdrew ECX’s award proposal and cancelled the loan. The loan was part of what the government had borrowed from International Development Association (IDA) for the purposes of financing the Rural Capacity Building project. [1] Strangely, the said futures trading software was not needed to begin with and would have been running idle today had ECX purchased it in 2010, because the government is, as it has always been, decidedly against price speculations and hence would not allow Forwards and Futures trade operations that the software was supposed to support.

ECX is once again preparing to spend some of the money that the government has borrowed from the Investment Climate Facilities for Africa Trust (ICF) and other donors on an online trading platform at an estimated total cost of more than $10 million (exact amount and details are withheld). Arguably, much like the futures trading software, the merit of this investment is also questionable, especially in light of ECX’s and the government’s current priorities, the details of which is for another article. The purpose of this article is to equip concerned citizens with the information and resources they need to be on their guard against corruption, and to put on notice anyone who may be under temptation or illusion to fraudulently benefit from the upcoming bid. Although there is no evidence so far, it is better to prevent corruption than to prosecute it.

According to ECX’s budget proposal that was reviewed for this article, almost 76% of the budget for the online trading project will be covered by funds from the World Bank’s Rural Capacity Building Project. ICF has agreed to cover the financing gap of about 24% of the total estimated budget through a grant. The procurement is being conducted under the auspices of the outgoing officers, Dr. Eleni Gebre-Medhin, Solomon Edossa, and Ahadu Woubshet who only have an advisory role under a one-year contract, even though the new CEO, Anteneh Assefa and other officers have already assumed their positions.

The Invitation for Bid (IFD) for the procurement of a core system for online trading, including its risk management, surveillance, and clearing components (Procurement Reference Number ECX-ICF/G/002/2012) was advertised on November 1, 2012 on national papers and online, including on dgMarket. [2] Accordingly, the bid will be opened in two phases: the technical bid will be opened on November 30, 2012 at 10:30 am local time at ECX Media Room, and the opening date for the financial bid will be announced thereafter.[3] The bidding will be conducted in accordance with the open International Tendering Procedures contained in the public procurement guidelines of the Government of Ethiopia, the ICF Guidelines[4], and the International Competitive Bidding (ICB) procedures.

The past record of the government in detecting or prosecuting suspected fraud and corruption is dismal. On the other hand, donor’s guidelines have proved to be reliable sources of defense in past disputes involving international procurement bids. Among these, ICF’s guidelines appear to be by far clearer and strictly dictating how the borrower and bidders alike should behave during the bidding process. For example, ICF not only offers to provide assistance of audit services and monitoring (Article 1.6), but also explicitly states the steps that it takes to fight fraud and corruption (Article 1.7).

Review, Assistance, and Monitoring

1.6 ICF and auditors appointed by ICF shall review the Grant Recipient’s selection process for the selection of suppliers proposed by the Grant Recipient in the Procurement Plan to ensure compliance with the Grant Agreement and these Guidelines. The Grant Recipient shall retain all documentation with respect to each contract during project implementation and up to two [y]ears after the closing date of the Grant Agreement. This documentation would include, but not be limited to, the signed original of the contract, the analysis of the respective proposals, and recommendations for award the record of justification, the capabilities and experience of the suppliers, for examination by ICF, auditors appointed by ICF or by its suppliers.

Fraud and Corruption

1.7 It is ICF’s policy to require that Grant Recipients, as well as suppliers and their subcontractors under ICF-financed contracts, observe the highest standard of ethics during the selection and execution of such contracts. In pursuance of this policy, ICF will reject a proposal for award, cancel the portion of the Grant allocated to a contract; sanction a supplier if it at any time determines that the tender process was marred by corrupt, fraudulent, collusive, coercive, or obstructive practices. In addition, ICF will have the right to require that, in contracts financed by an ICF grant. a provision is included requiring suppliers to permit ICF to inspect their accounts and records and other documents relating to the submission of proposals and contract performance and to have them audited

Articles 2.1, 2.15, and 2.21 of ICF’s guidelines also require borrowers to conduct bidding by following a two-tiered approach and based on Quality and Cost Based Selection (QCBS), which uses a competitive process that takes into account the quality and the cost of the services in the selection of the winner. The guidelines prohibit evaluators of technical proposals from having access to the financial proposals until the technical evaluation is concluded.

