AFRICAN PUBLIC PROCUREMENT REFORM Technical Committee Meeting Nairobi, Kenya Sept 13-14, 2010

1. AFRICAN PUBLIC PROCUREMENT REFORMTechnical Committee MeetingNairobi, Kenya Sept 13-14, 2010

2. PREPARATION OF THE MEETING OF THE TECHNICAL COMMITTEE CHARGED TO FORMALIZE THE AFRICAN PUBLIC PROCUREMENT REFORM NETWORKOF STAKEHOLDERS(APPRENS)AFRICAN DEVELOPMENT BANKASSISTED PROJECT Prepared by: Prof Kunle Y. ADAMSON B.Sc., M.A., M.Soc.Sc., Ph.D Executive Director Africa Development Management Network Adamson Economics Organization 3037 Memorial Station Montclair, NJ 07043, USA www.adamson-economics.org

3. PART I:PROPOSED TERMS OF REFERENCE

4. African Procurement System Background Assessment Methodology Performance of the System What is APPRENS? Membership Objectives and Functions Institutions and Governance

5. Background • Africa cannot develop until it solves its procurement problems, contract inflation and corruption go hand in hand in Africa (Dr. Jonathan Goodluck, Nigerian President) • Many African governments lack the capacity to design, to implement and to monitor projects in a transparent way • Africa’s needs for procurement reform is supported by the “Tunis Declaration” to strengthen, modernize, and harmonize the existing procurement systems of African countries. • By creating the African Public Procurement Reform Network of Stakeholders (APPRENS).

6. Assessment Methodology • Increasing the effectiveness, efficiency and transparency of procurement systems require a national procurement system that meets international standards. • By Dec. 2004 Johannesburg Declaration, African countries are committed to the adoption of the OECD Development Assistance Committee (DAC) Baseline Indicators Tool as the agreed international standards for assessment of national procurement systems. • Based on OECD –DAC presentation to the Africa Regional meeting in Kampala (Dec. 12 – 14, 2006), the methodology for assessing national procurement systems consists of: • Objective and intent • Baseline Indicators (BLIs) • Compliance and Performance Indicators • Scoring of the BLIs • Planning and Preparation • Assessment Report

7. Assessment Methodology (Contd.) • The Baseline Indicators (BLIs) represent the comparison of actual system versus international standards. They consist of 12 indicators and 54 sub-indicators arranged around the following four pillars: • Legal and regulatory environment • Institutional architecture • Operations of the system and competitiveness • of the national system • Integrity of public procurement

8. Performance of the System According to various Procurement Assessment Reports of different African countries, the Performance Characteristics are: • Low % of open bidding • Low publicly advertized • Barring of group of bidders • Subjective evaluations • High % of contracts not in the Procurement Plan aligned with the Budget • High % of major contracts have no completion reports • High % of stakeholders perceive system as incompetent and untimely • High % of contracts have incomplete records • High % of corruption accusations never get to trial • Procurement audits are non-existing • High % of stakeholders perceive the anti-corruption measures as non-effective.  • Lack of a modern law on Public Procurement • Financial Regulations have gaps and deficiencies • Proliferation of tender boards causing delays and non transparency • Cumbersome customs systems and procedures causing major delay in clearing goods, and hence a source of corruption • Procurement is often carried out by staff members who lack relevant training • Lack of feedback mechanism • Low stakeholder awareness of web-based procurement information system • System for collecting and monitoring procurement statistics not fully utilized

9. What is APPRENS? Membership • The Network should be established through the collaborative efforts of the African Development Bank (AfDB), the African Capacity Building Forum (ACBF) and the Collaborative African Budget Reform Initiative (CABRI); which can guide it through its infancy period. • Membership of APPRENS shall be open to all AU Member States, the private sector, the civil society such as the NGOs’ and the Trade Unions, the regional economic organizations such as ECOWAS, COMESA, etc., and Observer status shall be granted to officials or representatives of donor organizations such as the OECD, the WORLD BANK, the EU, IMF, etc., or countries who are involved in, or which have expertise in, public procurement management

10. Objectives • Establishment of the culture of professionalism • Promotion and facilitation of mutual cooperation amongnational procurement authorities, private sector and NGO’s • Setting of standards and the establishment of procurement rules • Establishment of monitoring and compliance • Coordination of procurement capacity development • developing positions on procurement related issues of interest to Africa

