AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND PROCUREMENT ANNUAL REPORT 2009

Transcription

1 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND PROCUREMENT ANNUAL REPORT 2009 Procurement and Fiduciary Services Department ORPF October 2010

2 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND TABLE OF CONTENTS ACRONYMS AND ABBREVIATIONS i PREFACE AND NOTES TO READERS ii SUMMARY iii 1. INTRODUCTION 1 2. STATISTICS ON THE 2009 PROCUREMENT PERFORMANCE Methodology Contract Size Contract Distribution Between Regional and Non-Regional Firms Trend of Bank Disbursements from 1999 to CHARACTERISTICS OF THE PROCUREMENT PROCESS Introduction Procurement Methods Bid Participation Awardees Nationality OTHER PROCUREMENT ASPECTS Contract Financing Procurement Document Processing Timeframe Contract Amendments CONCLUSION 36 ANNEXS 1 ANNEX 1 Substantiation of Sampling 2 ANNEX 2 Awardees Nationality 1 ANNEX 3 Goods Contracts Awardees Nationality 2 ANNEX 4 Works Contracts Awardees Nationality 2 ANNEX 5 Service Contracts Awardees Nationality 2 ANNEX 6 International Competitive Bidding (ICB) Awardees Nationality 1 ANNEX 7 Awardees of the 1708 Contracts Approved in ANNEX 8 List of Amendments Approved in

3 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND ACRONYMS AND ABBREVIATIONS ADF BAD CPAR GPN IOC ISH ITB LIC MDB NCB NGO NSH NTF ORPF RMC SBD SHL UNDB African Development Fund African Development Bank Country Procurement Assessment Report General Procurement Notice International Competitive Bidding International Shopping Invitation to Bid Limited International Competitive Bidding Multilateral Development Banks National Competitive Bidding Non-Governmental Organization National Shopping Nigeria Trust Fund Procurement and Fiduciary Services Department Regional Member Country Standard Bidding Documents Shortlist United Nations Development Business Journal 2009

4 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND PREFACE AND NOTE TO READERS This report was prepared by the African Development Bank s Procurement and Fiduciary Services Department for: The Bank s Senior Management Executive Directors Offices Borrowing Countries The Business Community (contractors, suppliers and consultants) Bank staff members Etc. It aims to provide these addressees with information on the procurement process concerning projects financed by African Development Bank Group loan and grants in regional member countries during The data used in the preparation of this report was taken from the SAP-PMS1 (Project Management System), a database updated by the Operations Departments as the contracts are approved. The data was extracted from the system in April 2010 when a number of contracts approved and signed in 2009, had not yet been entered into the system. Indeed, the data entered for a given period evolves over time as updated by the Task Managers. 1 SAP is the information system used by the Bank since Page ii

5 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND SUMMARY 1. This fifteenth report on the Bank s monitoring of procurements made by borrowing regional member countries for Bank Group-financed projects was prepared by the Procurement and Fiduciary Services Department (ORPF). In comparing the fundamental principles of the Bank s procurement of goods, works and consultancy services with the procurement activity procedures in the borrowing countries and their monitoring by the Operations Departments, the main comments on this report are as follows: i) Economy and Efficiency Considerations: the different measures taken for economy and efficiency have continued to yield results. In particular, these aimed at harmonizing and simplifying the Bank s procurement policies, ensuring wide-scale distribution of the standard bidding documents, in both hard copy and electronic versions posted on the Bank s website. Several instruments (tools) are being prepared such as handbooks and guidelines, to assist Bank staff members in efficiently implementing the procurement policies and ensuring consistent application of the rules. The effective decentralization of procurement and financial management functions and responsibilities is also ongoing. The countries are beginning to benefit from the expertise of regional coordinators and procurement specialists. The qualified staff in the different Bank offices thus ensures a presence based on a high quality of service. ii) iii) Building Capacity in the Bank and in Regional Member Countries: capacity gaps in the efficient application of Bank rules and procedures have been identified in the operational sectors on the ground and in the new training tools and aids for Bank staff with several levels of expertise: basic, intermediate and advanced. Complete periodic staff accreditation programmes are held to ensure the continuing existence of high level Bank procurement and financial management expertise. ORPF also organized sensitization sessions for all regional office staff: 338 staff trained by end December The use of e-learning for staff is also envisaged for the next stage of procurement and financial capacity building. For country teams, tools such as procurement handbooks and new training materials have been developed to build different stakeholder capacity. The Bank has already organized training workshops in Morocco, Tunisia, Nigeria, Ghana, Egypt, Senegal, Zambia, The Gambia, Mozambique and Sierra Leone for 397 staff members from 15 Regional Member Countries on the Bank s new rules. Other continuing capacity building methods are being explored, such as the use of regional institutions to provide procurement training and the development of e-learning for regional member country project teams. Improvements in Probity and Transparency: Since end 2009, ORPF has taken the initiative to review the National Competitive Bidding (NCB) procedures and public procurement legislation in order to determine their compatibility with Bank policies. If the compatibilities with Bank rules and procedures are confirmed, the countries will be able to directly use national documents for Bank-financed projects. The countries will, therefore, benefit from the simplification of procedures and a reduction in transaction costs, as 2009 Page iii

