Dar es Salaam. Public procurement stakeholders in Tanzania are eagerly waiting for the government to release the regulations for the newly enacted Public Procurement Act of 2023 to decide whether the legislation addresses pertinent issues they have been pointing out.
Passed by the parliament on September 07, 2023, the new law replaces the Public Procurement Act of 2011. Described by the government as “reformist,” the new law emphasises value for money and provisions that guide supply in the country.
It also establishes a framework for procurement for public entities that run as commercial enterprises. The following is an analysis of the key issues in the new law.
The law makes it mandatory for procuring entities to use e-procurement systems, which is crucial in ensuring Tanzania moves from its current approach of using dual systems, i.e., paper-based and e-procurement systems.
In 2018, Tanzania introduced the first comprehensive e-procurement system, TANEPS, and later, the government issued a directive that all procurement should be done inside the system.
However, since 2018, only 15.5 per cent of all procurement in the country has been done using the TANEPs system. The main reason that procuring entities give for not using e-procurement was the unfriendliness of the TANEPS platform to users.
In a move to resolve the challenges observed, in July 2023, Tanzania introduced a new e-procurement system, the National e-Procurement System of Tanzania (NeST), which the Tanzania e-Government Authority designed.
The new system provides more flexibility in the usage and modification of its modules, which differs from the earlier system designed by the Greek-based company European Dynamics.
On July 27, 2023, the Government Pay Master General directed that September 30, 2023, is the end date for using the current system and that no procurement will be done outside NeST from October 1, 2023.
Moreover, the government has informed that the new system has already been linked with more than 16 government systems, including the Tanzania Revenue Authority (TRA), The Business Registrations and Licensing Agency (BRELA), the Contractors Registration Board, and the National Identification Authority, among others.
Stakeholders have praised these provisions, considering the available evidence that e-procurement systems help curb corruption and ensure efficiency in the process.
While the new law, unlike its predecessor, emphasises the concept of value for money in public procurement, stakeholders have pointed out the lack of clarity of the provision, many of them waiting for the regulations to see how the concept will be implemented.
However, the law introduces indicative prices based on the market price for construction equipment. The Public Procurement will update and maintain this database of the prices to gauge awards in procurement contracts.
Minister of Finance Mwigulu Nchemba told the parliament during the debate on the law that the government wants the procurement process to look at the value for money and not just the lowest price. He said the government has noted that there is an issue of collusion in procurement.
The law also includes a provision covering contract management, which was missing in the previous framework. The account officer will have the general mandate in contract management and the user department will also have direct responsibility for contract management as set out by the regulation.
This is an important provision, allowing for more accountability across the procurement circle. But as indicated earlier, the new law remains wanting on transparency as it doesn’t provide for much public participation or have citizens in mind as the key stakeholders in the implementation of the public procurement processes.
For example, it wants the annual performance and value for money report from the Public Procurement Regulatory Authority (PPRA) to be tabled before the president in March of every year, not mentioning whether the report will be made public.
While it was not required by law to make its report public, PPRA had set a progressive practice of releasing its annual report to the public. So far, the only report that wasn’t published by the authority is the 2021/22 report.
In a discussion that ensued in parliament around the PPRA report, the budget committee had agreed for the report not to be turned directly to the parliament as part of the report will also form part of the CAG report.
Daniel Baran Sillo, the chairperson of the Parliamentary Budget Committee, said during the committee’s analysis of the bill on September 07, 2023, that because the report is a performance report and it is also included in CAGreport, “the committee saw that there is no need to bring the report to parliament and proposed the report to end at the Ministerial level.”
One of the committee’s members, Charles Kimei, concurred, arguing the committee had wanted the report to come to parliament, but the Minister was able to convince them that it was okay for the report to end at the Ministerial level.
If the practice of publishing PPRA reports is halted and the report is not brought before parliament, it will be several steps backwards in ensuring transparency and public participation in the process.
In the current law, the only processes that are open for public scrutiny are the earlier stages of public procurement, which are planning, advertising of tender, and the name of the tenderer awarded. Other processes, such as evaluating the bids and deciding to award the tender and the contract, remain hidden from the public.
