Editor's Comment

Government bleeding through procurement

Former Minister of Finance FELIX C. MUTATI

GOVERNMENT’S decision to review the Public Procurement Act to enable the benchmarking of prices for routine goods and services that are procured to ensure uniform prices is indeed welcome and long overdue.

It is in public domain that Government is the most abused by suppliers where overpricing of goods and services is concerned. It is indisputable that this is one of the areas where Government’s real financial haemorrhage lies.
Minister of Finance Felix Mutati recently revealed that about 15 percent of the country’s gross domestic product is spent on public procurement of routine goods and services.
Given that in 2016 Zambia’s gross domestic product was worth US$19.55 billion, it means US$2.9325 was all gobbled in public procurement of routine goods and services.
While we may not contend with the need to procure routine goods and services such as stationery, cleaning services, fuel and many others, we are concerned that Government is paying far much more than what is obtaining on the market.
For the amount spent, Government is getting very little value because suppliers have a tendency of inflating prices far beyond the market value.
The Minister of Finance is, therefore, justified in questioning the economic logic in the exorbitant pricing offered by some suppliers.
“Why should one borehole be paid at K40,000, while a similar one is paid for at K10,000 but in the same locality? Why should a ream of paper cost so much when supplied to Government but cost less at the market shops? These are the issues, we want addressed once the Public Procurement Act is revised,” Mr Mutati said.
While it is acknowledged that Zambia is a free economy where prices are not pre-determined, it however, defies economic logic to have a huge variance in pricing as the minister has pointed out.
It does not make sense for Government to pay three times more than the obtaining market value.
Unfortunately, this is what Government has been subjected to over the years in its procurement of goods and services.
We know that road construction is yet another area where Government has been financially bleeding profusely.
Some analysts actually estimate that building a road in Zambia costs three times more than in Botswana, which has a bad topography being a desert.
Government has continued to lose money through overpricing of stationery, furniture, cleaning prices, conference facilities and workers clothing procured.
For instance, a suit which would ordinarily fetch K1,000 at market value would be sold at the price three times more because it is Government buying for employees for Labour Day.
Where are suppliers getting this notion from, that Government does not need to get value for money spent?
This certainly points to the prevalence of corruption in our procurement systems where suppliers and government officials collude to inflate prices for their benefit.
This is a huge disservice to a country like ours, which still has a long way to go in its development journey.
Inflation of prices by supplier is daylight robbery as it deprives the many poor Zambians of resources which could be channelled to other needy areas.
It is, however, reassuring that Government is awake to the need for fiscal sustainability aimed at reducing wasteful expenditure and avoiding the escalation of debts.
Mr Mutati assured that Government is undertaking various reforms to revamp the economy, and among the reforms being reviewed is the Public Procurement Act.
“We want to understand the pricing for routine goods and services that Government pays for,” he said.
Surely, time for wasteful expenditure is over, as suppliers must be made to account for every Kwacha that Government pays them.
While it commendable that a progressive pronouncement has been made, it is hoped that those charged with the responsibility of implementation will do so in the shortest possible time to save Government from further loss of money.

Send Your Letters

Facebook Feed

Ad1