Public Procurement and Resource Governance
By Mohammed Bougei Attah   Newsdiaryonline  Sat Aug 27,2011

Entry Point

The Public Procurement is defined as the acquisition by any means of goods, works and services by the Government.  By  virtue of the provisions of Section 55(2) of Public Procurement Act 2007, a Public Procurement Entity (PPE) is also a Public Disposal Entity  (PDE) which by implication means that public procurement also include the disposal of all government assets (whether tangible or intangible, serviceable or non serviceable).

Transparency International (TA), a global civil society organization, leading the fight against corruption noted that procurement process is important for the issuance of licenses (e.g. to operate certain public or private services), concessions (for extraction of natural and other resources) and in the selection of purchasers, procurers of public assets.

From the definition above, it is obvious that public procurement is part of supply chain management activities that entails providing the process, systems or methods of obtaining from external and internal sources, all goods (consumers goods, household goods, capital goods, including machinery, works buildings etc) and services which are necessary for the running, maintaining and managing government primary and secondary support services (social and economic) at the most favorable conditions and costs.

I have chosen to add the word ‘public’ to the original title given to me because the subject of this dialogue is about ‘public ownership’. Therefore, Resource Governance (RG) and Public Procurement (PP) are two paramount areas that every citizen should have rights to. In other words, Resource Governance is Procurement Governance (PG). But the right  to these elements, as enumerated in the concept note is so much abused that we are constantly researching the way out of the setbacks.

Where are we coming from?

The Country Procurement Assessment Report (CPAR) exercise carried out on the instructions of President Olusegun Obasanjo in the year 2000 examined the procurement system in Nigeria led by a team from the World Bank, with inputs from many Nigerian professional bodies including the then Institute of Purchasing and Supply, Nigeria (IPSMN), Manufacturers Association of Nigeria (MAN), Nigeria Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) among others. The report was subsequently submitted to the Federal Government of Nigeria with recommendations which include that: (a) there is need for a procurement law based on the United Nations Commission for International Trade Law (UNCITRAL) model; (b) the need to established a Public Procurement Commission (PPC) to serve as the regulatory and oversight body on Public Sector Procurement; (c) the Federal Government of Nigeria should  upgrade and charter the Nigerian Institute of Purchasing and Supply Management (now Chartered   Institute of Purchasing and Supply Management of Nigeria  (CIPSMN) to train and certify professionals in procurement in Nigeria, (d) there is need to revise key areas of Financial Regulations (FR) to make them functional and more transparent; (e) there is need to streamline Tender Boards and strengthen their functional authority; including powers to award contracts; (f) there is need to rebuild procurement and financial management capacity in the public sector; and (g) That there is need for a comprehensive review of the businesses related to export, import and transit regulations, procedures and practices, including the ASYCUDA System. 

From the above recommendations which form part of the proceeds from the assessment, it is very easy to see how procurement relates to every aspect of our economy. It is evident that procurement plays a strategic role that can either reduce the size of our Gross Domestic Product (GDP) or increase it, depending largely on the application of the procurement system in the Nigerian economy. Therefore, it is also easy to conclude that the success or failure of the Vision 20-2020 and the 7-Point (now 3-point) Agenda are dependent on the procurement governance system put in place.

There were other observation in that report which include that the then regulations on public procurement have no permanent measures for surveillance and control, there is no permanent body outside the purchasing entities monitoring and controlling the procurement process, and that there is no central policy making entity in the area of public procurement as this is left to ad-hoc circulars issued by the Ministry of Finance and in some cases the Presidency. Others include issues of complain mechanism, thresholds, tenders boards as well as the absence a Codified Contract Law (CCL) but a law of contract based on case law.

The eventual out come of the above report in Nigeria are the Public Procurement Act signed into law on 4th June 2007, the establishment of the Bureau of Public Procurement (BPP) to supervise and regulate public procurement processes in the procuring entities, and the CIPSMN Act 2007 signed into law on 30th April  2007 by then President Olusegun Obasanjo as well as the establishment of the Institute with a Governing Council, to  educate,  train and certify persons wishing to practice procurement in Nigeria and abroad and to regulate the practice of the profession,

Where are we now?

