Updating Public Procurement Law in Nigeria
The Director-General of the Budget Office of the Federation, Ben Akabueze, has a good point on the need to update Nigeria's public procurement regulations. His points must be considered despite what World Bank and international organizations might have imagined on conceptualizing them. While matured economies like U.S. and UK could live on some of these rules, Africa may not thrive on them, yet. In Rwanda, for example, most contracts are challenging in structure that most local companies cannot participate with RFP (request for proposal) running into 300 pages. Sure, we need to ensure corruption does not breed, but we have to be sensible to avoid killing our local economy.
“How can we have a public procurement law that approves a maximum of 15 per cent mobilisation fees to contractors? In most parts of the world, with a government contract, you can walk into a bank for a loan and the only thing the bank will check will be the capacity to deliver.
“The question about whether the government will pay is taken for granted. That is not the case here, where doing government contracts has killed many businesses. If you collect money from the bank, you are not sure when the National Assembly will approve the budget.
“Banks are not even in a hurry to finance government contracts. So, if you give somebody a contract and allow him 15 percent advance payment, he will spend the next six months going from one bank to another to get finance for the contract.
“After six months, the cost will escalate. That means from Day 1, the contract has failed. Some people will even prefer to make away with the 15 percent advance payment and abandon the contract. If we do not do something (revise the law), the problem will continue,” he said