Creating favourable conditions for the competitiveness of firms in the EAC Rwanda

1. Creating favourable conditions for the competitiveness of firms in the EAC Rwanda East African Procurement Forum November 16th 2011 Ministry of Trade and Industry

2. Outline Issue: The Importance of Competitive Bidders from the Region Context: Current Competitiveness of EAC Bidders Constraints: Major Challenges to Competitiveness Reforms: Creating Favourable Conditions for Competitiveness Looking Ahead: Opportunities 1 2 3 4 5

3. Issue: Importance of Public Procurement • Public institutions use the public procurement process to outsource activities to private firms. This could be in construction, supply of goods, consultancy services etc… • Major benefits include: • Cost savings • Improved quality of work • Reduced delivery time • Allows focus on core functions • Firms who specialise in the required area and serve many clients benefit from economies of scale and an accumulated stock of experience

4. Issue: Benefits of Regional Competitiveness International National & Regional • May be desirable to attract international bidders for projects that require considerable expertise, international networks and/or capital equipment (e.g. Kigali Convention Centre, Bugesera International Airport) • In many other instances, local and regional firms can have a competitive advantage • Q: How can this potential advantage be supported by: • procurement process reforms and, more broadly, • overall business competiveness reforms? • International experience • Network of international experts • Stock of capital equipment • Far-reaching business network • Knowledge of regional context • Regional experience • Regional business network • Low travel / communications costs • Language

5. Context: Tenders Awarded 2010/11 Table: Tenders Awarded in July 2010 - Feb 2011* (RWF billion) • EAC firms were awarded 58% of tenders by number (38), but only 41% by value (RWF 38.2bn) • More valuable tenders awarded to international firms *RPPA Data

6. Constraints

7. Reforms: Tender Process • Procurement Law (2007) and Regulations have been gazetted and available in 3 languages at www.rppa.gov.rw • Includes provision on appeal mechanism • Small/young companies supported by not considering company experience as a qualification criteria for tenders for works below RWF 50m, consultancies below RWF 10m and goods below RWF 5m • Reduced experience requirements in construction of multi-story buildings • Performance guarantee now 5 to 10% rather than fixed 10% • Bid security percentage reduces as tender value increases • RPPA conducts workshops in which local suppliers are trained on public procurement procedures and give their views about what can be done to facilitate them to better access public tenders

8. Reforms: Overall Business Environment Doing Business Reforms • Rwanda is 45th easiest country to do business worldwide, 3rd in Sub-Saharan Africa, 1st in EAC • Rwanda is 2nd most reformed country in the world since 2005

9. Reforms: Overall Business Environment EAC economies rank on average higher than the regional average on the ease of doing business EAC Burundi, Kenya, Rwanda, Tanzania, Uganda SADC Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe Rwanda 45 ECOWAS Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo ECCAS Angola, Burundi, Cameroon, Central African Republic, Chad, the Democratic Republic of Congo, the Republic of Congo, Equatorial Guinea, Gabon, São Tomé and Príncipe

10. Reforms: Overall Business Environment Competition and Consumer Protection Policy and Law • Established a Competition Unit in Ministry of Trade & Industry tasked with using advocacy, investigations & enforcement to achieve its objectives: • Provide consumers with competitive prices & product choices at the best possible quality • Ensure SMEs have an equitable opportunity to participate in the economy and to promote a greater spread of ownership • Provide incentives to producers within the country for improvement of production and quality products through technical and organisational innovation • Enhance competitiveness of Rwanda enterprises in world markets by exposing them to competition within the country. • Create a conducive environment to foreign direct investment • Promote economic efficiency and enhance consumer choice

11. Reforms: Overall Business Environment Competition and the EAC • Rwanda adopted the EAC Competition Regulations in 2009 for the EAC Competition Authority, for cross-border economic activity Anti-corruption institutions • Rwanda is a country with zero tolerance to corruption. Laws on anti corruption have been published and institutions to fight/or to assist in fighting against corruption have been established, including: • Office of the Ombudsman • Office of the Auditor General • Rwanda Public Procurement Authority

12. Looking Ahead: Opportunities • Collaboration through consortiums of local and foreign firms can provide win-win solutions, bringing the benefits of local knowledge and international expertise • Should be permitted and encouraged by tender processes in the region • Easy and flexible evaluation criteria and Inclusion of employing of local experts in the tender document are recommended • Continued harmonisation of tender requirements by institutions and agencies in Rwanda and the EAC • Education and training of our local companies on procurement laws and opportunities is encouraged • Special financing solutions to be developed by financial institutions that favour small/local companies which seek financing using contracts as collateral • Overall competitiveness of the region through Doing Business reforms and beyond should be championed, using best practices from EAC, Africa and the world