Business Botswana, an advocacy body for the private sector, has advised government to tread with caution when reserving some procurements to 100 percent citizen-owned companies under the Public Procurement Act (2021).
The law empowers the government to reserve certain procurements to fully citizen-owned entities, but the advocacy body representing the private sector raises red flags. It says, while a noble gesture, such powers may have unintended consequences of disadvantaging citizens with shareholding in listed companies and joint ventures as these are not 100 percent citizen-owned.
Business Botswana cited Section 76 of the Act as a prime example of the concerning portion of the law.
“It may also stifle job creation by the excluded categories and capacity building of SMMEs by joint ventures and foreign-owned enterprises,” the advocacy body noted.
This concern was however addressed by Minister of Trade and Industry, Mmusi Kgafela, when he noted that accounting officers have the power to make a determination to award a tender to joint ventures and even foreign-owned companies. The minister said exceptions will be made in the absence of a qualified citizen-owned company.
Business Botswana suggested that an enterprise development model be used to address concerns of potential discrimination of joint ventures. The advocacy body said in such instances, an established listed company or joint venture should be mandated to have three to four small to medium-sized entities to shadow it and grow it by skills transfer over a set period of time.
Business Botswana also suggested that there is a need to introduce the provisions of the Act on a quota basis – for example, 80 percent reservation for citizen-owned businesses and the balance for foreign-owned businesses.
“This will continue to encourage competitiveness and promote learnings for citizen-owned businesses,” Business Botswana said.
The advocacy body also faulted a clause that empowers company chiefs to approve transactions saying CEOs are typically not procurement experts.
“There is inefficiency resulting from the deployment of the procurement specialist. The key question is, if they are employed full time, what do they do when they are not buying?” Business Botswana said.
On a positive note, Business Botswana noted that the Act has procurement efficiency gains as red tape has been cut by eliminating the board tender committees. Business Botswana says the Act provides for structures that can adjudicate and award within an organisation without going external which means it has full control on the procurement process.
“What emerges from the analysis of this Act is that, although it has good intentions, there are areas that need a thorough reassessment; this calls for continued dialogue between Government and the private sector as the Act is implemented,” Business Botswana said.
It says the Act also calls for the Regulatory Impact Assessment (RIA) to have a full picture of the possible outcomes of implementing the Act. RIA is a tool that provides information before decisions are made and the government believes that it creates space for transparency and improves policy and regulatory decision-making.