6 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND well as increase empowerment in terms of project management. The Bank will also work to rationalize procurement processes through computer-assisted decision support systems. This will entail greater use of information technologies to transmit procurement documents and for exchange of correspondence as well as the use of a web interface for the preparation of bidding documents and granting of the Bank s no-objection. The deliverables are as follows: enhanced quality of information entered in the Bank s database, improved quality of decisions taken, thanks to the use of efficient tools for collaboration and document archiving, and an appropriate electronic management system to ensure closer monitoring, enhanced transparency and a significant improvement in the timeframe for processing procurement documents by the Bank and borrowing countries. iv) Considerations relating to Equal Access to Contracts for all Eligible Bidders: firms of 66 countries (as against 64 in 2008) were awarded 1708 contracts financed by the Bank Group. Moreover, firms of 71 countries (49 regional) took part in the procurement process which led to the award of 972 contracts with unit values above UA 50,000 in The Bank continued to organize opportunity seminars for firms of regional member countries with a view to disseminating information on consultancy services, and the supply of goods and works for Bank Group-financed contracts in member countries. These seminars, organized both in Tunis and in the member countries, attracted many participants. This illustrates very clearly the growing interest in Bank activities on the part of consultants, contractors and suppliers of member countries. v) Participation of Regional Contractors and Suppliers: firms and suppliers registered in regional member countries won 90% of the total number of contracts and 35% of the total value of contracts approved in In 2008, these figures were respectively 88% and 46%. Overall, firms of regional member countries won more contracts than those of non-regional member countries, very often on their own territory (particularly in the case of provision of goods and works following national competitive bidding or national shopping). It remains true that regional firms won mainly contracts for small or average amounts, whereas non-regional firms won the higher value contracts. However, several international firms have set up offices in the local African environment and their operations are considered as regional operations. 2. Timeframe for Processing Procurement Documents: the review focused on a sample of 117 contracts in 2009 compared to 273 in The average processing time for goods procurement documents was 8 months in 2009 and for works 12.4 months. In 2008, the average processing time for goods and works documents combined was 14.1 months. The average processing time for consultancy service documents was also down from 15.8 months in 2008 to 13.3 months in The overall average processing time fell from 13.5 months in 2008 to 11.3 months in Pursuant to the measures taken by the Bank, the number of training workshops on project implementation increased between 2005 and 2009, and training of Bank staff also increased over the same period. These measures also cover assistance to the countries concerned for procurement capacity building, including joint World Bank and ADB preparation of CPARs (Country Procurement Assessment Reports) as well as the 2009 Page iv

7 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND harmonization of procurement documents at the level of multilateral aid institutions. The overriding goal remains the decentralization and delegation of authority to regional offices so as to involve borrowers more closely in some decision-making. 3. Adoption of New Rules: On 7 May 2008, the Bank adopted the new Rules of Procedure for the Procurement of Goods, Works and Consultancy Services. The adoption of these Rules was the culmination of a long revision process which started in 2005 within the framework of harmonization with other Multilateral Development Institutions. It also addresses the need to take into account the bulk of the needs and concerns of the Regional Member Countries. These new Rules entered into force on 1 November One of the major changes of these New Rules requires borrowers to prepare and submit to the Bank for approval, prior to the start of loan or grant agreement negotiations, a Procurement Plan preferably covering the project implementation period. Since November 2008, ORPF has launched a vast campaign to train Bank staff in the application of these Rules. Finally, new Bidding Documents (BD) and a detailed handbook on the Rules are being prepared and will soon be available. Implementation of these Rules under the new Delegation of Authority Matrix (which assigns greater responsibilities to the Regional Offices) should help to improve and simplify the procurement process Page v

