Ethiopian News Today 2023 The new digital procurement auction
Ethiopian News Today 2023 The new digital procurement auction
He was a public relations officer who was well-known for opening his office and phone to any journalists seeking information, as will all those in the media testify. Ato Haji Ibsa gave a comprehensive explanation of the digital procurement system that his institution has established since Amna. He also talked about the challenges he faced as Director General of the Public Procurement and Assets Authority and the things he had to change. According to Ato Haji, the new government’s e-procurement will serve as the foundation for making Ethiopia a civilized nation by preventing corruption, embezzlement, and malpractice. Their meeting with Jonas Amare is described as follows in relation to this.
Reporter: You have started a new digital purchase. On the basis of the concept, could you please describe the operation’s nature to us?
Herr Haji, You are aware that procurement consumes 70% of the nation’s budget. The majority of procurement in developing nations, including Ethiopia, is carried out by the government. Time, labor, and resources are frequently wasted in procurement. We studied in 2011 because we stated that this issue would not go away on its own. We sought examples of how developed nations have fought this disease. We have examined the experiences of seven nations from Asia, Europe, and the United States, including South Africa. In 2010, Canada implemented the procurement system known as Electronic Government Procurement (e-GP). In 1991, it was first put into action. This method has almost completely eradicated corruption in Canada. They were able to avoid corruption in more than 70% of procurement spending as a result. We have had more positive experiences in North Korea and South Korea. This practice has reduced corruption exposure in numerous nations. This digital procurement system makes it easier to conduct financial audits. simplifies audit work that overlaps. Unplanned purchases are avoided by the process. Additionally, it will guarantee that our proposed procurement strategy is unharmed. A planned fourth-quarter purchase, for instance, will not be made in the first quarter. Not only does the procedure guarantee the existence of a procurement strategy, but it also contributes to the efficiency of the procurement process.
In our nation, people sit quietly throughout the year and make annual purchases in May and June. I will not have a ministry if I do not purchase up to 80% of the purchase by the fourth quarter. For instance, it would be difficult to deny this institution’s promise to purchase tractors for youth entrepreneurship. Because of the approaching winter and farming, it indicates that you have wronged the youth. Under this compulsion, you might end up making the purchase even though you hate and long for the process. But this is avoided by the new e-procurement. Revisiting the plan is necessary when making an impulsive purchase. You purchase what you have planned in the first, second, or third quarter. You plan your next acquisitions and finish your financial audit in the fourth quarter of the fiscal year. It is where you evaluate whether or not a procurement activity was successful. Within three quarters, all crucial acquisitions must be completed. The fourth quarter is the best time to make small purchases. Nevertheless, this procedure avoids the requirement for procurement at the conclusion of the fiscal year. Software and scripts, for instance, are frequently purchased at the end of each fiscal year and given to employees. What else can a worker who has been writing all year do but sell 12 pens in June? The nature of the regalia has declined toward the finish of the monetary year.
Reporter: What is the current state of digital procurement implementation?
Herr Haji, In Ethiopia, procurement refers to the budget. Procurement accounts for approximately 70% of the budget, while salaries and regular services take up a significant portion of the remaining funds. Other industries have relatively modest budgets. It is necessary to tailor the procurement procedure in accordance with an efficient operating system in order to save money and safeguard the nation’s resources. This digital procurement system is implemented for this reason. This system was used by nine institutions. We increased it this year to 74. Training will begin in February, and the digital procurement system will be implemented in 169 offices by the end of the year. We anticipate network and other infrastructure issues for universities in remote areas. We will attempt to incorporate all federal institutions into the digital procurement system in the coming year. In two to five years, we hope to implement it in all regions.
