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GOVERNMENT will take punitive measures against public officials who are complicit to overpricing and procurement malpractices while suppliers involved in illicit financial activity will be blacklisted from future supply contracts, Treasury has said.
This comes as the Government has noted with concern the obscene pricing of goods and services based on speculative parallel market rates by suppliers to ministries, departments and agencies (MDAs), as well as parastatals and local authorities.
With Government being the major buyer, the move has prompted the recent suspension of payments to all current supplier contracts, which are now subject to a value for money audit review before the payments are made, as a corrective measure.
In a latest statement on the implementation of the “Value for Money Process” on Government procurement contracts, Finance and Economic Development Minister, Professor Mthuli Ncube, said Treasury has observed that certain pricing behaviours and weaknesses in the procurement framework have contributed to distorted pricing practices by the market.
In this regard, he said adoption of additional comprehensive measures to further strengthen procurement systems and to improve management of payment cycles for Government contracts was an urgent imperative.
“Government through the Treasury will be strict in enforcing measures to enhance economic stability and punitive measures shall be taken against officials found to be complicit to overpricing and procurement malpractices while suppliers will be blacklisted for future supply contracts,” said Prof Ncube.
He said the move buttresses the recent Treasury Circular issued to MDAs, which also followed the announcement by the Ministry of Finance of the establishment of the value for money audit process to be embedded into the procurement cycle for all goods and services.
While the Government remains committed to maintaining macro-economic stability and elimination of harmful and destabilising arbitrage conditions, which have pervaded the economy at the expense of the generality of citizens, Prof Ncube said the combined effect of such illicit behaviour has resulted in erosion of budgeted resources.
It is for this reason that the Government has come up with a raft of measures to deal with the menace, he added.
“The pricing framework adopted by suppliers is characterised by a behavioural tendency for forward pricing and benchmarking prices to front-loaded parallel market exchange rates.
“These pricing models are leading to extortionist pricing of goods and services supplies to Government ministries, departments and agencies not anchored on economic fundamentals,” said Prof Ncube.
“Government has also noted with concern the fact that substantial differences in pricing are obtaining in the market for goods and services supplied to the Government as compared to other customers.”
Furthermore, the minister said it has been noted that MDAs, through various procurement units, have not been exercising due diligence, especially with regards to the value for money in terms of pricing.
“They have been merely following procurement rules to the latter, without due regard to established value for money practices already enshrined in the procurement laws of the country,” said Prof Ncube.
The relentless and significant steps to stabilise the exchange rate and control inflation are in line with the Presidential Policy Statement and subsequent policy measures announced by both the Treasury and the Reserve Bank of Zimbabwe (RBZ).
Already the impact of these measures has signalled to the market Government’s total commitment to restoring price stability and market discipline, which in turn will engender market confidence.
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derick.khumalo