Looking at Transparency in Public Procurement in Zimbabwe: A Constitutional Perspective

January 2019

Background

The current Constitution of Zimbabwe (the Constitution) has been in force since 2013, and has been signaled as a more ‘progressive’ constitution based on its entrenchment of the principles of good governance and transparency. Section 315 of the Constitution is one of the key provisions relating to good governance and transparency in government procurement. The section provides for the legislation that should be in place, to ensure transparency and accountability in government procurement.?

This article focuses on section 315 (2), in light of the current laws that are in place. It is the writers aim to highlight the shortfall of the current legal framework in meeting the requirement of section 315(2) while sensitizing you, the reader on the potential dangers that lie in failure to uphold this key section of the Constitution [especially in so far as it leaves the system prone to corrupt and other underhand practices].?

The Challenge

Over five years since enactment of the Constitution, a key constitutional provision relating to government procurement has not been fully respected.

Section 315(2)?

“…an act of Parliament must provide for the negotiation and performance of the following contracts:

(a)?Joint?Venture?Contracts;?(b)?Contracts?for?the?construction?and?operation?of?infrastructure?and?facilities;?(c)?concession?of?minerals?and?other?rights to?ensure?transparency,?honesty,?cost?effectiveness?and?competitiveness."

Constitution of Zimbabwe(As amended)

The provision clearly requires that there be legislation that deals with the?negotiation?and?performance?of joint ventures contracts, contracts for the construction and operation of infrastructure facilities and concession of minerals and other rights?(hereinafter referred to as The Section 315(2) Contracts). The need to have dedicated legislation dealing with these contracts separately from the general public procurement processes is due to the complex nature of such contracts[1].?

The Constitution recognises this and thus section 315(2) requires there to be?a separate act of parliament. “To?ensure transparency, honesty, cost-effectiveness and competitiveness…”is the additional proviso and qualification for the need for standalone legislation for these contracts.?The importance of this stipulation is that it leaves no ambiguity as to the interpretation of why the negotiation and performance of these contracts must be provided for in standalone legislation. Thus, in the absence of legislative provisions, the negotiation and performance of any of the Section 315(2) contracts would likely lack transparency, making room for dishonest conduct, possible wasted resources and non-competitiveness.

At present, there is no consolidated piece of legislation that has been enacted in accordance with section 315(2), furthermore, the legislative framework that governs each of these types of contracts fails to meet the requirement of section 315(2) as it does not sufficiently provide for the negotiation and performance of these contracts in a manner that will ensure transparency, honesty, cost-effectiveness and competitiveness. Instead, the current legal framework is weak and therefore prone to the mischief that the Constitution has tried to curtail. This issue can be corrected by putting in place sufficient legislation to meet the requirement of section 315(2), and in so doing foster transparency, accountability, value for money and competitiveness.

Joint Ventures and Infrastructure Contracts

The governance of joint ventures contracts (JV Contracts) is under the Joint ventures act [Chapter 22:22] (JV Act), which came into force in May 2016. The JV Act provides for the establishment of the JV Unit (including its composition and functions), and the procedural approval process for solicited and unsolicited JV Projects.?

The contracts for the construction and operation of infrastructure and facilities as outlined in section 315(2)(b) of the Constitution (infrastructure contracts) are not specifically provided for in separate legislation. Currently, these contracts are dealt with in terms of the Joint Ventures Act, based on the?de facto?position that such contracts are normally executed in the form of BOT/BOOT/BT[2]?arrangements which have been included in the definition of joint ventures and are therefore part of the JV Act regulatory framework.??

This act does not provide for the process of negotiation of JV Contracts, nor is it very clear on the performance monitoring of such contracts.?

Infrastructure contracts are ordinarily in the form of PPP arrangements based on the fact that it is the primary responsibility of the government to provide infrastructure and facilities. Where the government is unable to do so in an effective manner, they ordinarily enter into a partnership with the private sector. As alluded to above, PPP contracts are normally executed as BOT/BOOT/BT arrangements.?In Zimbabwe, we now therefore have a peculiar position in which the JV Act has extended its reach beyond JVs in the ordinary sense, but rather regulates PPP contracts as well, in the form of BT/BLT/BOT/BOO/BOOT/CAO/DOT/ROT/ROO/BOOM/CM arrangements. The JV Act therefore has a wide interpretation of JVs, and in this way, coupled with its inclusion of the above-stated types of arrangements, therefore includes PPPs within its regulatory ambit.