11. Functions: • Increase awareness of high-level decision-makers of the knowledge gained through APPRENS activities • Enrich dialogue between African States and Development Partners on public procurement management issues • Provide technical support to regional initiatives relating to public procurement management • Create and facilitate mutual evaluation and peer review, and Perform any other activity necessary for attaining the objectives of APPRENS. • Facilitate exchanges on public procurement management issues between African States • Organize annual seminar and seminar dialogues • Expand resource base of African public procurement management experience through publications reflecting discussions at various APPRENS forums • Undertake capacity development activities, such as cooperating with training institutions in designing and presenting programmes on aspects of public procurement management addressing the needs of African States

12. Programs: • APPRENS must institute a program which will focus on strengthening the cooperation on exchange of information, best practices and benchmarking, operating in close collaboration with the member states and the international aid donors. • The goals of the program will be: • To analyze the progress made by member states in modernizing its public procurement system • To produce recommendations on improving integrity in public procurement in member states • To assist members states in grasping the challenges of integrity in public procurement • To explore practical applications of the OECD Procurement Assessment Methodology • To encourage mutual learning

13. Institutions and Governance • Institutions: APPRENS shall have a General Assembly, Management Committee and a Secretariat.  Other institutions may be established as determined by the General Assembly. • Consensus: APPRENS institutions shall take decisions on the basis of consensus. • Representation: In order to be truly representative, the quorum of all meetings of the institutions of APPRENS shall be at least sixty percent of the members of the particular APPRENS institution. • Language: English, French and Portuguese shall be official languages of APPRENS. • Secretariat: APPRENS shall conclude a Headquarters Agreement with the hosting Member State or its secretariat may be hosted by an existing organization as a means of minimizing cost and expediting its inception

14. Institutions and Governance (Contd.) • Contact Points: Each country shall appoint up to three Contact Points for taking action in connection with the activities of APPRENS including taking action in international procurement matters. • Costs: Each participant is responsible for their own costs for all travel and subsistence in connection with the networking. It is recommended that administrative costs be kept low. • Information: All necessary information about the APPRENS shall be made available on the Contact points, the National websites and other websites.

15. PART II:OPTIMAL ORGANIZATIONAL STRUCTURE

16. The GRECO Organizational Model • Application Issues of the GRECO Model to Africa • Formal and Informal Organizations • Organizational Structure of APPRENS • Terms of Reference of the Components The General Assembly • The Management Committee • The Secretariat • Budget and Finance

17. The GRECO Organizational Model • An example of a continental body with legal powers to formulate, to build consensus and to monitor reforms and encourage self compliance in the member states is the Council of Europe with 47 countries. • The approach of the Council of Europe in the fight against corruption consists of three interrelated elements: 1. Setting of European norms and standards 2. Monitoring of compliance with the standards 3. Capacity building offered to individual countries and regions • The monitoring of compliance with these standards is entrusted to the Group of States against Corruption, GRECO

18. The GRECO Organizational Model (Contd.) • If the AU represents the European Council, then the African Network of Stakeholders in Public Procurement Reforms (APPRENS) shall play the role of GRECO; which will carry out the three objectives: 1. setting the African procurement standards, 2. monitoring compliance and 3. building capacity in member states for meeting the standards. • Hence the organizational structure and the legal framework for APPRENS may be similar to that of GRECO. • Let us first present the organizational structure of GRECO below.

20. The GRECO Organizational Model (Contd.) • The GRECO Agreement creates a Plenary which comprises of the Presidency, the Bureau and the Working Groups. • Membership in GRECO is not limited to Council of Europe member States alone • any State which becomes Party to the Criminal or Civil Law Conventions on Corruption automatically accedes to GRECO and its evaluation procedures • The functioning of GRECO is governed by its Statute and Rules of Procedure • Each Member State appoints up to two representatives who participate in GRECO plenary meetings with a right to vote; each member also provides GRECO with a list of experts available for taking part in GRECO’s evaluations. • GRECO has granted observer status to the Organisation for Economic Cooperation and Development (OECD) and the United Nations – represented by the United Nations Office on Drugs and Crime (UNODC).

21. Application Issues of the GRECO Model to Africa • Two issues should be noted here. • The first issue: • That GRECO does not directly include the private sector and the civil society as members • That the membership of APPRENS will directly include the private sector and the civil society representatives. • That it is a problem to form an organization between states which at the same time includes the private sector and civil society in its membership. • Therefore the membership of APPRENS suggests an organization without an international agreement, in contrast to GRECO.