8 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 1. INTRODUCTION 1.1 The creation of the new Procurement and Fiduciary Services Department (ORPF) in 2008 made it possible to identify and take up the following external and internal challenges of the Bank: Length and complexity of the procurement procedures which constitute a major obstacle to efficient project implementation; Internal capacity and process weaknesses; Weak national procurement systems; Limited country capacity, inadequate decentralization of activities and poor use of information technologies and ex post reviews. 1.2 The main deliverables of the reforms implemented by ORPF are: (i) about 50% reduction in the average timeframe for processing procurement documents; (ii) lower transaction costs; and (iii) an improvement in quality. To this end, the Bank has undertaken a series of key initiatives to improve the quality and efficiency of project that it finances, namely: Revision of the Bank s procurement policies through the harmonization and simplification of the procurement rules and standard bidding documents (SBD); Preparation of internal guides on procurement procedures, the drafting of procurement handbooks and provision of training material compliant with the simplified and harmonized documents of other multilateral institutions. Establishment of an accreditation programme for task managers, country programme officers and specialized agents. Effective decentralization of implementation functions and responsibilities for procurements: delegation of authority to empower procurement and sector specialists is done on the basis of their accreditation level. This requires the performance of procurement functions by qualified, competent and experienced staff, most of whom will be procurement specialists assigned to the regional offices in order to be close to the Bank s clientele, providing high quality service delivery at country level. The Delegation of Authority Matrix has been approved and its implementation will shortly begin. Capacity building for staff to provide procurement experts in the Bank s different offices. Capacity building in the regional member countries (RMCs): identification of shortcomings in the management of RMC projects regarding country and institutional capacity, and capacity building involving mid-term adjustments. 2009

9 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Development of a robust, decentralized IT system with a view to facilitating collaborative work and the procurement document approval process. (Refer to the Box entitled New IT Initiatives ). Ex post procurement reviews: delegate more authority to project-associated procurements through a strict risk assessment with increased use of Bank supervision through selective, targeted ex post reviews of fiduciary decisions. Improvement of national procurement systems: support to RMCs in their initiatives to improve national procurement. Restructuring of the Bank s procurement and financial management functions. Closer collaboration with the Multilateral Development Banks (MDBs): the Bank continues to collaborate with the other MDBs to develop standard documents, share information and participate in the working groups of International Finance Institutions such as those on e-public procurement, sustainability issues in public procurement, etc. E-procurement: the Department is taking appropriate measures to promote the use of e-contracts in order to enhance efficiency, transparency and economy in the RMCs public procurements. The recent revision of the procurement policy contains articles advocating electronic procurement systems with adequate guarantees. Decentralization of the processing and decision-making powers to the field offices, and the development of IT tools to rationalize the monitoring of operational processes concerning procurement and financial management, to carry out regular monitoring of activities, including reporting, the creation of a Web portal, the preparation of spreadsheets and the creation of an archiving system. 1.3 The purpose of this fifteenth Annual Report on statistics relating to the procurement of goods, works and services, prepared by the Procurement and Fiduciary Services Department (ORPF), is to inform Senior Management and the Boards of Directors of the Bank s procurement activities, by means of a statistical study for The information contained in it comes mainly from contracts entered in the Bank s SAP-PMS system (Project Management System). Chapters 1 and 2 of the report present the context and methodology of the analysis as well as a list of recent initiatives, whereas Chapter 3 is dedicated to a review of the 1708 contracts approved by the Bank Group in Chapter 4 concerns a sample of 972 contracts with unit values above UA 50,000 representing 98% of the total value of contracts approved in It is worth noting that since 1997, contracts with unit values above UA 50,000 have represented at least 98% of the total annual value of contracts. This Chapter focuses on the procurement process, the procurement methods effectively used and the level of bidder participation. Chapter 5 concerns contract financing, the procurement timeframe, i.e. the time required for the procurement process, and contract amendments. 1.5 The presentation covers the following topics: analysis of procurement methods used by the Bank s borrowers, geographic distribution of bidders and geographic distribution of 2009 Page 2

10 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND awardees. This study also includes the distribution of contracts awarded by size and procurement method as well as the timeframes for processing procurement documents and contract amendments approved in This database showed that contracts were approved in 2009, 972 of which were for a unit amount above UA 50,000. These account for over 98% of the total value of the contracts and 57% of their number. The number of contracts approved by the Bank over the period under consideration dropped by 19% from 2120 in 2008 to 1708 in The cumulative amount of these contracts also fell by 23% from UA 1415 million in 2008 to UA 1087 million in In many respects, this report analyses the major trends underpinning the award of goods, works and consultancy service contracts by comparing the key variables for 2007, 2008 and 2009 such as total contract amount and distribution of the total number of contracts by amount, market share trend between regional and non-regional countries as well as the frequency of use of the different procurement methods. 1.8 For reasons of relevance in the comparison of figures, it is important to note that, since 2006, the data used in preparing the Annual Report are systematically extracted from the SAP-PMS system in the second half of the first quarter. Moreover, task managers input contract statistics daily into the SAP-PMS system, contract data and consequently the number of contracts entered in the system increases steadily throughout the year. 2 The data used in preparing this report were extracted from the SAP-PMS system in April It is worth mentioning that, at that time, some contracts already approved and signed in 2009 had still not been entered in the system Page 3