Transparency and competitiveness are essential factors and key drivers to the success of PPPs. The World Bank Group Framework for PPPs notes that implementing transparent and competitive processes through the legal and regulatory framework can prove an essential factor to the success of a PPP, and a critical part of an investors and lenders’ due diligence.?

Within the context of PPPs, transparency principles are incorporated in the following sub-categories:?

• Legislation- this must be clear and unambiguous in its provisions. The legislation must be comprehensive and accessible to the general public and all those who would rely on it.?

Although the JV Act is in place, it is vague in some instances, and lacks clarity on roles and responsibilities of parties. Furthermore, the JV Act is currently not supported by regulations which would specify some of the processes.?

• Procurement processes?- must be clear and transparent thus implying impartial bid evaluation criteria, abolition of non-competitive unsolicited bids, effective appeals and complains mechanisms to guarantee accountability.?

The current procurement processes, amongst other issues, does not allow for unsolicited proposals and does not provide a sound appeals process that would ensure accountability.

• Access to information- means there must be public disclosure of information relating to PPP projects by any person to ensure that the PPP processes are effectively implemented and that the projects are achieving performance targets and value for money.?

The current legislative framework does not make the disclosure of information relating to PPPs compulsory for the contracting authority, or any of the committees in the approval process.?Thus, the applicable legislation would be the Access to Information and Protection of Privacy Act (AIPPA) (which is currently under review as it is severely flawed in its provisioning relating to government obligations to disclose).?

From this perspective, the current legal framework is very much under-developed, and leaves wide room for improvement. It is clear that the requirement of section 315(2)(b) of the Constitution remains?unmet for so long as there is not legislative provision that encompasses the principles of transparency as highlighted above.

?Furthermore, as the JV Act does not expressly provide for the negotiation processes, and the performance monitoring and measurement of contracts, its falls short of the requirement of section 315(2). In essence, the failure to comply with this Constitutional provision, while continuing to procure JV Contracts and infrastructure contracts on the part of government is grossly irregular and may be challenged for unconstitutionality.

Mineral Concessions and Other Rights

In the instance of mineral concessions, the mines and minerals legislation becomes relevant. Currently, the Mines and Minerals Act [Chapter 21:05] (MMA) is under review and is expected to update the regulation of mineral concessions in line with international best practice, and prevailing trends.

?As a key source of foreign currency earnings, the mining sector has received extensive coverage and scrutiny from international players. Government is still expecting to` boost the country’s export earnings further through value addition and beneficiation in the minerals sector[3]. The lack of transparency and accountability in the past has however brought the government to consider Zimbabwe’s signing up to the Extractive Industries Transparency Initiative (EITI)[4][5].

The EITI recommends general disclosure of information related to rules for how the extractive sector is managed, enabling stakeholders to understand the laws and procedures for the award of exploration and production rights, the legal, regulatory and contractual framework that apply to the extractive sector, and the institutional responsibilities of the State in managing the sector. Zimbabwe’s membership to the EITI will be a positive step towards transparency in the mining sector.?

The considerations for the government in amending the MMA must therefore include the EITI, and the provision of section 315(2)(c ) in relation to transparency, cost effectiveness and competitiveness. The act in its current form does not provide for the negotiation of mining concessions and related rights nor does it explicitly provide for a monitoring framework on performance, and therefore falls short of the section 315(2)(c ) requirement.

The central tenet of transparency in the granting of rights is information disclosure. An analysis of the provisions of the MMA shows the need to improve the legal framework so that it encompasses information disclosure on the part of the State.?

Sections 115(4), 151(1)(a), 163(3) and 170(3) and 234(2) of the MMA require all applicants to lodge plans, registration notices and details of owners and occupiers of land. While this provision is on the applicant, there is no requirement on government to disclose this information. The provisions of AIPPA become relevant in the instance of disclosure, and thus the current flaws with that particular legislation are also applicable in the instance of information relating to mineral and other rights.?