22. Application Issues of the GRECO Model to Africa (Contd.) • The second issue: • That Europe already has a much more democratic and a rule-of-law society than Africa. • An organizational structure and legal framework which performs well in the European context does not mean that it will do exactly the same in the African context. • This is the reason why it is necessary to look at several existing African and non-African institutions, to draw from their similarities and dissimilarities in contrast to GRECO.

23. Institutions Examined • Non-African Institutions • GRECO - Group of States against Corruption • PPN – European Public Procurement Network • OECD (ACN) - Anti-Corruption Network for Eastern Europe and Central Asia • UNCITRAL – United Nations Commission on International Trade Law • ACINET - Arab Anti-Corruption and Integrity Network • LIBNOR – Lebanese Standards Institution • CYPRUS – Public Procurement Directorate • African Institutions • ACBF – African Capacity Building Foundation • CABRI - Collaborative Africa Budget Reform Initiative • ATAF – African Tax Administration Forum • NITC – National Information Technology Authority • COMESA – Common Market of Eastern and Southern Africa • AFROSAI – African Organizations of Supreme Audit Institution • WAEMU (UEMOA) – West African Economic and Monetary Union

24. Notable Comparisons • GRECO is an informal organization with international agreement between members. • ACINET, the Arab Anti-Corruption and Integrity Network, is also very similar to GRECO as an informal international organization. • OECD’s Anti-Corruption Network for Eastern Europe and Central Asia has no formal agreement what so ever. • Many of the African organizations such as the African Capacity Building Forum (ACBF), the Collaborative African Budget Reform Initiative (CABRI) and the African Tax Administration Forum (ATAF) have formal agreements. • Let us look at the organizational diagram of the ACBF as shown

26. African Organizational Structures • Common Characteristics • The diagram shows that ACBF, like the other African organizations, is hierarchically structured. • It is a top-down organization • Decisions are passed down from the top without much feedback linkage or participation of the stakeholders. • They rely to a limited degree on membership fees but more on donor sponsorships and grants for their financial resources. • In contrast: • the Arab Anti-Corruption and Integrity Network (ACINET) does not have a formal agreement, its membership is voluntary and there is no membership fee. • So is the European Public Procurement Network, which is an informal organization with voluntary membership as well.

27. Structural Possibilities • There are two possibilities for APPRENS: • 1. The formal organizational framework based on an agreement and rules • 2. The informal one which has no agreement and decisions are based on consensus. • To derive an optimal organizational structure for APPRENS, we must at least present the theoretical advantages and disadvantages of each type of organizational structure.

28. Formal versus Informal Organizations • Using Max Weber’s theory of Bureaucracy as our premise, an organizational structure can be classified as: • Entrepreneural • bureaucratic or • cooperative. • Theentrepreneuraltype of organization: • It lacks the standardization of tasks • It is most common in very small organizations headed by the owner • It performs very simple tasks • The structure is totally centralized • The owner has all the decision • The nature of the structure is subjective • Its sustainability is dependent on the personality of the owner • Hence it is an organic structure.

29. Formal versus Informal Organizations (Contd.) • The bureaucratic organizational structure: • It is standardized • It is more suited to complex operations and activities. • It is very hierarchical • It operates by rules • Decisions are made by rationalization • Communication is non-personal • its operations are objective and mechanistic in nature. • The cooperative organizational structure: • Decisions are based on dialogue and consensus • The organization is a network • It is open at the boundaries • It encourages participation • It helps to empower people

30. Relative Advantages vs. Disadvantages • Simplicity of the entrepreneurial organization limits its capability and its scale of operation. • The bureaucratic organizational structure is highly hierarchical and top-heavy. Its standardized routine limits participation, loyalty and creativity. • In the cooperative organization, membership is voluntary and so participation is maximized. It is a self-motivating organization and hence loyalty and productiveness are guaranteed. Because members have equal power, responsibilities for the attainment of the organizational goals are also shared equally and since decisions are built on consensus; monitoring and compliance are easier to attain. • CONCLUSION: Since cooperative organization is the best way to attain egalitarian participation, full compliance, decentralization of authority and the least expensive to set up and to run, then the cooperative organizational structure is the one to be applied to APPRENS.