In Addis Ababa, we started with nine offices. We will now travel to Hawassa. The implementation has been promised by Sidama regional officials. We discussed setting out on Dredawa. In the near future, we will also launch in Bahrain. Our strategy is to begin small and grow. The Ministry of Finance’s digital budget system (Integrated Financial Management Information System/IFMIS) was initially accepted by few. However, as the process demonstrated, many are putting it into practice. We intend to introduce everyone as we gradually become accustomed to it. The IFMIS of the Finance Ministry is a cutting-edge system that only deals with government institutions’ budgets, procurements, and financial operations. However, the entire business community is included in our eGP. Ethiopia may have up to 30.000 business owners, according to reports. So far, we’ve registered about 6,000. We want to become a civilized nation that participates in this system, from the big business owner to the chest shop. Morocco has achieved this objective from Africa. The same has been achieved by South Africa. Ten years earlier than us, Uganda started it. We are Africa’s sixth nation. We are working hard to make the digital procurement system change quickly.
Reporter: What kind of changes will the procurement system undergo as a result of the digital process?
Herr Haji, Because it is digital first, the beginning of this electronic procurement will eliminate paper waste. Second, it lowers the cost of transportation. On their mobile phone, anyone can bid from anywhere, at any time. Participation is possible at any time, even if the shop is closed or the office is closed. You can keep track of the entire bidding process from any location. From the comfort of your own home, you can bid, choose a winner, negotiate contracts, file complaints, and generally serve effectively. It lets the bidder and bidders work together without meeting or knowing each other. The winner will be announced when a contract is signed in which he offers up to 30% of the goods and takes the rent. However, the procedure will prevent the bidder from falling behind in the bidding process. The new auction is touch-free, whereas the existing auction is touch-intensive in every way. The bidding process, which is only open to people of a certain region, nation, or kinship who claim to be from Afar, Amhara, Oromia, Somalia, or other places. will completely adhere to the new system. Ethiopian citizens from all over the world can challenge the digital auction as well. Being human entitles anyone to equal participation in this technology auction.
In the previous bidding process, the notice could be revoked, either formal or informal, to end the tender once it was issued as a bid. The tender document was typically sold as an auction for three days before being closed in an Amonal office or meeting, where only a small number of bidders could compete. They first made it available as a tender, but only three people applied, and they can now move it to pro forma procurement. There can only be five bidders in the auction. The majority were restricted, but three individuals competed.
makes a bid. It is a pro forma purchase if three people are present. By intentionally sending the office worker who sells the tender document to another country or by closing the office under pretext, it is common practice to suppress competition and attempt to use the auction for personal gain. It is common practice to ask for bids. It has been claimed numerous times that he gave it to a relative. All of these issues are resolved by the new system.
We are the sixth African nation to enter this region. It is challenging to compete with South Africa in this sector. In 2002, South Africa began operating for the first time. South Africa controls all of its purchases, which is why it is ranked first in Africa. Despite our tardy start, we anticipate that the procedure will develop as it overcomes obstacles. Even though it is a significant step in getting the work started, it will take a lot of work to change the usual backward practices at the government institutions here. I should buy because I’m used to doing so; I’m comfortable because I’m used to doing it; I don’t register as a bidder; networking is hard; I don’t have a professional; and so on. Ministers have some admirers. Additionally, there is one that reads, “Permit me to shop normally just one more time.” In Africa, difficulty adjusting to new situations has always been a problem. We can see this as well. It would be beneficial for the media to prevent these obvious and numerous corrupt practices. There is a procurement budget for each government agency. I frequently reply, “I don’t have the budget,” when asked to make a purchase. The majority of the time, there is no issue with the institution’s budget when it comes to purchasing items that will benefit its leaders or officials. It is claimed that significant institutional work is not covered by the budget.
Reporter: How will the new system affect efforts to stop bribery in the procurement process?
Herr Haji, In a number of nations, this method has been found to be successful. Work that has been done has been very effective, especially during the Corona epidemic. It is ideal to be able to work from home without having to be physically present. Through this system, South Korea, for instance, was able to reduce the number of paper documents by 7.8 million per year. India was able to steer clear of spending $560,000 on an unforeseen auction. Each purchase in England was eligible for a deduction of 41 euros. The procurement process resulted in gains of 178 million euros for Australia and 67 million euros for Italy. Bangladesh was able to save 1.1 billion dollars, or six percent of its procurement budget, and South Korea was able to save a total of eight billion dollars. Due to this technology procurement, India’s procurement time has decreased from 135 days to 35 days. It reduced the procurement procedure in Norway by 40%. A 30-hour procurement process was reduced to 30 minutes in South Korea. Since the quality level itself will prevent substandard procurement, the new digital procurement system will prevent theft.
