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PPADB fails to punish delinquent contractors

Public Procurement and Assets Disposal Board (PPADB) has admitted to failure to take actions against nonperforming contractors who continue to bid and win government tenders, due to lapses in monitoring system caused by procuring entities.

PPADB Executive Chairperson, Brigette Poppy-John indicated in the organisation’s latest Annual Report (2017/18) that as PPADB continues to execute its mandate, one of the major challenges which persist is the non-submission of End of Activity Reports by Procuring Entities.
Poppy-John contended that such failure constrains the monitoring of performance of contractors and the tracking delivery of awarded contracts as well as the effectiveness of the Suspension and Delisting Committee to discipline defaulting contractors.

“Furthermore, nonperforming contractors continue to bid for and win Government contracts, and often continue with their unacceptable performance and misconduct,” she noted. “The performance of DATCs (District Administration Tender Committees) in relation to compliance to the PPAD Act needs to improve particularly where there are no secretaries resulting in poor record keeping.”

The PPADB chief argued that the increasing devolution to Tender Committees necessitate enhanced capacity hence it is important for Procuring Entities to continue to resource the procurement function approximately with skilled personnel.  Poppy-John has consistently spoken in favour of devolving powers to Ministerial Tender Committees (MTC) and District Administration Tender Committees (DATC) in tender adjudication.


Currently MTCs and DATCs deal with procurement of goods, services and works which are below P300 million in value. The MTC financial ceiling range from P25 million to P300 million while ceilings for DATCs range from P2 million to P10 million.  “The intent is to increasingly devolve authority to Ministries and Districts for improved procurement performance. Challenges that come with the devolved mandate need to be acknowledged and addressed for improved procurement performance,” Poppy-John said earlier this year.

Poppy-John had argued that procuring entities should embrace sound procurement practises to deliver on their core functions because procurement can no longer be treated as a menial standalone task that is not a priority for those in leadership. 
However, as indicated in the Annual Reports, MTCs and DATCs are failing to rise to the occasion in dealing with issues that ensures efficiency and quality in the public procurement system.

“The conceptualisation, planning, and the contact management need to revive more attention at Procurement Entity level to address concerns of poor project implementation resulting in time and cost overruns which compromise quality,” Poppy-John noted in statement. 
Poppy-John indicated that the monitoring and enforcement of empowerment schemes such as Economic Diversification Drive (EDD) and Citizen Economic Empowerment (CEE) need to improve particularly at contract implementation stage to allow for the assessment of the impact of the schemes.

STRIGENT BUDGET 

PPADB Executive Directors has also indicated that her institution is operating under a limited budget despite increasing requirements. “There is need to revisit PPADB annual budget and align it with its mandate, strategy, and key activities, “she said. “The Board should continue to review its cost recovery initiatives to raise more money and lessen dependence on the Government’s subvention.

ADJUDICATION OF TENDERS FOR CENTRAL GOVERNMENT

According to the Annual Report, during the 2017/18 financial year, the Board adjudicated on 614 submissions. The figure represents a 6 percent increase when compared to the previous financial year when 579 submission were considered by the Board. The Board awarded tenders amounting to P1.9 billion compared to P6 billion in 2016/17 financial year, representing a 68 percent decrease. However, it is noted that the high value in 2016/17 was due to roads projects awarded under the Ministry of Transport and Communications.

MTCs adjudicated on a total number of 5693 submissions during the period under review amounting to P5.4 billion compared to the previous financial year of 4074 submissions amounting to P5.43 billion. The DATCs adjudicated on a total number of 1645 of submissions amounting to P400.5 million as opposed to the previous year’s 1667 submissions totalling P398 million. PPADB was unable to have records for four of the 28 DATCs mainly owing to the absence of secretaries.

During the period under review, the Special Procurement and Assets Disposal Board (SPADC) adjudicated a total of 98 requests amounting to P3.6 billion compared to a total of 169 in 2016/17 financial year amounting to a total of P1.187 billion.  The total value of procurement for PPADB and its Committees for the 2017/18 financial year amounted to P11.322 billion excluding micro procurement by Ministries, lower than the 2016/17 financial year figure of P13.075 billion. The value of tenders awarded through micro procurement for the 2017/18 financial year amounted to P402.6 million compared to P335 million in the 2016/17 financial year. 

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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