31. Examples of Informal Cooperative Organizations • European Public Procurement Network (PPN) is “a co-operation network of public procurement expert officials dedicated to strengthen the application and the enforcement of the procurement rules through mutual exchange of experience and benchmarking; and to create a reliable and effective informal co-operation including problem-solving in cross-border cases related to public procurement.” • The Anti-Corruption Network for Eastern Europe and Central Asia (OECD – ACN) • The Arab Anti-Corruption and Integrity Network (ACINET)

32. Organizational Diagram of APPRENS

33. The Optimal Organizational Structure of APPRENS • APPRENS shall have three institutions: • General Assembly • Management Committee and • Secretariat. • Decisions are consensus based as stakeholders opinions loop back into the decision process via: • Working Group reports to the General Assembly • Operational Reports from Secretariat to Management Committee • Stakeholders and Service Recipients opinions via the Complaints Bureau of the Secretariat or directly to the General Assembly.

34. Terms of Reference of the Components The General Assembly • Membership: It shall be open to all AU Member States, the private sector, the civil society such as the NGOs’ and the Trade Unions, the regional economic organizations such as ECOWAS, COMESA, etc., and Observer status shall be granted to officials or representatives of donor organisations such as the OECD, the WORLD BANK, the EU, IMF, etc., or countries who are involved in, or which have expertise in, public procurement management. • Functions: • It shall meet at least once every financial year • It shall be responsible for the ratification of the annual work plan and budget of APPRENS and the overall policy direction of APPRENS • It strengthen the application and the enforcement of the procurement rules through mutual exchange of experience and benchmarking • It shall create a reliable and effective informal cooperation among members • In order to address specific issues of interest to participating members, it shall set up specific ad hoc working groups and workshops

35. Terms of Reference of the Components (Contd.) The Management Committee Membership • It shall consist of 13 members • 5 members represent each region of Africa • 3 members represent private business interest, NGO’s and Trade Union • 3 members represent ACBF, CABRI and ATAF • 2 members represent the foreign donors • Executive Secretary and Chair of General Assembly are ex-officio members but no voting rights Term • Members of the Management Committee shall serve 2 yearsin line with APPRENS financial year and may be re-elected for only one additional term. • The Chair shall be elected by the members of the Management Committee  

36. Terms of Reference of the Components (Contd.) Management Committee Functions • The Management Committee shall be responsible for the management of APPRENS. •  The Management Committee shall approve APPRENS work plan and oversee the use of funds. • The Management Committee shall oversee the work of the Secretariat. • The Management Committee may delegate specific tasks to the Secretariat. • The Management Committee shall meet at such intervals as it may decide but at least once every financial year.

37. Terms of Reference of the Components (Contd.) Secretariat Membership • The Secretariat shall consist of the Executive Secretary and such other officials as appointed by the Management Committee. The Management Committee shall determine their staffing levels subject to cost rationality, and the terms and conditions of their employment. Functions • The Secretariat shall be responsible for the day-to-day administration of APPRENS. • The Secretariat shall arrange all meetings, seminars and dialogues of APPRENS, keep reports, publications and the minutes of all meetings and shall disseminate information on behalf of APPRENS.  • The Secretariat shall prepare the annual work plan of APPRENS and submit it to the Management Committee for approval and to the General Assembly for ratification.

38. Terms of Reference of the Components (Contd.) Secretariat Functions (Contd.) • The Secretariat shall assist the General Assembly and the Management Committee in their work and shall perform all functions assigned to it by the Management Committee. • The Secretariat shall be the depositary of all records of APPRENS, of its Charter (Statute), of the Rules of procedure adopted for all APPRENS institutions and of all documents of accession and membership. • The Secretariat shall receive all correspondence related to APPRENS and its activities. • The Executive Secretary shall be the head of the Secretariat and shall serve for a term of three years and may be re-appointed for no more than one additional term. • The Executive Secretary shall be responsible for signing collaborative agreements and contracts on behalf of APPRENS and shall do so in consultation with the Management Committee. 

39. Terms of Reference of the Components (Contd.) Secretariat: Budget and Finance Functions • The Secretariat shall prepare the budget to be approved by the Management Committee and adopted by the General Assembly. • APPRENS shall operate a bank account in the Member State hosting the Secretariat. • The Executive Secretary shall be the chief accounting officer of APPRENS and shall manage the APPRENS bank account under APPRENS’ financial rules and procedures. • The Executive Secretary may delegate administrative functions in respect of the APPRENS bank account to a financial officer in the Secretariat. • All membership fees, donations, income from endowment funds and income from APPRENS services, activities, products and publications shall be paid into the bank account of APPRENS. • The Management Committee shall appoint external auditors for APPRENS and determine their mandate and remuneration. • The General Assembly shall adopt the audited annual accounts of APPRENS. • APPRENS shall prepare accounts in accordance with generally recognized accounting practices and should have a zero tolerance for corruption.