The Selection Process

2.1 QCBS uses a competitive process among short-listed firms that takes into account the quality and the cost of the goods and supplies in the selection of the successful supplier. Cost as a factor of selection shall be used judiciously. The relative weight to be given to the quality and cost shall he determined for each case depending on the nature of the assignment.

Evaluation of Proposals: Consideration of Quality and Cost

2.15 The evaluation of the proposals shall be carried out in two stages: first the quality, and then the cost. Evaluators of technical proposals shall not have access to the financial proposals until the technical evaluation is concluded. Financial proposals shall be opened only thereafter. The evaluation shall be carried out in full conformity with the provisions of the RFP.

Articles 2.11 and 2.12 if IFC’s guidelines even go as far as to dictating the minimum time that grant recipients need to allow between the different stages of the procurement process. For example, the minimum time-limit for receipt of proposals should not be less than 40 days from the date of the advertisement, except in emergency situations.

While these and other Articles of ICF’s guidelines appear to provide reasonable controls around each segment of the procurement processes, any control is only as strong as the people applying them. It is thus imperative that concerned citizens and bidders get engaged and attentively monitor all international bidding processes conducted at ECX and other institutions in order to prevent misappropriations of foreign aid in Ethiopia.

Report suspected fraud and corruption to Investment Climate Facility for Africa at info@icfafrica.org or projects@icfafrica.org; the World Bank Group’s Integrity Vice Presidency at investigations_hotline@worldbank.org; or Transparency International at transparency@transparency-usa.org.

[1] http://poorfarmer.blogspot.com/2012/03/is-government-serious-about-fighting_19.html
[2] http://www.dgmarket.com/tenders/np-notice.do~8547811 (dgMarket is an international portal for tenders and procurement opportunities from governments and international organizations)
[3] The time elapsed between the date of advertisement and the bid opening date appears to be shorter than the minimum time limit set under Articles 2.11 and 2.12 of ICF’s Procurement Guidelines
[4] http://www.icfafrica.org/documents/ICF-Procurement-Guidelines-for-Goods–Suppliers.pdf

Read more about ECX at http://poorfarmer.blogspot.com/p/ecx-watch.html
Contact the writer at poorfarmer@gmail.com

From Berlin to Brussels: Will Europe Underdevelop Africa Again?


ThisDay Live

By Chukwuma Charles Soludo

March 19, 2012

Africa is in trouble. Its future is once again on the table, and it is Europe that holds the ace. Unlike the Berlin Conference of 1884 to 1885 which balkanized Africa among 13 European powers as guaranteed sources of raw materials and market, the current contraption under the Economic Partnership Agreements (EPAs) spearheaded from Brussels is the modern day equivalent of the Berlin Conference. At issue in both Berlin and Brussels is whether or not Africa can be allowed latitude to conduct trade, industrial and development policies for her own development or for the development of Europe. A major difference is that the ‘agreement’ will now be signed by free people, under supposedly democratic regimes, and in contexts where the African people again have neither voice nor choice. Only about 10 out of 47 Sub-Saharan African countries (SSA) have either signed or initialled the EPAs. Trade ministers of the affected regions—the African, Caribbean and Pacific (ACP) countries as well as African trade ministers and the African Union—have largely rejected the EPAs. Despite all of these, and the reported public protests in twenty countries against the raw deal, it seems all but certain to be rammed through. In private whisperings, not many Africans or policymakers are happy with the deal but there is a certain sense of helplessness….

