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05.11.2007 Business & Finance

AGI boss calls for fair play

By Public Agenda

Mr. Tony Oteng-Gyasi, President of the Association of Ghana Industries AGI) has dismissed suggestions that domestic firms are scared to compete with foreign companies in public procurement.

He has pointed out that local firms are prepared to give their foreign counterparts a run for their money in public procurement once they (local firms) are treated fairly.

"It is not true that industries n Ghana do not like competition. All we ask for is that we must compete on an even playing field; we are not scared of competition", Mr. Oteng-Gyasi argues.

According to the Public Agenda, he stressed the point at the 6th monthly luncheon for AGI members and business executives in Accra last Thursday. The objective of the monthly luncheon is to offer a platform for members to network among themselves and with stakeholders and also discuss key issues pertaining to industrial development in Ghana.

The topic for discussion was "Public Procurement: An Instrument for the Growth of Local Industries - Prospects and Challenges." Mr. Oteng-Gyasi acknowledged that everywhere in the world; public procurement is a recognized and accepted agent for development."

To actualize this, therefore, "public procurement must take cognizance of the entire national interest and must be on an even playing field," he emphasised.

Public procurement is defined as a process of acquisition of public works, goods and services from public funds. This covers a wide spectrum, from commodities such as stationery or energy and contracted out services like building maintenance or security, to major IT systems and construction projects.

It is estimated that public procurement constitutes 50-70% of the nation's import value. It also represents about 14% of the country's Gross Domestic Product (GDP). And in terms of national budget, public procurement constitutes 50/70% (apart from personnel emoluments).

Section 45(1) of the Public Procurement Act, 2003, Act 663, states; "International Competitive tendering shall be used wherever open competitive tendering is used and effective competition cannot be obtained unless foreign firms are invited."

This is reinforced in section 46 as follows: " ... effective competition cannot be obtained unless foreign firms are invited to participate in procedures apart from open competitive international tendering such as selective tendering or invitation of proposals."

But at a forum organized recently by Public Agenda, Mr. Eric Oduro Osae, a lecturer at the Institute of Local Government Studies called for protection for local firms.

He said "Protectionism is one of two major challenges that public procurement has to contend with, the other being accountability. Ideally, public procurement system should operate to protect local industries and promote fair competition against strong, well capitalized and giant firms and industries operating in the international market."

In his opinion, "If we don't implement the Procurement Act to operate to ensure certain advantages to our local firms, they will in the long run fold up because they cannot, except for a few, cope with the huge capital base, superior technology and the cost effectiveness techniques used by these multinational firms in contracting and other work processes."

According to Mr. Osae, there is ample evidence to suggest that international firms are out-boxing Ghanaian firms, giving the background and calibre of firms wining major procurement contracts, technical services and other consulting services in Ghana.

"As at today, if one is to conduct a research into who are doing what in our road, technical services and other works sectors, the results would definitely support this argument," he observed.

He, therefore, pointed out the need to strengthen the domestic economy in order to create a congenial atmosphere for the strengthening of local firms to improve their capacity to compete favourably.

Schooling members of industry and the business community on public procurement at the 6th luncheon, Mr. Agyenim Boateng Adjei, Chief Executive, Public Procurement Authority (formerly board) admitted that public procurement is indispensable as far as serious national development is concerned.

"Therefore, if it is properly managed, it represents enormous potential for accelerated national development."

The PPA CEO noted that public procurement can bring about job creation, promote fair labour conditions, enhance the use of local labour, accelerate poverty reduction and provide a major stimulus to local small enterprise growth and development.

Mr. Adjei pointed out that despite the potential for developing local industry through public procurement, many local firms do not participate in public procurement for various reasons.

According to him, the reasons these firms advance include "a perception (and at times the reality) that the government is a slow payer, difficult to work with or has its own favoured suppliers for contract awards; a feeling among suppliers based on anecdotal reports that corruption plays a part in contract award decisions; and lack of transparency in the procurement process, as well as, little or no information on the results of specific procurement transactions."

He urged local firms to take part in public procurement because after some three years of implementing Act 663, the Public Procurement Authority (PPA) has successfully undertaken a number of activities and programmes that will ensure fair competition.

They include Guidelines on Margin of Preference, which aims at assisting the local business community to become more competitive and efficient suppliers to the public sector.

He explained that these margins are supposed to be granted only during the Evaluation of Tenders to give preference to local Suppliers and Contractors when in competition with foreign Suppliers and Contractors.

For instance, to qualify for 20% margin of preference during evaluation of tenders, a tenderer of domestic goods (equipment, materials, consumables etc.) must prove in tender documents that the use of local labour, raw materials and components from within Ghana accounts for 15% or more of the Ex-Works (EXW) price of its products.

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