The bulk of corrupt practices in Nigeria today are linked to public procurement, which accounts for about 70% of government daily activities (see August 2009 CSO Report on Public Procurement Process in Nigeria). The continuous low rating of Nigeria by Transparency International (TI) and other international anti-corruption organizations, among the most corrupt nations of the world are also located within the ambit of weak governance embedded in a weak public procurement system that has blighted the development of many parts of Africa to date.

Research has shown that without transformation in public procurement, budget implementation result will continue to remain poor, thus no organization or country can survive in the absence of efficient flow of materials, supplies and services to support their activities. This perhaps underscores why the President chose to ‘transform’ and not to ‘turn around’ Nigerian operations.

There is one question that successive governments in Nigeria, from Obasanjo’s time have refused to answer. And the question is ‘why would government implements, all other recommendations of the CPAR 2000 but refused to inaugurate the National Council on Public Procurement (NCPP) as provided for in Section 1:1 of the Public Procurement Act (PPA) 2007?’ Perhaps if we get the right answer to this question, we may be close to solving the Resource Governance challenges.

It should be noted that the procurement Act did not only established the National Council on Public Procurement (NCPP), it gave the Council the authority to superintend over the BPP at the policy level. Indeed, the BPP serves as the Secretariat of the Council, thus BPP cannot effectively exist without the Council. By the Act, it was expected to have been the first organ of the procurement process to be constituted and it is on the basis of its existence that other organs are created. Reading from the Act, the Council has five (5) permanent members from the executive and six (6) non-permanent members from other sectors, including the civil society and the media.

Gaps and Mischief in Resource Governance

For me the biggest obstacle to effective and efficient resource governance in Nigeria is lack of adequate capacity to locate the enabling laws, interpret them and apply same for the public good. Though political will is essential, we need first to understand the issue(s) before applying same in our campaign to right the wrongs. This is one critical area therefore that CSOs need to address forthwith. The low level of capacity on the parts of public office holders – technocrats’ inclusive -, non-state actors (NSAs) and in some cases politicians has created a detrimental gap that is the bane of our poor resource governance.

For example, the 2005 NEITI Audit Report referenced in the Concept Note to this Policy Dialogue fell short of the general expectation. This much was contained in my August 2010 review of the Audit Report published in the Nigeria dailies. In that appraisal, I explained, as I do now again that there are three (3) basic audit reviews known to science. They include Financial Audit, which account for about 35%, Physical Audit – 35% and Process (Procurement) Audit – 45% of the entire audit circle. The NEITI Audit failed to cover the third type of audit which in some cases are a combination of the first and second. If they do, it will be helpful to know how and who conducted the audit? If the answer is in the negative, we may as well ask ‘Can financial or physical audits unearth the truth about oil block sales?

Despite these flaws in the review of our extractive resources as widely publicized and with the extant laws, NEITI today, largely driven by a civil society board, remains in the dark to this contemporary issue. On Monday May 16, NEITI management carried out a paid advertorial in the national dailies requesting for expression of interest from consultants for the ‘Auditing of Extractive Industries Companies and Fiscal System for the Oil and Gas Sector’ Here they validate my claim above and clearly demonstrated ignorance, low level of capacity and understanding of the system. The question I ask here is “what type of audit?”

Another colossal gap in the resource governance process as it relate to capacity came to the fore during the recent National Assembly probe into the disposal of assets by the Bureau of Public Enterprises (BPE) in the last ten years. Throughout the public hearing conducted over a period of one month and the level of panelists, invited witnesses and the media analysis of the proceeds, it is shocking that no one made any reference to Section 55 of the Public Procurement Act (PPA) 2007 under ‘Disposal of Public Property’. The extant law, which is subject to the BPE Act is very clear as to the laid down procedures for the disposal of these assets such as Ajaokuta Steel Company of Nigeria (ASCON) Nigeria Airways, NITEL  and other gross misprocurement that we grieve about today. Worst still, the management of BPP is yet to issue a statement or make any comment regarding this investigations as it affects the enabling laws.

If we direct our attention to the environmental poverty in the Niger Delta, the summary of what was said in the past and the eventual outcome of this dialogue will point to the poor management of our resources that has denied the people of the rights to participate and enjoy the natural resources in their environment. From the Oil Mineral Producing Development Commission (OMPADEC) era to the present day Niger Delta Development Commission (NDDC) and now the Niger Delta Ministry – a duplication of certain roles – the rots all point to a systemic failure traceable to the absence of sound procurement agenda, which include the acquisition and disposal of assets belonging to the people.

