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Gov’t swindled of millions of pula by private sector

Minister of Finance & Economic Development, Dr Thapelo Matsheka has cried foul of the business community saying the private sector is not collaborative when it comes to government‘s efforts geared towards empowering Batswana through procurement.

Delivering the 2020/21 Budget Speech on Monday, Dr Matsheka said Government is concerned that, despite the efforts to empower Batswana through procurement, prices  charged by the private sector for purchase of goods and services by Government are substantially higher than the market prices. “This means that Government does not get value for money. Therefore, the private sector needs to appreciate that by so doing, they are depriving the public of essential services that are expected to be provided by Government,” he said.

Government procurement is worth around P15 billion annually. This is predominantly administered by Public Procurement & Asset Disposal Board (PPADB) as the body that receives bids, evaluates, adjudicates and allocates mega tenders. Amongst other goods and services acquired under the government procurement system is infrastructure development, medical and pharmaceutical services, supplies of goods, services and other works.

In an interview with WeekendPost on the sidelines of the budget speech Public Procurement and Asset Disposal Board (PPADB) Executive Chairperson Elijah Motshedi said his organization is well aware of exorbitant charges that government is subjected to by business owners. “We have noted this trend and it cuts across the entire procurement space whether supplies, works or services, when it comes to government the prices are hiked way beyond market threshold,” he said.

Motshedi explained that according to several studies undertaken by his organization it has emerged that several reasons contributes to this trend. “One of the findings from our assessment is that government payments process takes too long , thus services providers price for that as part of the risk , encompassing the fact that during a  longer payment duration rates may also go up.”

The PPADB Boss added  that  bidders  also price for  longer tendering  period taking into account that some government tendering processes can take longer and stretch to even a year “Bidders will then say by the time the tender closes  rates  may have gone  increased , thus they price for that resulting in exorbitant charges,” he said. Elijah Motshedi reiterated that PPADB has since highlighted these inefficiencies on the part of government to authorities. “We indicated to Government that these impediments in the procurements system have significant contribution to this increasing and worrying trend of above market price charges.

On the part of private sector Motshedi explained that the business community has also been addressed to make them aware of acceptable charges “ we have a price guide in place that we communicate to our service providers  to say let’s not rip off  and take  government for a ride with over 100 % profits charges,” he said.

PPADB has also included in the proposed review of PPAD act a bid to enable the board to negotiate prices “Currently after earmarking a bidder we cannot negotiate prices, this is not helping and we are hoping the proposed amendment once passed and approved into law will assist with making sure government funds are not depleted with these exorbitant charges.

CITIZEN ECONOMIC EMPOWERMENT LAW

Finance Minister however underscored that government is committed to citizen economic empower against all odds. Matsheka revealed that Government is currently formulating a law on citizen economic empowerment to support the existing Citizen Economic Empowerment (CEE) policy. “Over the years, Government has embraced citizen empowerment in its development planning process because of the low citizen participation in economic development in the country.”

 Minister Matsheka noted that among the existing initiatives, include citizen reservation, where only 100 percent citizen owned companies are eligible to participate; price preference where citizen owned companies, joint ventures/associations of citizens and non-citizens and local companies are eligible for preference; and mandatory subcontracting to citizen owned companies.

The other existing citizen economic initiatives include: the Economic Diversification Drive (EDD), where procurement is reserved for local manufacturers and service providers regardless of citizenship; Local Procurement Scheme (LPS), which facilitates economic development in rural areas using public procurement in line with the CEE Policy.

 The objective is to empower women, youth and people living with disability in general, and specifically in the rural areas in line with Section 66(3) of the PPAD Act. The Scheme also introduces preference in tenders within the District Administration Tender Committees (DATC) threshold, whether administered by the DATC or Ministerial Tender Committees (MTC).

The Scheme requires that a 20 percent target quota be reserved for the target groups in all tenders above the micro procurement financial threshold, but within the DATC financial threshold at all districts country wide. Minister Matsheka reiterated that despite the existence of these schemes, effective citizen participation in some sectors of the economy has not been satisfactory, hence the decision to move from policy to a law to ensure effectiveness in application and implementation of the citizen economic empowerment agenda.

He explained that the law will address the inequalities of the past by transferring the country’s wealth to disadvantaged Batswana, thereby allowing for more participation of citizens in the economy. Dr Matsheka shared that Government has developed a Consolidated Framework for Empowerment Programmes. A key feature of this Framework is the proposal to separate economic empowerment programmes and social upliftment schemes, which will be critical in promoting entrepreneurship development and enterprise development.

The Framework acknowledges the relevance and importance of social upliftment towards developing sustainable livelihood. “However, this model puts more emphasis on entrepreneurship to address unemployment, economic growth, poverty eradication and economic diversification,”  he said 

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