Public procurement fulfils an important role in any economy. Expenditures of a country are regarded as a critical indicator of the effectiveness of a government, which lie central to public service delivery. Additionally, the Government remains a huge consumer of goods and services and a key contributor to aggregate demand. Thus, the Government is expected to consume locally made goods to boost local supply. In Zambia’s case, there has been increased public outcry from the business community, calling on the Zambian Government to support local manufacturers by buying locally produced goods for Government operations.
Public procurement in public entities in Zambia is regulated by the Zambia Public Procurement Authority (ZPPA) which is mandated by the Public Procurement Act No.12 of 2008. Though the Act is the current governing law for public procurement in the country, it is under-review for repeal and replacement because of a number of reasons. One of them being that the Act does not support procurement from domestic suppliers, but rather favors foreign goods. Even so, Section 63 of the Public Procurement Act states that procuring entities may in a prescribed manner: “a) grant a margin of preference for the benefit of bids by a certain group offering goods, works or services manufactured or performed by a target; b) reserve or set aside certain procurement requirements for a target group, by restricting bidding to a target group”, but all at discretion.
By this account, local suppliers have on several occasions failed to supply to Government, and this has been aided by the information gaps on procedures and the requirements in the law. Firstly, eligibility to benefit from the preferential schemes requires that companies are registered and certified by the Citizens Economic Empowerment Commission (CEEC). According to the Citizens Economic Empowerment Act locally means either citizen influenced, which is a company with 5 to 25% Zambian ownership, a citizen empowered company with 26 to 49% Zambian ownership, or a Zambian owned company which has more than 50% Zambian ownership. Moreover, it is worth-noting that, registration does not guarantee supplying.
The procedure of registration to be recognized as a citizen influenced company is the requirement that the vendor should approach the CEEC supplier registration desk for supplier registration formalities. A payment of K70 accompanied with a filled in application form will be assessed. And if the applicant meets the requirements, a certificate is issued and it is valid for a period of 2 years.
The Public Procurement Act provides for 15% preference of domestically produced goods. The margin of preference is applied as a discount to the bid price of the eligible bidder during financial evaluation. Notably, the nationality of the bidder is not a condition for such eligibility. Further, up to K3 million worth of procurement of goods is reserved for citizen companies, up K20 million worth of building construction costs, and up to K30 million for road works. While, up to K1 million is reserved for services.
However, the Public Procurement Act has some loopholes worth paying attention to. Firstly, a K3 million worth of procurement of goods reserved for citizen companies should be broken down to reflect a more clear and targeted procurement system. For instance, whereas a 3 million reservation for foods and beverages may be sufficient, 3 million is little for fabricated metal sectors. Further, the law, gives the procuring entity authority to either buy or not procure by stating “may”, hence, it should be made mandatory. Understandably, at the point of development of the law, the domestic economy may have not had the capacity, but it has been developed and that calls for a revision of the law.
Further, Government doesn’t make upfront payments to local suppliers in compliance with non-finance of procurement requirements. Understandably, this is drawn from the fact that a number of companies have defaulted on various agreements. Therefore, it would be encouraged that Government stiffens the screening procedures, to allow for an upfront payment to be made, just as is the case with foreign imports.
For more effectiveness, in the implementation of the Act, there is need for Government to undertake monthly evaluations which have not been undertaken for a long period of time. Evaluations will aid the Government understand the capacities of the local manufacturers by product and subsector and will remove the blanket understanding or perception that local manufacturers are not able to deliver on contracts.