11 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND New IT Initiatives Rationalization of Business Processes through IT Solutions Objectives Rationalize work flows and improve the procurement processes Develop financial management control tools Build reporting capacity Prepare automated spreadsheets Establish archiving and collaboration systems Improve our procurement Web portal Deliverables Improve project procurement performance monitoring Improve proactive optimization of procurement plans in real time and removal of bottlenecks Improve collaboration and communication among country teams Improve project procurement performance reports Improve access to information on procurement, opportunities and procedures Upgrading of the Bank s Website More interactive and informative More content and simpler browsing Facilitate access to information on procurements for projects, opportunities, Bank procedures, guidelines Use of customized alerts for new contents Linkages to social networks RSS flows Project Procurement Monitoring Improvement of the Bank s existing project management system in SAP Baseline plan, revised real plan on key project stages New screen for the Procurement Plan in SAP Audit of the Plan, analysis of version history and lessons learned Linkages to no-objection approval flows Interactive Spreadsheet Interactive in real time Simplified alert system Customized user system, including new reporting models Aggregated statistics and possibility of accessing customized procurement plans Visible via ORPF s new SharePoint portal. Transactional data and reporting tool for Senior Management. Integration of New Collaboration Tools SharePoint Portal Collaboration among all procurement actors Powerful tool to improve collaboration with the decentralized project teams in the field offices Shared schedules and instant messaging Efficient document management Front-end interface for new workflows Possibility of blogs/wiki and future potential for collaboration with PIUs of borrowing countries. Tool for the rapid dissemination of the lessons learned and to ensure compliance with new procedures Page 4

12 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 2. STATISTICS ON THE 2009 PROCUREMENT PERFORMANCE 2.1. Methodology The study covers contracts approved in 2009 under Bank-financed projects. However, the overall sample does not take into account amendments to procurement contracts (dealt with separately in Section 5.5) or contracts awarded on non-project loan resources (lines of credit, structural and sector adjustment programmes) As in previous reports, the approach used consisted in preparing: Statistics based on all 1708 contracts approved in 2009 or procurement statistics which provide general information in particular on unit amounts, awardee nationality and contract financing source. Procurement process management statistics (procurement methods, bids and document processing timeframes), based on contracts over UA 50,000, for which detailed data on their award procedure have been obtained An analysis of the data helped to determine the sample size for contracts above UA 50,000, i.e. 972 contracts for a total UA 1069 million. This sample represents 99% of the value of all contracts approved in 2009 and 57% of their number. From 2007 to 2009, contracts with a unit value of over UA 50,000 corresponded to at least 98% of the total value of contracts for the year. They make up between 57% and 60% of the total number of contracts (Table 1). Table 1 Comparative Sample Values from 2007 to 2009 Data Collection Total % Total % Total % Total Number of Contracts Approved In number % % % In value ( million) % % % Contracts over UA 50,000 In number % % % In value ( million) % % % 2009 Page 5

13 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 2.2. Contract Size The number of contracts (based on information retrieved from SAP) rose from 1362 in 2008 to 1708 in 2009 (i.e. a 25% increase) and the total contract value rose from UA 929 million to UA 1087 million (i.e. a 17% increase). The average contract size fell slightly by 7% from UA 682,209 in 2008 to UA 636,358 in Moreover, the maximum amount registered per contract in 2009 was UA million compared to UA million in Overall, average contract size fell in The size of goods contracts rose from UA 442,239 in 2008 to UA 539,556 in 2009 (+22%), while that of works contracts fell from UA 1,260,106 to UA 1,101,506 (-13%) with the average size of service contracts falling from 212,927 to 149,701 (-30%) (Table 2). Table 2 Average Size by Contract Type Average Size (UA) Goods Contracts Works Contracts Consultancy Contracts All Contracts Size (UA thousand) The proportion of small-size contracts (below UA 50,000) represents less than half of the total number of contracts in the last three years (39% in 2007, 43% in 2008 and 43% in 2009). For the higher tranches, the proportions are also almost equivalent to those of the previous years. For all 3 years, slightly over half of the contracts are below UA 100,000 (Table 3 and Graph 1). Finally, the largest contract registered was a contract for UA million for the construction of a steam turbine electric power generator awarded to a Japanese firm in Egypt. Table 3 Number of Contracts Approved in Comparisons Between 2007 and 2009 Goods Works Cons. Total 2009 % Total 2007 % Total 2008 % Total 2009 % Cumul % Cumul % Cumul % 16.67% 12.5% 12.5% 16.67% 12.5% % 11.38% 10.1% 22.0% 28.05% 22.6% % 14.54% 20.5% 39.2% 42.58% 43.1% % 15.35% 17.0% 52.8% 57.93% 60.1% % 16.30% 18.4% 72.1% 74.23% 78.6% % 10.35% 10.5% 84.7% 84.58% 89.1% % 3.23% 3.4% 89.6% 87.81% 92.4% % 2.57% 1.4% 91.4% 90.38% 93.9% % 7.42% 4.6% 98.6% 97.80% 98.4% % 0.88% 0.6% 99.2% 98.68% 99.1% % 0.44% 0.2% 99.4% 99.12% 99.2% % 0.2% 99.4% 99.49% 99.5% % 0.37% 0.1% 99.8% 99.85% 99.6% % 0.07% 0.2% 99.9% 99.93% 99.8% > % 0.07% 0.2% 100.0% % 100.0% Total % % 100.0% 100.0% % % 2009 Page 6

