Monday, April 23, 2012

Guarantee our benefits…local contractors tell Gov’t

Business executives say non-compliance with the Public Procurement Act (Act 663, 2003) hampers the promotion of local content in procurement activities, and have demanded more benefits from resources flowing into the economy. Participants at a one-day seminar made up of tax consultants, legal practitioners, contractors, public-sector executives and private-sector operators wondered why “policy-makers who broker deals [do not] ask for some projects to be executed solely by Ghanaian contractors or in joint- ventures with foreign firms. “Government is guaranteeing the work of foreign parties to the detriment of Ghanaian expertise,” they said. Mr. Ebo Newton, a representative from the Association of Ghanaian Contractors, said it’s about time government made it a legal policy for all firms seeking government contracts to set aside a percentage for local contractors to help promote local content in the projects. The seminar was organised in Accra by AB & David law firm to mark its 15th anniversary of operations in the country. The discussion was to examine how Ghanaians can get a bigger share of the “megabucks” fuelling the new-found middle-income economy. Mr. Eric Victor Appiah, Director, Benchmarking, Monitoring and Evaluation at the Public Procurement Authority, shed some light on the issue by saying: “In respect to public procurement generally, the Procurement Act, Act 663, contains provisions in respect to giving a margin of preference which aims at increasing the income of local businesses and persons; but some of these guidelines and policies are not enforced mandatorily by Ministries, Departments and Agencies (MDAs) and Municipalities, Metropolitan and District Assemblies (MMDAs).” He explained that government, being the largest procurer of goods, services and works, passed the Public Procurement Act to regulate how these services should be procured using public funds. “This it did, knowing that there would be a time when it may become necessary to promote local-content measures.” Mr. Appiah cited Section 40(2) of the Act which allows an entity, with the approval of the board, to advertise its intention to procure from a particular provider in order to promote a policy that is aimed at national development. This can be used to promote local content, he said. “Restricted tendering method[s] can be used to engage competent local providers to render required services. To promote local content, the competition in this instance could be limited to at least three competent local or domestic providers. “The third intervention, which uses margins of preference, basically seeks to assure local or domestic firms that within a certain margin their higher-priced tenders will be recommended for award if they are able to meet all the qualification criteria. “Much as these provisions are strictly captured in the Act, the question of who is to use them has to be addressed,” he said. Lawyer David Ofosu-Dorte, Senior Patner at AB & David law firm, observed that in recent times there has been a lot of talk in West African countries about the need for promotion of local-content policies to boost local economies and create jobs. Nigeria has promulgated a local-content law for the oil and gas industry, while Sierra Leone is reported to have instituted a 35% local-input requirement for most sectors including advisory services. Ghana’s Ministry of Energy has also been promoting a local-content policy for the oil and gas sector. Mr. Ofosu-Dorte indicated that the general complaint is that non-indigenous but locally- incorporated companies appear to benefit more than “real Ghanaian-owned” entities, adding however that there is no data to confirm if this is true. “The Millennium Development Authority was mandated to disburse US$547m between 2007 and 2012 under the Millennium Challenge Compact. “Government has secured a US$3billion facility from China Development Bank (CDB) in addition to other major finance facilities. Between 2012 and the next few years, the public sector is expected to disburse over US$3billion. “How much of these monies will actually become income to indigenous businesses in the industrial and service sectors -- as against foreign but locally-incorporated companies, or direct foreign service-providers? “Megabucks go through the economy, and Ghanaians apparently want a bigger piece of the pie,” Lawyer Ofosu-Dorte said

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