History has been made, the Budget has openly acknowledged procurement as the source of service delivery challenges in the public sector for the first time.
In the presentation made on November 24 Finance minister Tendai Biti allocated close to 20% to capital projects in the $4 billion Budget.
Lack of transparency and competitiveness, procurement management skills and qualified personnel, recognition of procurement as a profession were rampant in the public sector.
The need to review the procurement legal framework and decentralisation of procurement were identified as key drivers to achievement of budgetary targets.
Procurement planning was highlighted as a grey area in public finance management systems (PFMS). This was unravelled by the rate of utilisation of capital budget disbursements in 2011.
There was only a 0,04% improvement on utilisation efficiency from the Mid-Term Fiscal Review to a new across sector average of 89%. The housing sector utilisation factor was the lowest at 74%.
Utilisation ratio of disbursed capital is a factor of procurement planning reflecting the level of preparedness of some procuring entities to execute their duties.
Disbursement rates were low at 35% with $151,6 million of the planned $438,8 being realised by Treasury.
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The utilisation and disbursement scale affect both service delivery and the upstream industries that were supposed to benefit from the funds.
The minister brought to the fore the need to improve government operational efficiency by changing the culture in the way procurement is conducted. This requires the exclusion of political fingers in public procurement decision making.
The issue of “incomplete” projects was also highlighted. The government is faced with a task of revaluing the Zimdollarprojects that are outstanding.
This is against the background that there is no conversion factor supported by economic principles for such projects. Previous revalued projects for the City of Harare made headlines and IDBZ was called in to intercede. It is, however, not clear if the involvement achieved economic revaluation of the price disparities.
The State Procurement Board was given the responsibility to build capacity in the public sector.
Finance minister Biti highlighted that the tendering process is ideally supposed to be transparent and competitive in order to achieve value for money.
Procurement agencies were fingered as culprits of belittling the procurement function.
There is no appreciation of the tasks involved in procurement management resulting in the government paying higher prices of goods and services than those obtaining on the market.
Procurement is a sub-function or an add-on to other activities according to Biti. The majority of personnel in such positions do not hold the requisite qualifications — a procurement qualification and membership of a professional institution to effectively undertake their tasks.
Cost management in public procurement is only achievable if the Finance ministry takes appropriate steps to enhance the PFMS framework. There is a lot of work required to enhance management accounting in the public sectors.
Cost centres and cost codes need to be defined for all the public sector. In addition to standard cost definition, a national catalogue is required to facilitate comparability of government expenditure.
A blue pen must be identifiable with one description and one stock code in the government and efficiency of all public institutions can be assessed by comparing prices paid by individual procuring agencies.
In addition to decentralisation of procurement to enhance efficiency, the need to create an environment for professionalism was highlighted.
Decentralisation will fail to achieve results if infrastructure to manage procurement is not in place and capacity is not built in the public sector.
This involves review of the procurement legal framework, regulation of the procurement profession by enacting a procurement council to enshrine issues of responsibility, accountability, ethical and moral behaviour in procurement activities.
Nyasha Chizu is a Fellow of CIPS and the branch chairman of CIPS Zimbabwe writing in his personal capacity. Email: [email protected]