14 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 1 Size (000 UA) Goods (000 UA) Works (000 UA) Table 4 of Contracts Approved in Comparisons Between 2007 and 2009 Consult. (000 UC) Total 2009 (000 UC) % Total 2007 % Total 2008 % Total 2009 % Cumul % Cumul % Cumul % 0.19% 0.18% 0.20% 0.19% 0.18% % 0.34% 0.32% 0.50% 0.52% 0.49% % 0.75% 1.15% 1.60% 1.28% 1.65% % 1.60% 1.94% 3.40% 2.88% 3.59% % 3.79% 4.49% 9.00% 6.67% 8.09% % 5.30% 5.82% 16.70% 11.97% 13.90% % 2.89% 3.24% 22.00% 14.86% 17.14% % 3.28% 1.87% 24.70% 18.15% 19.00% % 21.30% 12.96% 49.60% 39.45% 31.96% % 7.74% 7.36% 59.20% 47.19% 39.32% % 8.45% 3.03% 63.90% 55.64% 42.36% % 9.28% 6.45% 63.90% 64.92% 48.80% % 15.31% 4.12% 80.30% 80.23% 52.92% % 4.42% 10.92% 92.40% 84.65% 63.84% > % 15.35% 36.16% % % % Total % % % % % % 2009 Page 7

15 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Concerning contract value, the number of small-size contracts (under UA 50,000) has risen slightly compared to 2008: 1.65% against 1.28% in Graph From 2007 to 2009, the bulk of the total contract value was in the UA 1 to 5 million size range in the following proportions: 12.96% in 2009, 21.3% in 2008 and 25% in 2007 (Table 4 and Graph 2) From 2007 to 2009, the cumulative distribution of the number of contracts for goods and services remained virtually identical (Graph 3). In the case of works contracts, the most significant ranges for 2009 are the intermediate ones with 29% for the UA 100,000 UA 250,000 range, 18% for the UA 50, ,000 range and 16% for the UA 250,000 to UA 500,000 range (Graph 4). In the case of service contracts, the most significant ranges for 2009 are the UA 25,000 to UA 50,000 range with 26%, the UA 0 to UA 15,000 range with 18% and the UA 15,000 to UA 25,000 range with 14% (Graph 5). Graph Page 8

16 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 4 Graph Page 9

17 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND The contract number is still dominated by goods (41%, 34% and 35% in 2007, 2008 and 2009, respectively) followed by works (30%, 34% and 37%) and finally by services (29%, 32% and 28%) (Graph 6). Graph An analysis of the breakdown of the total contract amount by procurement method shows that goods and services combined represented between 90% and 93% of the total contract value from 2007 to Over the period, it was noted that works contract amounts dominated in 2007, 2008 and 2009 with 76%, 59% and 64%, respectively. As was to be expected, consultancy contracts were smaller in terms of value with respectively 9% in 2007, 10% in 2008 and 7% in 2009 (Graph 7). Graph Page 10

18 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 2.3. Contract Distribution between Regional3 and Non-Regional Firms Firms of regional member countries are generally in the majority in terms of the number of contracts won, but such contracts are mostly small-size. On the other hand, firms of non-regional countries are awarded the biggest contracts The distribution of contracts between regional and non-regional firms in 2009 was as follows: 9.7% of the number of contracts for non-regional firms compared to 90.2% for regional firms and 0.2% for multinationals4. From 2007 to 2009, the proportion of contracts of regional firms rose steadily from 87.7% in 2007 to 88.4% in 2008 and 90.2% in Those for non-regional firms continue to fall: 12% in 2007, 11.6% in 2008, and 9.7% in The share of multinationals remains highly marginal (Table 5 and Graph 8). Table 5 Contract Distribution by Origin of Firm Total Number of Contracts % Total Number of Contracts Firms Non-Regional % 11.60% 9.70% Regional % 88.35% 90.20% Specialized Agencies % 0.05% 0.20% Total % 100% 100% Graph In terms of value, 65.3% of the total contract amount goes to non-regional firms compared to 34.6% for regional firms and 0.1% for multinationals. There has been an 3 4 A significant number of non-regional firms hold shares in regional firms The heading Multinational normally refers to United Nations Agencies (IAPSO, UNICEF, etc.) 2009 Page 11