Put simply, in order to continue to have access to European markets (on the terms that it had enjoyed for more than three decades) Africa is now required to eliminate tariffs on at least 80% of imports from the EU; in some cases, abolish all export duties and taxes, in others, countries can retain existing export taxes but not increase them or introduce new taxes; eliminate all quantitative restrictions; and meet all kinds of other intrusive and destructive conditionalities that literally tie the hands of African governments to deploy the same kinds of instruments that all countries that have industrialised applied to build competitive national economies. Under the WTO, least developed countries (LDCs) are not required to further reduce their tariffs (at least they have the choice to decide whether and when to do so) but EPAs require at least 80% of them eliminated. Indeed, Africa is being asked to comply with more stringent conditions than Brazil, India and China are required to meet under the WTO. Almost all the flexibilities in policy choice that Africa and other developing countries won under the WTO are lost under the EPAs. Hitherto, the EU had also (in addition to the Cotonou agreement) granted a special concession to all African LDCs – the ‘Everything But Arms’ (EBA) – allowing them to export duty-free to the EU. This was the EU’s equivalent of the US Africa Growth Opportunity Act (AGOA) and African LDCs were not expected to reciprocate.  With EPA, it means that EBA is effectively dead. LDCs would have to provide reciprocal market access opening. In addition, what the EU has failed to get under the WTO or issues that developing countries have rejected under the WTO are being foisted on Africa under the EPA. For example, the so-called trade-related issues (the Singapore issues) such as investment, competition and transparency in government procurement, which are dead under WTO are being smuggled into EPA…Read more.

Indian drug firms target African anti-malarial market


Business Line

P. T. JYOTHI DATTA

Mumbai-February 22, 2012

It was a decision grounded in practical reasons, but Bliss GVS Pharma’s strategy to sell its anti-malarial medicines through retail channels in African countries seems to have worked for it.

It managed to steer away from large players including Indian drug-makers like Cipla and Ipca, active in the global-funds-driven Government tenders market in these countries.

But that is poised to change – the African anti-malarial drugs market is set to get stirred. Bliss is preparing to make a play for the funds-driven segment, and companies like Cipla are eyeing the private, retail market. Africa accounts for over 80 per cent of the global malaria incidence.

Bliss targeted the retail market as its manufacturing facility was old and would not have passed World Health Organisation (WHO) specifications, says Managing Director, Mr S.N. Kamath, rather candidly. Positioning itself in a niche segment, the company targeted 26 African markets, with the exception of Botswana and South Africa, he said.

But over the next six to 12 months, Bliss is targeting the tender-driven market – where the Government sources large volumes from companies that offer medicines at reasonable prices. These Government-run programmes are supported by global funding organisations including UNAIDS, the Gates Foundation and the Global Fund for AIDS, Tuberculosis and Malaria.

With India being home to several manufacturing facilities that meet global regulatory standards, Mr Kamath says, Bliss will tie up with a third-party to manufacture anti-malarials and target the African tender market. About 80 per cent of Bliss’ over Rs 220-crore turnover comes from exports and a lion’s share of that comes from anti-malarials…Read more.

Women to Win More Government Contracts Following WTO Agreement


Businessweek

By Jennifer M. Freedman

December 19, 2011

Dec. 17 (Bloomberg) — Women entrepreneurs, with full or partial ownership of more than a third of global businesses, win just 1 percent of government contracts, according to Patricia Francis, executive director of the International Trade Centre.

They may get a bigger piece of that pie as a World Trade Organization agreement opens up purchasing to more competition, minimizing cronyism and nepotism that have capped women’s access to such business, she said in an interview today in Geneva.

“Women don’t think of themselves in certain kinds of positions, and therefore you need role models, you need an outreach program, you need to get a process of engagement,” said Francis.

The disparity is particularly pronounced in developing countries, although women in rich economies also get a disproportionately small share of such contracts, according to the ITC, the Geneva-based joint agency of the WTO and the United Nations. While 5 percent of federal contracts worth about $30 billion were to be allocated to female business owners in the U.S. last year, the actual number fell short of that figure…Robert Anderson, a counselor in the WTO’s intellectual property division, said the procurement accord is “very important for women” even though it covers no countries in Africa, where women are a growing economic forceRead more.

