Why procurement cost remains high, by experts

Divergent views have continued to trail the Senate President, Dr. Ahmed Lawan’s recent outcry that the cost of project execution in the country was the highest in the world, with experts identifying corruption and appointment of unqualified professionals in sensitive positions as major factors.

While some commentators particularly faulted the corrupt tendencies and greed prevalent among public servants charged with budgeting and it’s implementation, others decried that inability of successive governments to set up the Procurement Council, which is meant to be an independent procurement awarding body.

The experts noted that over 10 years after as it was prescribed by the 2007 BPP Act, the Procurement Council was yet to be set up, thereby creating a situation which continues to allow the Federal Executive Council (FEC) to award contracts at their meetings whereas many of the members were deficient in price mechanism and other requirements.

The experts were in agreement that the implication of Nigeria’s high cost of procurement was partly responsible for the astronomical rise in its debt portfolio, which had in the last four years more than double from about N11 trillion in 2015 to more than N24 trillion now.

The country’s debt manager has continued to borrow money at exorbitant rate to finance projects approved in the yearly budgets at very high cost more than obtains elsewhere.

Lawan had noted that the nation’s public procurement procedures fell short of world best practices, saying that the Act will receive holistic overhaul once the Senate resumed.

A former Acting Director-General of the Bureau for Public Procurement (BPP), Engr. Ahmed Abdul, attributed the disturbing phenomenon to a number of factors, including the poor infrastructure situation in the country, high interest rate regime and the delay in payment to suppliers and contractors.

One of the experts, a development economist and Public Private Partnership (PPP) specialist, Dr. Felix Ogbera told The Guardian that one way public servants grew the nation’s debt portfolio through budgeting was through conscious under project revenue assumptions, thereby creating room for borrowing to finance the highly-rated procurement in the budget.

He insisted that it was only if the PPP framework is imbibed in project implementation that the sleaze would be checked.

Speaking in the same vein, Dr. Abiodun Adeniyi, a University lecturer and public affairs and communication expert, said that the high cost of procurement in Nigeria would be a hard nut to crack unless the propensity for greed by civil servant was checked.

However, Mohammed Bougei Attah, a certified procurement professional and National Coordinator of Procurement Observation and Advocacy Initiative (PRADIN), said that until the National Council for Public Procurement (NCPP) is inaugurated as approved by law, Nigeria would continue to have issues with high procurement cost.

Attah said that what obtains in Nigeria today was a situation where persons not qualified as procurement professionals man the procurement cadres across the Ministries, Departments and Agencies (MDAs) of government. He noted that the inauguration of the Council has consistently been frustrated by a few unpatriotic elements within the corridors of power.

He added, “Though the law is very clear as to the qualifications of those to function as heads of these entities, from the Director General of the Bureau for Public Procurement (BPP), Directors in the Bureau and across other parts of the public sector, the story is the same.”

Engr. Abdul, stressed that Nigeria’s high cost of procurement could not be divorced from poor power supply and high interest rate.

“A factory operating in Nigeria will be operating at a higher cost. Interest rate is high at between 27 to 28 per cent as compared to other climes, where it could be as low as five or six per cent. You don’t expect the contractor who acquires loan at that high cost to supply or provide services lower than the cost of his money,” he said.

To correct the anomaly, Abdul said government must improve the power supply situation and reduce interest rate to what obtains elsewhere, as well as ensure speedy settlement of contractors.

For Dr. Adeniyi, Nigeria must deal with high propensity for corruption, and the regard for public resources as one that belongs to no one, but only for balkanization and reckless use.

Adeniyi said: Recall the procurement reform came as a result of a World Bank country assessment report, which discovered that of every N100 of government expenditure, N60 was wasted. The reform, therefore sought to introduce processes and procedures, revolving around competition, quality and value-for-money in the application of public resources.

“The signing of the law is well over one decade now, but regrettably, we are still far from implementation, not because the Bureau of Public Procurement (BPP) is not doing its very best, but because of stakeholders’ reluctance to be painstaking and patiently follow laid down rules.”

Adeniyi said this was why Nigeria still witnesses bid rigging, undue quest for selective tendering, multiple bidding, and outright forgeries of documents.

“What we need really is a genuine re-orientation, away from acquisitive tendency, which privileges materialism at all cost, ahead of honour, quality values and virtues, necessary for the cultivation of good ethics, social and communal growth and development,” he said.