40. PART III:PROGRAM OF WORKAND BUDGETARY ESTIMATES

41. PROGRAM OF WORK AND BUDGETARY ESTIMATE • Network Strategic Activities • Medium-term Inception Plan (2011-2013) • Medium-term Strategic Objectives • Medium-term Operational Programs • Medium-term Operational Activities • Medium-term Inception Budget Proposal

42. Network Strategic Activities Objective: Reform and improve existing public procurement systems Strategy: • setting of African Procurement standards • enhancing institutional capacity building • ensuring systemic integrity through compliance withthe standards Strategic Activities: • Institutional Activities • Educational Activities • Capacity Building Activities • Monitoring and compliance activities

43. Strategic Activities Key Institutional Reforms Education, Training & Learning • Draft standard bidding documents for routine services • Develop procedures for safe keeping of procurement records • Establish mechanism for integrating procurement in the budget process • Create legal backing for procurement system and strengthen anti-corruption institutions • Conduct sensitization activities for procuring entities, user departments, and private sector • Develop procurement guidelines to procuring entities and private sector • Establish formalized helpdesk function

44. Strategic Activities Key Capacity Building Activities Key Monitoring & Compliance Activities • Sensitize politicians and top officials on the importance of sound procurement practices • Sensitize management level of NGOs and media on the importance of procurement to public service delivery • Conduct information campaign to enhance public awareness of procurement • Accelerate dialogue between procurement authorities and private sector • Initiate systematic procurement monitoring in low performance areas

45. Medium-term Inception Plan (2011-2013) Medium-term Strategic Objectives • Establish communication and cooperation between policymakers and practitioners of public procurement • Create and advance policy dialogue, capacity and knowledge development at the national and regional level in different areas of public procurement • Provide mechanisms for peer learning and advice and facilitate building sustainable partnerships at the regional and national levels, in order to promote procurement standards • Support frameworks and mechanisms aimed at developing benchmarks for assessment and indicators to measure performance, in participating countries • Develop the foundation for productive partnerships with all stakeholders including civil society, media, the private sector, and government representatives, and donor organizations

46. Medium-term Inception Plan 2011-2013 (Contd.) Medium-term Operational Programs • Public Procurement Standards Program • Public Procurement Complaints Program • Public Procurement Systems Training Program • Public Procurement Anti-corruption Program • Public Procurement Structures, Methods and Decision-making Program • Public Procurement Judicial Integrity Program • Private Sector Sensitization Program • NGO’s Participation and Awareness Program • Civil Society Awareness Program • Network Communication and Internet Program • Procurement Studies and Research Program • National Legislation and Anti-corruption Instruments Program • International Cooperation and Assistance Program

47. Medium-term Inception Plan 2011-2013 (Contd.) Medium-term Operational Activities • Establishment of the Secretariat • Hiring and Recruitment of Management Staff, Experts and Human Resources • Hiring of Consultants • Establishment of websites and contacts at regional, national and local levels • Preparation of Annual, Quarterly and Weekly Activities of Work • Preparation and execution of Budgets • Mobilization of financial and fund raising activities • Preparation of Proposals for Technical and Financial Assistance Needs • Preparation of Technical and Financial Reports • Preparation of Reform Plans and Recommendations • Formulation of Network Services with Members’ Collaboration • Organization of General Assembly Meetings

48. Medium-term Inception Plan 2011-2013 (Contd.) Medium-term Operational Activities (Contd.) • Organization of Workshops and Training • Provision of Technical Support, Expertise and Advice to Network Members • Undertake activities to promote peer-learning and peer-advice such as joint learning studies, field visits and other activities that benefit the Network Members • Preparation and publication of procurement standards, awareness and knowledge • Conduct studies on various topics related to procurement integrity, transparency, and accountability and disseminate results among members and jointly formulate appropriate procurement reform policies • Preparation of quarterly activity and progress reports • Implementation of African and international procurement instruments and conventions

49. Medium-term Inception Plan 2011-2013 (Contd.) Medium-term Operational Activities (Contd.) • Preparation of the Network’s annual progress report • Organization of the Network’s consultative meetings to promote dialogue with the civil society, the media, the private sector, parliamentarians and donor organizations • Preparation of a collaborative framework with AfDB, ACBF, BABRI, ATAF, ECOWAS, COMESA, OECD, UNDP, etc.

50. Medium-term Inception Budget Proposal