Ethiopian News Today 2023 The new digital procurement auction
For instance, the system was designed to avoid quality issues in procurement, which are common in construction. As a pre-forecast, a construction bid will be issued. However, there are times when I will, for instance, offer a purchase worth one billion birr for one million birr in order to disrupt the market. The bidders’ technical evaluations are comparable, but their prices may differ significantly. Since the price is one of the competitors in the bidding process, it can be said that because our government is poor, we will pass on the lowest-priced bidder. However, this has been prevented by our current system. because a growing number of suppliers of goods and services are lowering prices and driving people who are able to work out of the market, not only in the construction industry but also in many other industries. Contract to operate at rates below market and undercut formidable rivals. However, it should be noted that the price was increased by offering bribes and incentives to the institution’s employees without actually performing the work. Since the cost of cement, sand, and steel was low when I took the job, many contractors in the construction industry requested an increase in price so that I could complete the project. This practice has begun to be observed in other industries as well. I made certain arrangements for the procurement committees.
We have begun a process, working with authorities in the construction industry, to ensure that only successful contractors compete. We encourage the contractor to finish the work within the allotted time, whether it’s in six months, one year, or two. Contractors who delay, waste money, and time will not be competitive. We have to deal with every bidder who lowers or raises the price of bread for universities. For instance, a loaf of bread may cost eight birr at the national level. However, you might encounter a bidder who claims to offer it for four birr. He will win the bid simply because his price is lower, even if this supplier is technically just as competitive as the bidders who offered ten bucks. However, by doing so, he can avoid competing with many others and enter into a bargain to raise the price and provide the university with bread for two months.
Ethiopian News Today 2023 The new digital procurement auction
We have therefore developed a system that forces the auction to be canceled and rerun if the price is less than or equal to 5% of the average set price. Debre Berhan University, for instance, put out a bid for construction work. 110 million birr was set as the average price. But 159 million was offered by one bidder. One made a 59 million offer. In any auction, you will always take the lowest bidder, but technically you are comparing up to 60% of bidders. Equally, they both passed the technique. However, the disparity between 159 and 59 million birr is substantial. The prices of both are significantly above the average. We turned down this proposal when it came to us so that another tender could be issued. The solution is to give the job to bidders who do a good job if another bid fails. There are numerous domestic and international contractors who deliver on their promises regarding completion time and budget. The government is not under any obligation to provide them. There are contractors who arrive on time and complete their work.
The Ministry of Finance confirmed that the government had paid more than 43 billion birr for projects that were delayed between five and ten years. It’s not what they agreed to pay, but rather the expense they incurred as a result of the delay. This money is comparable to the current budgets of our nation’s major regions. This demonstrates how much the nation has paid. To carry out a project without a plan or budget, the foundation stone is laid. Some of them only apply to the insect zone because it is screamin’ there. The public will be promised it, there is no budget, there is no study, and neither the contract nor the completion date are known. However, the foundation stone will be laid. For ten years, the stone will remain empty. Then there is a lot of bad management in a whole zone. The nation will face another crisis as a result of this. As a result, we are currently monitoring and controlling projects with extreme caution. We collaborate closely with the building authority. Contractors who have done very well are getting support from us. A con artist who cheats and raises prices without doing anything is being shut out. They are now launching a new fashion. Some claim that we will enter into contracts in dollars because the price of silver is falling. The dollar is going up. In contrast, shrewd individuals predict that we will be compensated in dollars and that silver will decline.
Ethiopian News Today 2023 The new digital procurement auction
Reporter: When it came to the authority for government procurement and property, what issues did the institution encounter?
