RPPA

1. Improving the Efficiency of Public Procurement for Economic Growth in Rwanda • Presented by • Augustus Seminega • The Director General of RPPA • East African Procurement Forum • Kigali , Lemigo Hotel , November 2011 RPPA

2. CONTENTS • Introduction • Indicators of inefficiency in Public Procurement in Rwanda • Causes of inefficiency in public procurement in Rwanda • Measures to improve the efficiency of Public procurement in Rwanda • Future trends to enhance the efficiency of public procurement. RPPA

3. Intoduction • Public Procurement in Rwanda is Estimated at 11 % of GDP and 40% of public expenditure; Employees hundreds of thousands of workers and Contributes to the tax envelope • Improving the efficiency of public procurement would increase the value of goods and services produced for a given amount of money during a given financial year leading to economic growth. 11% of GDP RPPA

4. Introduction: Understanding the efficiency in Public Procurement Definitions RPPA

5. Introduction • Efficiency in PP can be improved at two levels: • Level 1 or low level involves removing the inexperience of government officials and lack of professionalism of suppliers (definition 1) • Level 2 or high level involves adopting policies that ensure cost savings even though no apparent losses are evident ( definition 2) • This presentation is mainly about level 1 but hints on level 2 towards the end RPPA

6. Indicators of inefficiency in Public Procurement in Rwanda Indicator # 1: Long time spent in tendering • Tendering by nature and by law takes a long time; Statutory time and administrative time • In Rwanda minimum statutory time is about 73 days (for national tenders without appeals and requests for no objection), while maximum time is about 214 days (for international tenders with appeals and requests for no objection) • In practice total time can go up to 2 years indicating that in most cases of long time tendering administrative time is much more than statutory time RPPA

7. Indicators of inefficiency in Public Procurement in Rwanda ctd Indicator # 1: Long time spent in tendering ctd • Determining factor • Administrative time • Example: Acquisition of TV and Radio studio equipment and transformation of the TV/ Radio building by ORINFOR • Time spent: Over 26 months. • Reasons: lack of understanding of the nature of items to be procured resulting in two rounds of tendering; then two rounds appeals and a lengthy contract negotiation process. RPPA

8. Indicators of inefficiency in Public Procurement in Rwanda ctd Indicator # 2: Hiring incompetent suppliers/providers • Examples: • In the late 1990s Government lost money on unconstructed or very poorly constructed houses for vulnerable people; 21 companies were involved and government is in a legal process to recover the funds • In 2009, over 90 contracts were cancelled after contractors failed to complete different small works and sometimes disappearing without trace RPPA

9. Indicators of inefficiency in Public Procurement in Rwanda ctd Indicator #3 : Delays in paying suppliers • Finding by the study carried out by MINECOFIN in 2008: confirmed existence, examined extent and causes • Average number of days the invoices of suppliers took at a procuring entity before being submitted to treasury:150; Average number of days the treasury took to pay after receiving the invoice was: 36 RPPA

10. Indicators of inefficiency in Public Procurement in Rwanda ctn Indicator #3 : Delays in paying suppliers ctd • Causes • Ignorance of suppliers of payment procedures • Negligence of officers in charge of processing payments • Lengthy procedures • lack of adherence to procurement plans • Lack of funds and incomplete supporting documents. • Measures: treasure takes 14 days to pay invoices and every month checks entities which have received invoices and delayed to submit them. RPPA

11. Indicators of inefficiency in Public Procurement in Rwanda ctd • Indicator #4: “The government pays more than other buyers for the same products” • The above is a common perception; if it is true, likely causes are Corruption and/or incompetence or negligence of staff A study should be conducted to provide guidance on measures to address the problem Government as buyer Private as buyer RPPA

12. Causes of inefficiency in Public Procurement in Rwanda • Lack of effective linkage between planning, budgeting and procurement planning. • Lack of sufficient involvement of senior management at strategic level. In some institutions public procurement is left only to procurement officers and the tender committee while the accounting officer does the role of only signing the contract Budgeting Procurement Planning RPPA