UN Global Compact: What is in the brand name?


Map of South Africa, with provinces, neighbour...
Image via Wikipedia

Anti-corruption core focus for UN Global Compact, more SA groups sign in

Engineering News by Christy van der Merve

March 17, 2011

From 2011 to 2014 the major focus of the United Nations Global Compact (UNGC), which focuses on sustainable business promotion, would be to fight corruption.

South Africa, with 52 organisations partaking in the initiative, was represented at the UNGC network through the National Business Initiative (NBI), which joined the UNGC in 2007.

On Thursday, a further four South African entities signed on to become a part of the UNGC, which focuses on ten principles in the areas of human rights, labour practices, the environment, and anti-corruption…Discussions would start on ‘integrity pacts’ to put procurement processes under the spotlight, and stakeholders would look to start a pilot project, which would enable the establishment of best practice guidelines, and monitoring and reporting guidelines…UNGC South Africa chairperson Futhi Mtoba noted that a collective action platform called the National Anti-Corruption Forum, which represented business, government and civil society, already existed in South Africa. She said this forum had identified projects in the pipeline that could serve as a pilot project to establish guidelines and principles to root out corruption. One of these projects was the Metrorail upgrade of moving stock. She said that Information Technology was also an area where government was “hit seriously”, and thus these projects could be scrutinised. Read the full article.

The Global Compact launched in 1999 by Koffi Annan, the former U.N. Secretary-General, is an initiative that promotes ten agreed principles of responsible corporate citizenship based on U.N. universal values related to human rights, labor, environment and anti-corruption. It goes without saying that the Global Compact initiative appeals to many in Africa because the U.N. brand offers civil society a broader platform for cross-sectoral partnerships and political mobilization. Under the Global Compact, civil society is becoming more engaged and creative by shifting discourse from ‘corruption’ tout court, to ‘the actual areas where it manifests.’  It is said that the risk of corruption is higher in public procurement and incidences of government subpar performance increasingly make front page news on the continent.

So, what is in the U.N. Global Compact brand for African countries? A possibility. As the model of public-private partnerships for development is  integrated and understood by social and economic actors, it might be reasonnable to expect that actual  government  procurement reform could gain greater support.

It is important to note that civil society engaged in the debate over public procurement reform in Africa is not anti-business. There are pockets of business-adverse activists all over the continent but their influence is declining. In the case of South Africa, civil society is focusing on the fight against corruption in public procurement because it hurts business, democratic governance, and society at large. The U.N. Global Compact is therefore an initial step in the good direction.

Despite its good intentions, the U.N. Global Compact still lacks adequate regulatory and institutional framework. A report published by the Joint Inspection Unit (JIU) of the United Nations in 2010 highlights several regulatory and institutional problems with the Global Compact that could, once again, put the reputation of the U.N. at risk. For instance, noting  the confusion between ends and means, the JIU warns that “mere commitment to the principles upon joining the initiative is not a certificate of ‘good behavior’ on the part of participants.” Moreover, “the voluntary nature of the commitment and the ‘learning’ premise on which the initiative is based do not provide adequate safeguards for behavior.” These are the same problems that cripple African bureaucracies.

According to the U.N. Joint Inspection Unit report, the lack of reliable regulatory and institutional standing limits the impact of the Global Compact. It therefore follows that in order to bring about institutional reforms, African states and civil society also need to explore possibilities that the WTO Government Procurement Agreement offers. This is not going to be an easy task because of differences in emphasis –social versus economic outcomes, administrative versus legal approaches– in the U.N. and the WTO models. Nevertheless, without a serious commitment to an institutionalized and formalized procurement compact, broader political participation alone may not bring about the kind of economic development that civil society wishes to see in Africa.  S.N. Nyeck.

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