19 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND increase in the share of non-regional firms (from 54.2% in 2008 to 65.3% in 2009) and an equivalent fall in the shares of regional firms (from 45.8% in 2008 to 34.6% in 2009). This can be explained by the fact that non-regional firms concentrate mainly on the largest contracts. The multinational share rose from 0.07% to 0.1% (Table 6 and Graph 9). Table 6 Breakdown of Contract by Origin of Firm Total (UA million) % Total Firms Non-Regional % 54.17% 65.30% Regional % 45.76% 34.60% Specialized Agencies % 0.07% 0.10% Total % 100% 100% Graph Page 12

20 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 2.4. Trend of Bank Disbursements5 from 1999 to The volume of disbursements has been steadily rising over the past ten years. It rose spectacularly in The total volume of Bank Group disbursements rose sharply once again in 2009 from UA 1861 million to UA 4873 million (i.e. a 162% increase) This rise was due to a tripling in the volume of disbursements from the ADB window: up from UA 728 million to UA 2352 million. The ADF window also rose significantly from UA 1225 million to UA 1726 million (i.e. a 53% increase). However, the Nigeria Trust Fund (NTF) fell sharply from UA 8.4 million to UA 4.9 million (-42%) (Graph 10). Graph Source FFCO There is a very big difference between the contract amount allocated in a year and the disbursements made in the same year. Contracts awarded in a given year can be implemented over several years and therefore disbursed over several years Page 13

21 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 3. CHARACTERISTICS OF THE PROCUREMENT PROCESS 3.1 Introduction To ensure the relevance of the data processed, the statistical analysis of this Chapter will only concern contracts above UA 50,000. This sample contains 972 contracts amounting to UA 1069 million, or 99% of the total value of contracts awarded in It is the subject of the analysis presented in this Chapter. 3.2 Procurement Methods It was noted that four fifths of the total contract value was awarded through international competitive bidding. This represents one fifth of the total number of contracts above UA 50, Regarding the number of contracts by procurement method, 186 were awarded through international competitive bidding (i.e. 49%) and 144 on the basis of shortlisting (i.e. 15%) (Table 7). Table 7 Number of Contracts by Procurement Method 7 and Size Contract Size in UA Thousand ICB NCB LIC ISH NSH DNP FA SHL > Total In terms of contract amounts, International Competitive Bidding (ICB) was used for an amount representing 80.3% of the sum covered by the 2009 financial year; the rate for 2008 was 79.9%. National Competitive Bidding (NCB) concerned 11% of the total value of contracts in 2009, compared with 8.5% in Finally, Shortlists (SHL) represented 5.2% Total 7 Legend for Procurement Methods: ICB : International Competitive Bidding NCB : National Competitive Bidding ISH : International Shopping NSH : National Shopping DNP : Directly Negotiated Purchase SHL : Shortlisting LIC : Limited International Competition FA: Force Accourt 2009 Page 14

22 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND of the total amount of contracts in 2009 (compared to 9.5% in 2008). These three main procurement methods totalled 96.5% of the overall value of contracts reviewed in 2009 (compared to 97.9% in 2008). The remaining 3.5% covered other procurement methods, including 2% for directly negotiated purchases (Table 8). Table 8 Breakdown in Value by Procurement Method Total Contract Value ( million) ICB NCB LIC ISH NSH FA DNP SHL Total % of Total 80.3% 11.0% 0.0% 0.5% 0.9% 0.1% 2.0% 5.2% 100.0% Average Size Contract In terms of number, International Competitive Bidding (ICB) represented 19.1% of the total contracts (29.9% in 2008), with 7.6% for goods contracts (13.3% in 2008), 10.3% for works contracts (16.1% in 2008) and 1.2% for services contracts (0.5% in 2008). National Competitive Bidding (NCB) represented 49.3% of the total number of contracts (35.3% in 2008), with 7.9% for goods (11.1% in 2008) and 40.4% for works (23.9% in 2008). Finally, Shortlists (SL) represented 14.8% (22.8% in 2008), with 0.2% for goods (0.8% in 2008) and 14.5% for services (21.7% in 2008). The other procurement methods accounted for 16.8% of the total number of contracts (12% in 2008) (Table 9) In terms of value, International Competitive Bidding (ICB) represented 80.03% of the total volume of contracts (79.9% in 2008), with 26.3% for goods contracts (28.7% in 2008) and 53.6% for works contracts (51% in 2008). National Competitive Bidding (NCB) represented 11% of the total amount of contracts (8.5% in 2008), with 1.1% for goods (1.2% in 2008) and 9.8% for works (7.4% in 2008). Finally, Shortlists (SL) represented 5.2% (9.5% in 2008), with 0.9% for works (0.8% in 2008) and 4.3% for services (8.6% in 2008). The other procurement methods accounted for 3.5% of the total contract value (2.1% in 2008) (Table 9). Table 9 Breakdown by Expenditure Category Expenditure Category Goods Contracts Works Contracts Services Contracts Grand Total ICB NCB LIC ISH NSH FA DNP SHL %Number 7.6% 7.9% 0.3% 2.0% 6.4% 0.0% 1.2% 0.2% % 26.3% 1.1% 0.0% 0.5% 0.8% 0.0% 0.5% 0.0% %Number 10.3% 40.4% 0.0% 0.0% 0.2% 2.1% 0.6% 0.1% % 53.6% 9.8% 0.0% 0.0% 0.1% 0.1% 0.1% 0.9% %Number 1.2% 0.9% 0.0% 0.0% 0.2% 0.0% 3.8% 14.5% % 0.4% 0.1% 0.0% 0.0% 0.0% 0.0% 1.4% 4.3% %Number 19.1% 49.3% 0.3% 2.0% 6.8% 2.1% 5.7% 14.8% % 80.3% 11.0% 0.0% 0.5% 0.9% 0.1% 2.0% 5.2% International Competitive Bidding (ICB) and National Competitive Bidding (NCB) were used mainly for the procurement of goods and works, both totalling 91.3% in terms of value (97.8% in 2008) (Graph 11). Shortlisting for the selection of international consultants 2009 Page 15