Herr Haji, The absence of a system is the primary issue. However, it is done through a manual or existing procurement procedure. There are items made to order and manual procurement. Additionally, issues related to audits are frequently encountered. The auditors I believe have evolved since I arrived. No matter where they go, they are able to complete their audit work without receiving a dime from anyone. Even though the government’s allowance system will get better over time, auditors who think it’s not good enough will have trouble being honest in their work if they get allowances from the auditing body where they work. If the audited institution provides an auditor with a bed, food, a vehicle, and other benefits while he is working, how honestly can he perform his duties? As a result, we have made it impossible for auditors to accept allowances from anyone.
Reporter: Nevertheless, audit deficiencies are always mentioned in the audit reports that are presented to the parliament, correct?
Herr Haji, Problems with audit procedures known as collection and payment are common. For instance, even the undisputed audit deficiencies that have accrued since the time of the Trinity remained unresolved until they were canceled by the government. It becomes a debt of the government if a person dies or disappears without presenting their money and property in legal documents. For instance, I will not wager that I have returned if I work in the United States and die after receiving allowance for a month. An institution has been around for a long time; however, if a person dies suddenly and leaves behind insufficient wealth and assets to settle the account, the audit process becomes more difficult. There are numerous so-called sit-down audience audits. Every industry has a problem. However, honesty with oneself is the solution. Finding an accurate audit result can be difficult if you claim to have received an allowance. Additionally, the institution that paid the allowance is required to provide figures to support the payment under the new e-procurement. He has reported to the auditor that he paid this amount of allowance in a report. Every government expenditure and revenue can be easily collected because it is digital. To work, it needs someone to help. if it is supported by all stakeholders, including the media. especially if senior executives assist him. If ministers, commissioners, directors, and other officials assist him, we assert that. If you think this practice is important for the country, it can be developed.
Reporter: Do you intend to enforce it in any way?
Herr Haji, It will most certainly be required. However, we must first demonstrate it and comprehend its significance. We completed the trial work after beseeching and persuading nine institutions. We started this year in 74 institutions. About sixty of them are undergoing successful work, and the remaining ones are said to be entering and exiting through both manual and digital procurement. The job is still done. We will travel to all government facilities next year. Individuals who do not enter are left alone and isolated. The Ministry of Finance does not release a budget or make purchases. For instance, the IFMIS system of the Ministry of Finance now provides budgets to all offices, with the exception of universities. The eGP will without a doubt make government procurement mandatory beginning next year. When I told him that we had reached 73 institutions in one year and nine months, I surprised an Indian consultant who had worked as a consultant in 60 countries. Another claims that reaching this level will take 15 to 20 years. In 2003, the Ministry of Finance launched IFMIS. Today marks 12 years. This year was our start. However, next year, we will pass IFMIS. Even institutions that have not yet joined IFMIS are being introduced by us. One indication that the work is being done quickly is this.
Ethiopian News Today 2023 The new digital procurement auction
Reporter: Are there any technological or human resources available to fully implement the system?
Herr Haji, There is technology. It’s also a course. Every year, up to 150,000 university graduates leave. It’s to explain how it works to them. Because they own the technology, it won’t be difficult to implement if the youth are trained. As a result, we have begun holding conferences twice a year with universities.
Reporter: What is the function of partners? For instance, is support for information network security management (INSA) required?
Haji Ato: INSA serves as the primary foundation for this work, just like the expansion of digital insurance, banking, and other services. We and INSA share a committee. All cyber security is guaranteed by Insa. Without Insa’s approval, this work cannot be done. By trusting Insa, a vast procurement system in which the entire business community participates is realized. If the market that the business community relies on to buy and sell is damaged, the company will fail.
Ethiopian News Today 2023 The new digital procurement auction
Reporter: Is there a special place in the new system for local suppliers of goods and services?
Herr Haji, We have decided to give local rivals a chance that is up to 3% better. Up to 20% is given to people working in the manufacturing industry in some cases. However, the market is open to local suppliers and manufacturers. Growth is built on the basis of competition. How long will the market remain closed? When domestic rivals put their capabilities to the test against rivals from abroad, they can only expand. The micro- and small-scale industries that are regarded as exceptional may be eligible for incentives. However, competition will be stifled if the nation permits procurement that prioritizes price, quality, and service at the expense of others.