With the ongoing crisis engulfing the NDDC and the attendant investigative panel set up by the Federal Government, what the CSOs need to do quickly is to urge the government to conduct an audit process of the resources committed on the militant youths to avert future or further agitation. I have no doubt in my mind that the huge resources invested so far may have been managed through the usual channels of corruption.

Statutory Laws on Public Asset Governance

The Public Procurement Act, the Fiscal Responsibility Act and Chartered Institute of Purchasing and Supply Management Act (CIPSMN) 2007 are special legislations of the National Assembly to curb corruption and to improve on professional procurement practice in Nigeria, thus it is the duty of the government and our courts to give effect to the respective special legislations of the National Assembly. Unfortunately the executive, legislature and the judiciary are overwhelmed with political intrigues that the business of good governance has eluded us. The PPA remains one of the strongest anti-corruption strategies that have not been fully tested to date. Rather than apply the provisions of the Act, some politicians have succeeded in making government ignore the content and called for amendments. You will recall that even the immediate past National Assembly at some stage began to demand that their Principal Officers be allowed to regulate or certify contracts in parallel lines with the BPP and independent of the Executive.

Ironically and true in context, since the signing into law of the PPA, all the procurement issues and activities through the BPP have been classified in some quarters as illegal due to the absence of the National Council on Public Procurement (NCPP), the administrative body saddled with the responsibility of driving the process in Nigeria. Rather than solve this glaring abuse of the law, the actions of the government have created more problems and thus cast doubt on her readiness to fight corruption. Therefore it is not only improper; it is illegal and represents constitutional crises for the Nigerian government to continue to manage the procurement system of the country without the inauguration of NCPP.

The laws of Nigeria are clear that where there are clear express provisions of statutes to be followed by the Federal Government to reduce or eradicate corruption, it is the sacred duty of the Federal Government and the courts to give orders that will give effect to it. (See Olatunji v. F.R.N. (2003) 3 NWLR (Pt. 807) 406 and State V. Ajayi (1996) 1 [P. 231] paras. 5-15) But this is one area our government has failed us. How then can we effectively govern our resources (with inputs from you and I) if the above are not properly addressed?

The good news here is that we have information that the BPP have commenced the procurement audit of the 165 Ministries, Departments and Agencies (MDAs) of government. This much is also expected of NEITI, BPE and other statutorily empowered bodies to join this direction. However, the recent pronouncement by the Director General of the BPP to the effect that only contract above N1bn threshold is referred to the Bureau for review raises more questions than answers. This from an informed position is daylight robbery. The simple logic here is that with about 165 MDAs spending N1bn each without recourse to audit Nigeria will not have the right to know how this huge some of monies as expended. This is against the spirit and letters of transparency.

At this juncture, may I state that proper Resource Governance is a strong tool for the observation of a process in accountability, however without an informed, effective and organized Civil Society; it is most often very challenging to make leaders account for their actions and inactions. Organised civil society organisations like the labour, the Bar and the media among others have contributed greatly to the enthronement of transparent system of governance. What we need more to is to ensure that these processes are translated into reality and sustained. CSOs represent the people and have in some instance become more reliable than government in responding to the needs of the people.

CSO should and must cultivate the culture of learning. To make government accountable every tool adopted must be supported with adequate knowledge of the issue. It is not just enough to be ‘CSO activist’ by name but it must be an activist by action. By this I mean that a situation where people wish to make government accountable, it is vital to be well informed on the issue at stake so that one can effectively and adequately address such issue with some level of authority. CSOs should endeavour to study and understand issues, especially the legal implications before they engage governments. Unfortunately this is one big gap that non-state actors (NSAs) need to fill in this drive for accountability and good governance.

Finally, CSOs should as a matter of urgency revisit the lapses in the procurement laws. They should liaise with the professionals that are equipped with more knowledge of procurement and resource governance, and collaborate in urging the Federal Government to constitute and inaugurate the National Council on Public Procurement in accordance with Section 1 of the Public Procurement Act 2007 to promote good governance especially in the Niger Delta, power, security, electoral process, infrastructure, which in the end will encourage the fight against corruption.

Attah, National Coordinator of Procurement Observation and Advocacy Initiative, delivered this paper at the August 25 National Policy Dialogue on Resource Governance in Nigeria held in Abuja

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