PRESIDENT Mnangagwa has spoken tough on the Government procurement process saying he is going to ensure that no public resources will be used to finance economic hitmen and women as has been the case where public sector suppliers have been inflating invoices and using local currency payments to mop up US dollars on the black market, leading to volatility of the exchange rate.
Writing in his weekly column in this paper, President Mnangagwa said his administration was going to employ stiff measures where necessary as the public sector, which accounts for over 70 percent of purchases in the economy, had become an unwitting player in stoking the parallel exchange market thereby bleeding the national economy
The President has therefore directed Treasury to send back all procurement invoices to ministries, Government departments and agencies for re-validation before payments are effected to suppliers of goods and services in order to curb malpractices that have been driving inflation and destabilising the local currency.
He said accounting officers who fail to detect such pricing malpractices would be deemed criminally negligent and held personally liable in terms of the Public Finance Management Act while suppliers who generate invoices based on black market exchange rates would be blacklisted and banned from participating in public procurement processes.
“A random check has shown that such abusive pricing in respect of procurement of goods and services by the public sector is more of a rule than an exception. We have not always been a prudent procurer, a weakness which has levied very costly consequences to the whole economy,” he said.
He noted that from now onwards, Government was going to be a prudent procurer of goods and services where it would flex its purchasing muscle in the market in the double sense of demanding favourable procurement terms and going as far as blacklisting suppliers who cheat and rely on extortionate black-market rates for pricing.
“Such errant actors must be stopped from participating in the public procurement process. As already stated, the Public Sector accounts for over 70 percent of purchases in the Economy. That preponderant power should now be used for greater good. We should, in the next few weeks or months, see a gradual return to normalcy in the economy; we just have to consolidate on the positive fundamentals that have not been that easy to achieve. Let us all play our part so we speedily reset our economy on an even keel, and on the path to durable growth,” he added.
He said it was unfortunate that the Government was becoming an unwitting accomplice.
“A quick check has revealed the bulk of our fuel needs are being met from private players. Ordinarily that should not be a problem, provided the pricing is right. This has not always been the case, and in most cases has been grossly abused. The pricing of fuel coupons by these private players has been based on extortionate huge mark-ups, and on black market rates of anything between $900 to $1000 per USD.
“Meekly, the public sector, which accounts for over 70 percent of fuel purchases in the market, has been a price-taker! Even players who obtain their fuel from our NOCZIM at official rate and at prices gazetted by our own ZERA have been abusing ministries, departments and agencies using the same extortionate pricing formulae. That way, billions of dollars have been paid out to these devious suppliers,” he said.
He added that the extortionate suppliers would then pay off NOCZIM at gazetted prices, and using the official exchange rate.
“The rest of the monies from such extortionate sales then find way into the black market, thus precipitating the exchange rate turbulence that has been buffeting the whole economy. Government has thus been an accessory in the flouting of its own laws in the market,” said President Mnangagwa.
He also singled out mobile money transfer platforms saying they have been found guilty of aiding parallel exchange markets in the past, and Government was maintaining a close watch on them.
“Always mobile and on the hunt for new loopholes, the same greedy and devious economic actors moved into our financial sector where they consorted with several banks and other deposit-taking institutions to resume their arcane, unlawful activities,” said the President.
Hoteliers and travel agencies have also been found guilty of insincerity in their dealings with the President saying such abuse was unacceptable where on several instances, Government officials flying from Harare to Victoria Falls would be sold tickets for $699 000 or more apiece.
“At the official rate, this amounts to more than US$1 500 a ticket to Victoria Falls! This is close to what it costs an air traveller in economy class to fly to Europe! Meanwhile, Air Zimbabwe, the sole carrier of Government delegations, only charges about US$300 a ticket! The issue is what happens to the huge difference? It finds its way into the black market,” he said.
— Sunday News