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Tendering in Zimbabwe

The economic crisis presently facing the Zimbabwe government undermines its ability to call for tenders effectively, and consequently to deliver services. In a situation where the currency is so unstable, there is a huge danger for consultants and contractors who bid for work in Zimbabwe today. While some analysts have described the Zimbabwe Dollar (Z$) as in `free fall', others have tried to quantify the differences between the value of the Zimbabwean dollar on the black market and the official value of the Zimbabwean dollar. [Please note that the currency figures quoted below are from 2004, which means that the figures below are hopelessly out of date, as the situation has deteriorated much further. As the situation is changing on a daily basis, it is not possible to provide any medium or long term certainty as to how the procurement policy will be affected. Please do not treat the currency figures quoted below as reliable . They are only provided to give an indication of how the procurement system works.]

The 4 main legal texts with relevance for tendering in Zimbabwe are:

  • The Procurement Act 2 of 1999
  • The Procurement Regulations, 2002
  • The Procurement (Amendment) Regulations, 2003 No 2
  • Urban Councils Act of 1995 (revised 1996).

The Procurement Act describes the rules governing the State Procurement Board. This is the Zimbabwe central government body whose function is to procure services on behalf of government departments, and to ensure compliance with the procurement laws by other procuring entities. The President appoints the members of the SPB, which must have a chairman and not more than 10 members but not less than 7 members. Members of Parliament and members serving on more than 2 statutory bodies may not be appointed to the SPB. Members are appointed for a term of 3 years, and thereafter may be re-appointed. The President may suspend a member of the SPB if criminal proceedings for dishonesty are instituted against him or her. If a member of the SPB (or a relative of the member) is participating as a bidder in a tender, the member may not take part in the discussion of the proceedings of that tender. If a member is found guilty of contravening this prohibition, he or she is liable to a fine of Z$2 000 or 3 months imprisonment, or both. Such a low fine would not appear to be a very serious deterrent. The SPB employs a principal officer and other staff to carry out its functions.

Although the terminology used is not absolutely consistent between the two, the Procurement Regulations are based on the Model Law on Procurement of Goods and Construction adopted by the United Nations Commission on International Trade Law in 1993. While the Procurement Act would not appear to have been so seriously affected by the depreciation of the Zimbabwean dollar over the past few years, the Procurement Regulations have had to face the problem of the depreciating currency head on. While in 1994 the exchange rate was Z$2 for R1 (ZAR), by 2004 this had changed to Z$900 for R1 (ZAR). Such rapid depreciation plays havoc on the administration of tenders. In general, small jobs or tasks may be authorized by the accounting officer of a government department, but once the cost of the job goes over a certain limit a public tender has to be called for. In 2004, the accounting officer of a Zimbabwean government department could authorize any expenditure up to Z$40 million on the basis of 3 competitive quotes, without calling for public tenders.

For expenditures of over Z$40 million, the Regulations distinguished between three different kinds of tender:

  • informal tenders - where the total budget for the job was expected to be between Z$40 million and Z$200 million
  • special-formal tenders - where the normal tender procedure is not applied due to urgency, issues of national security, etc
  • formal tenders - where the total budget for the job was expected to be over Z$200 million.

The Regulations allow for two kinds of preferences to be granted:

  • A 10% preference may be given to locally based contractors over external contractors
  • A 10% preference may be given to previously economically disadvantaged contractors.

The difficulty with these two preferences is that neither of the terms ("locally based" or "previously economically disadvantaged") is defined in Zimbabwean law. This suggests that a legal appeal against the adjudication of tenders using such preferences could force the Zimbabwe government to rescind an appointment, thus creating a further delay in the carrying out of government functions.

The SPB has compiled a list of approved contractors and consultants in respect of specific services. This list may be used for the purpose of inviting informal or special-formal tenders, and thus becomes very important to government departments who are under pressure to deliver services, especially under the present circumstances of depreciating currency values. A list of Public Enterprises (or parastatals) that are governed by the Act and Regulations is provided at the end of the Regulations. If a contractor does not perform satisfactorily, the SPB may direct that no further tenders may be awarded to that contractor for 5 years.

Unlike the Urban Councils Act (which governs municipal tenders), the Procurement Act & Regulations do not spell out the minimum period from publication to closing date. In this sense, it would appear that the legislation is stricter on municipalities than it is on central government departments and public enterprises.

The Urban Councils Act of 1995 is the law governing the calling for tenders by municipalities. Basically, this act places the responsibility for appointing the Municipal Procurement Board for the municipality (and its members) on the municipal council. While the description of how the municipal procurement board is meant to operate is briefly explained in this Act, this description does not provide much detail. What this implies is that the procedure for calling for tenders by municipalities needs to be in line with the national government guidelines provided by the first three texts. Although the Act says that a municipal council may compile a register of contractors, this is not a prescribed requirement for municipalities. There are two requirements stipulated in the Urban Councils Act which make it stricter than the national government legislation: i.e. that tenders are to be advertised in two issues of a local newspaper, and that the closing date should not be less than 28 days after publication.

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