23 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND and for national/regional consultants was the main procurement method for consultancy services, with 77.6% in value (90.1% in 2008) (Graph 12). Graph 11 1 ICB: International Competitive Bidding 2 NCB: National Competitive Bidding 3 DNP: Directly Negotiated Purchase 4 SHL: Shortlisting 5 NSH: National Shopping 6 ISH: International Shopping 7 LIC: Limited International Competition Graph According to Bank Rules, consultants shall be recruited by competition based on shortlists. Some project managers sometimes enter ICB, LIC or NCB in the SAP as procurement methods for consultancy services but in the final analysis, shortlists are always established. On the above graph, SHL (shortlisting) was used throughout Page 16

24 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 3.3 Bid Participation This section deals with the bid contract amounts 10, their number and bid information received. In 2009, 3281 bids were received for the 1708 contracts approved, or an average of 1.92 bids per contract. The 3281 bids were from 2027 different bidders. In 2008, 2988 bidders took part in bidding for 1362 contracts (average of 1.72 bids per contract) Firms originating from regional member countries presented 89.6% of bids, while their non-regional counterparts presented 10.3%. In terms of value and compared to 2008, the share of regional firms fell from 48.4% to 34.7%, while the share of firms originating from non-regional countries rose from 50.8% to 65.2%. The share of multinational bids is still very marginal (Table 10). Table 10 Bids in Value and Number by Category of Firm Firm % Number of Bids % Value of Bids Non-Regional 17.6% 14.2% 10.3% 41.8% 50.8% 65.2% Regional 82.2% 85.7% 89.6% 57.9% 48.4% 34.7% Multinational 0.2% 0.1% 0.1% 0.3% 0.8% 0.1% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Regarding the nationalities of firms taking part in bidding, bidders from China are in the lead in terms of value with 28.5%, followed by those from Japan (18.3%), France (7%), and Chad (5.5%) (Graph 13). In 2008, the leaders were China with 22.8% followed by Senegal (8.9%) and Egypt (7.1%) In terms of the number of bids, the following countries stand out: Ghana (20.6%), Uganda (10%) and Chad (7%). In 2008, the leaders were Senegal (14%), Niger (7.2%) and Ghana (6.7%) Regarding bid value for participation in International Competitive Bidding, the leaders were: China (35%), Japan (23%) and France (8%) (Graph 14). In 2008, the lead countries were: China (28%), Egypt (9%) and Japan (9%) Concerning bid value for National Competitive Bidding, the leaders were bidders from Chad (18.2%), followed by those from Tunisia (13.2%), Ghana (10.4%) and Uganda (9.9%) (Graph 15). In 2008, the leaders were bidders from Senegal (31.8%), followed by those from Tunisia (11.9%) and Ghana (9.2%) Regarding contracts awarded through International Shortlisting, the leaders in terms of bid value were bidders from France with 11%, followed by those from Germany (9%), 9 The data on which this analysis is based are incomplete because in a number of cases only the awardees (not all bidders) were entered in the project management system 10 The total bid amount represents the total number of contracts in respect of which the bidders registered in a given country took part in competitive bidding. This variable is used to calculate a country s bid value Page 17