13. Causes of inefficiency in Public Procurement in Rwanda ctd • Weak capacities of procurement officials: no academic training, no experience and a high rate of turnover • Weak capacities and lack of integrity of some suppliers: Most businesses are new in business and have not passed the test of time. Their also the mentality that there is easy to get-money in public procurement • Evidence: Over the last 4 years • 88 companies have been blacklisted, 52 for forgery and 38 for failure to meet contractual obligations RPPA

14. Causes of inefficiency in Public Procurement in Rwanda ctd • Difficulties in defining technical specifications and/or terms of reference for the goods and services • Fear of breaking the law: staff and managers of institutions fear to take important decisions concerning public procurement thus curtailing service delivery and economic development. RPPA

15. Measures to improve the efficiency of public procurement • Addressing insufficient attention given to planning • Article 6 of law on procurement requires PEs to make a procurement plan while article of the regulations require them to submit the plan to RPPA before end of first month of financial year • A budget call circular issued each year contains instructions to include an annual action plan and a procurement plan among documents submitted with the budget to the MINECOFIN • A member of staff of RPPA sits on the team examining the budget proposals to ensure quality of the procurement plans RPPA

16. Measures to improve the efficiency of public procurement in Rwanda ctd • Addressing the problem of lack of involvement of senior managers • The role of senior managers in public procurement is discussed every year in the Accounting Officers Retreat organized by the Ministry of Finance and Economic Planning to discuss public financial management issues. RPPA

17. Measures to improve the efficiency of public procurement in Rwanda ctd • Addressing weak capacities of procurement officials • Establishing a capacity development unit at RPPA • Developing short courses and master degree at SFB • Post graduate diploma course at RIAM • Facilitating some staff to undertake professional courses (CIPS) RPPA

18. Measures to improve the efficiency of public procurement in Rwanda ctn Addressing the problem of lack of capacity and integrity of suppliers • Carrot and stick approach: • Training and dialogue • Categorization of contractors • Debarring fraudulent bidders and those who lack integrity in other ways • Supplementary instructions by Ministry of Finance and RPPA on pre evaluation market research and post qualification verification to help officials to avoid buying at high prices and selecting unreliable suppliers respectively RPPA

19. Measures improve the efficiency of public procurement in Rwanda ctn • Addressing the problem of fear of breaking the law • Proposed amendments in the law define specific offenses that lead to criminal sanctions and those that lead to disciplinary sanctions • Offenses leading to disciplinary sanctions are: • Refusal of due service (refuse to communicate, delay payment, refuse to return guarantee, refuse to accept goods works or services) and • Failure to abide by fundamental principles in public procurement. RPPA

20. Measures to improve the efficiency of public procurement in Rwanda ctd • Addressing the problem of fear of breaking the law ctd • Offenses leading to criminal sanctions: • Violation of the principle of competition and unequal treatment of bidders • disclosure of technical specifications before publication • refusal to give a bidding document or an addendum • influence tender committee to base evaluation on criteria not provided by the tender document and • splitting tenders to evade the law RPPA

21. Measures to improve the efficiency of public procurement in Rwanda ctn • Measures against fear of breaking the law ctd • Addressing the problem of fear of breaking the law ctd • offensive negligence • collusion with and among bidders • award of unjustified advantages during contract execution and • use of methods not authorized by law. • Impact: increased ability to take decisions due to clarity of consequences RPPA

22. Procurement trends: Australian and New Zealand Government Framework for Sustainable Procurement • Australian and New Zealand Government Framework for Sustainable Procurement can give an insight into the direction the governments in the EAC could follow in further improving efficiency in public procurement. The framework is based on four principles namely: • Adopt strategies to avoid unnecessary consumption and manage demand RPPA

23. Procurement trends: Australian and New Zealand Government Framework for Sustainable Procurement ctd • In the context of whole-of-life value for money, select products and services which have lower environmental impacts across their life cycle compared to competing products and services • Foster Australian and New Zealand market for sustainable products and services by supporting businesses and industry that demonstrate innovation in sustainability; and • Support suppliers to government who are socially responsible and adopt ethical practices. RPPA

24. Procurement trends: Australian and New Zealand Government Framework for Sustainable Procurement ctd • Example: For vehicles, the government sustainable purchase guide included a points based system that weighs up fuel economy, co2 emission, crash rating and lifetime cost each with a weight of 25%. • It is these kinds of approaches that can lead to high level cost savings now and in the future RPPA

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