Experts on public procurement recommend that the process be open in all stages, especially because in countries like Tanzania, over 70 per cent of taxpayers’ money is used in procurement.
Chief Executive Officer of PPRA, Eliakim Maswi, underscored the need for more transparency during his annual briefing to the press on July 17, 2023.
“As the regulator, we have encountered several challenges from procuring entities in the country. One of the challenges is the lack of transparency in the procurement process,” Mr Maswi said.
“Most tender processes are not open as they should be in the spirit of more transparency and accountability,” he added. “Absence of transparency in the process leads to the deficiency of information and lack of value for money, and in turn, people lose faith in the procuring entities.”
One of the areas that led to extensive debate in parliament during the passage of the Act was around national preference, where lawmakers wanted more commitment from the government to ensure local companies benefit more from public procurement.
As with the previous legislation, the new law introduces national preference where local companies owned by Tanzanians are given preference up to certain tender limits. The relevant minister told lawmakers that the amount limit of tender that is set to be compulsory for only Tanzanian companies will be Sh50 billion (US$20 million).
The law also introduces preferential treatment schemes for women, youth, persons with disabilities, and the elderly business. In the scheme, the procuring entities must set a certain percentage of the procurement volume for special group businesses. In the previous regulation, businesses were supposed to set 30 per cent of their annual procurement volume.
Research by The Chanzo and Africa Freedom of Information Centre (AFIC) found that despite the scheme’s potential in empowering special group businesses, procuring entities in Tanzania were not complying.
The research also shows that the process for identification and registration of special groups was cumbersome; the lack of data on the scheme’s implementation also made it difficult to monitor progress.
Also, the fact that the law required special groups to access this opportunity as groups was itself a shortfall, causing already established companies and sole proprietors to avoid the hassle of forming groups.
The lack of ownership in the provision was also a challenge, as no specific government department owned the scheme. In the new Act, the government has set that the regulation will be set out with close coordination with the Ministry responsible for special groups.
The research compares a similar preferential scheme from Kenya to that of Tanzania. In Kenya and Tanzania, the schemes started in 2013 and 2016 respectively. Between 2013 and 2019, about 40,597 businesses registered for the scheme in Kenya, while between 2016 and 2021, only 144 businesses registered for the scheme in Tanzania.
Moreover, between 2015 and 2019, about US$1.7 billion was set aside for the scheme in Kenya, and only about US$281,821 was set for the scheme in Tanzania. For the scheme to achieve its potential, the new regulation must resolve some of its structural barriers.
The politics of force accounts
The new law also provides for the use of force account, a process where public or semipublic departments or agencies carry out works using their personnel and equipment or collaborating with any other public or private entity.
In most cases, the use of force account involves using local technicians who are not registered and operating informally. The CAG report on the use of Force Account in the Education Sector (2021) revealed issues related to fraud, quality control, and losses due to abnormal prices in labour and goods, among other things.
In the discussion that ensued in parliament, there were divergent views regarding the usage of force accounts. Some MPs were concerned about the issue of quality in works through force accounts, while others were pushing that the limit should be increased to allow their voters to get opportunities in public procurement.
The government thus hinted that there would be a limit on the tenders that can go to force accounts, which is around Sh100,000,000, which made Speaker of Parliament Tulia Ackson wonder if that is the right amount, considering that it cannot even cover dispensaries!
Many stakeholders have commended the tone of the law, noting that it raises some hopes that Tanzania’s public procurement system will get the fixing it needs.
But they’re waiting to see the regulations that the government will develop to see if that will be the case.
The parliament has directed that the regulations to be developed by the government be tabled to the relevant parliamentary committee before coming into force to ensure they fit the spirit of the Act.
The regulations are also expected to set the overall processes for which state-owned commercial entities such as the Tanzania Telecommunication Company (TTCL) will operate.
Stakeholders believe that the government has an opportunity through the regulations to ensure public procurement processes are more efficient, effective, transparent, and accountable to the citizens.