A key provision for amendment would be the concession holders expenditure information submitted in terms of section 100(1) of the MMA to be publicly disclosed. Additionally, regulations and guidelines should set out the bonus payment information, volumes data and commodity values, to enable third parties to review and monitor performance.

In order for the requirement in section 315(2)(c ) to be met, the MMA need to be reviewed in line with the EITI. A recent report noted that while a number of MMA provisions are in line with the EITI, they often stop short of realising them entirely or are inconsistent with other processes adopted.?

Important Policy Considerations

Open for business = transparent

The current policy framework is designed to attract investors without creating too much bureaucracy. The challenge is that there seems to be a lack of consistency in policy making, while conducive legal frameworks are not in place. “Open for business” is government’s adoptive position in relation to welcoming new investments. This position has not as yet however been backed by sufficient legal reform that at least allows an investor to get an assurance of transparency and accountability in approvals processes in line with prevailing international best practice. A system that is prone to corrupt practices tends to attract the wrong kind of investor and leaves the system vulnerable to money laundering activities.?

The 2018 investment guidelines developed by the present government note that?transparency and good regulatory practices in particular will need to be addressed. Specifically, the government commits to ensuring that all laws, regulations, administrative guidelines and policies pertaining to investment are enacted following proper notice and consultation and are available publicly in a prompt, transparent and readily accessible manner.?

The World Bank Group’s PPP Report published in April 2018 benchmarks economies against international recognized good practices for procuring infrastructure. The scoring is based on four elements namely preparation, procurement, contract management and treatment of unsolicited proposals. Out of a total score of 100 in each of the test elements, Zimbabwe scored 31, 46, 30 and 42 respectively highlighting the number of areas which could be improved in public procurement of PPPs, including issues of contract transparency. The notable areas for low scoring on pre-procurement procedures include the following:

• Evaluations?and the results of evaluations are not included in the tender documents or published online;
• Draft contracts are not included in the requests for proposal;
• There is no standardized model contract or transaction document to expedite the process and also guarantee consistency;
• Public procurement notices and award notice are published, however these documents are not available online.?

Promoting?transparency?and?accountability?in government procurement plays a vital role in increasing public confidence in proposed projects and reducing the risk of corruption. The interplay of access to information legislation as a contract transparency issue cannot be underscored enough. In an effort to address these drivers for disclosure, the international community has generally been keen to promote contract transparency. The government should therefore look to putting in place legal reforms that are in line with transparent and good governance in keeping with the constitutional provision in section 315(2).?

Respect for constitution

As the constitution is the supreme law of the land, its provisions must be upheld to the highest degree possible. To ensure that it attracts quality investments, the government must be seen to be implementing the provisions of the constitution where it requires legislation to be enacted such as in section 315(2). Furthermore, the general upholding of the constitution must be implemented across the length and breadth of the law, as part of the ongoing alignment of laws to the constitution [which is anticipated to be completed soon]. The entrenchment of principles of transparency within the constitution illustrates the progressive nature of this constitution in advancing principles of good governance. A constitutional provision is however only as effective (and protective) as the exercise of it. The current situation is that the constitutional provisions relating to procurement of the section 315(2) Contracts is not effective (and thus protective) for the benefit of the citizens based on the fact that the requirements its sets are not met. Incumbent upon the various arms of the state, is the duty to ensure that this and similar constitutional provisions are upheld in law and in process.?Where there is failure to meet this constitutional requirement, the citizens have been short-changed.?

[1]?The section 315(2) contracts are contracts that primarily deal with issues of national interest and are related to significant projects in which the government would either have a key stake in partnership with a private player, or bestow either a part of its functions to a private player for an agreed period of time, or a significant concession of rights to exploit natural resources.?

[2]?Build Own Transfer/Build Own Operate Transfer/Build and Transfer are types of contractual arrangements usually undertaken by governments and private sector in infrastructure and facilities projects. These are some of the any forms of Public Private Partnerships.

[3]?Refer to Guidelines on Investment Opportunities in Zimbabwe January 2018.

[4]?Refer to 2019 National Budget Statement November 2018.

[5]?The EITI is a global standard to promote the open and accountable management of oil, gas and mineral resources.