25 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Morocco (9%) and Canada (8%) (Graph 16). In 2008, bidders from Germany took the lead with 13%, followed by those from France (12%) and Canada (11%) Page 18

26 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 13 Participation in Competitive Bidding, in Bid Value, by Nationality Italy 2,2% Ghana 2,1% Mali 2,2% Tunisia 2,3% Niger 2,4% Mozambique 1,4% South Korea 2,9% Portugal 3,1% Burkina Faso 1,3% France 3,8% Uganda 4,1% Morocco 1,2% Others 15,7% Cameroon 4,7% China 22,8% India 4,8% Senegal 8,9% Egypt 7,1% Japan 6,9% 2009 Page 19

27 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 14 Niger 2% Italy 3% Portugal 4% France 4% South Korea 4% Participation in International Competitive Bidding, in Bid Value, by Nationality Mali Burkina Faso Ghana Malawi 2% 1% 1% 1% Uganda 5% Cameroon 6% India 6% Others 10% China 28% Japan 9% Senegal 7% Egypt 9% 2009 Page 20

28 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 15 Participation in National Competitive Bidding, in Bid Value By Nationality Burundi 2,1% China 1,5% Nigeria 1,5% Uganda 1,3% Others 10,9% Madagascar 2,4% Senegal 31,8% DRC 2,8% Tunisia 11,9% Ethiopia 2,8% Zambia 3,1% Niger 3,7% Morocco 3,9% Mozambique 4,4% Tanzania 6,7% Ghana 9,2% 2009 Page 21

29 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 16 Denmark 2% Niger 2% Ghana 2% Uganda 2% Participation in Bidding/Short Lists, in Bid Value South Africa 2% Zimbabwe 2% Italy 3% Mali 4% Others 21% Tunisia 7% Belgium 4% Germany 13% Benin 6% France 12% Canada 11% DRC 7% 2009 Page 22

30 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 3.4 Awardees Nationality An analysis of the distribution of awardees by nationality for the 972 contracts (above UA 50,000) for 2009 revealed that, in terms of value, contracts were mainly awarded to China (31%), Japan (18%) and France (10%) (Graph 17). China and Japan took the lead in 2008 with 24% and 15.5%, respectively Ghana was the country with the highest number of contracts in 2009 (12.1%). It was followed by Uganda with 9.6%, Mali (6.5%) and Burkina Faso (5.7%). Finally, it should be noted that China obtained 31% of contracts in terms of value compared to only 1.3% in terms of number Goods Contracts: in terms of the value of goods contracts in 2009, Japan had a clear lead with 62%, followed by France (9.2%), Germany (5.7%) and the United States (5.3%) (Graph 18). In 2008 the leaders were Japan (50.1%) and India (20.2%) Works Contracts: in terms of works contracts, China led with 47.3%, followed by France (10.9%), Chad (4.2%) and Tunisia (4%) (Graph 19). In 2008, the leaders were China (39%), Korea (11.1%) and Mali (6%) Consultancy Services Contracts: consulting firms from France, Mali, Senegal and the DRC won 8.7%, 8.3%, 8.3% and 6.8%, respectively, of the value of consultancy service contracts in In 2008, France led (12.6%), followed by Canada (12.2%) and the DRC (8%) (Graph 20) Page 23

31 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 17 Niger 2,1% Breakdown in Contract Value by Nationality of the Awardees, 2008 DRC 2,1% Rw anda 1,9% Malaw i 1,5% Benin 1,5% Others 14,6% China 24,0% Ghana 2,8% Japan 15,5% Morocco 2,8% Uganda 3,0% Senegal 3,2% Tunisia 3,4% Mali 4,1% France 4,6% South Korea 6,6% India 6,3% 2009 Page 24

32 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 18 Tunisia 1,4% Kenya 1,7% Italy 1,9% Portugal 1,3% Uganda 1,4% Breakdown of Goods Contract Value, 2008 Belgium 1,3% Niger 1,0% USA 0,8% Malaw i 0,8% Others 7,2% Benin 0,7% DRC 0,7% Japan 50,1% Morocco 2,0% France 4,5% India 20,2% 2009 Page 25

33 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 19 Niger 2,7% Rw anda 2,9% Breakdown of Works Contract Value, 2008 Others 8,8% DRC 1,8% Malaw i 1,8% Tanzania 1,7% China 39,0% France 3,4% Morocco 3,7% Uganda 3,9% Ghana 4,2% Tunisia 4,2% Senegal 4,9% Mali 6,0% South Korea 11,1% 2009 Page 26

34 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 20 Zimbabw e 2,4% Ghana 2,3% Breakdown of Services Contract Value, 2008 Madagascar 2,3% Others 19,5% France 12,6% Canada 12,2% DRC 8,0% Uganda 2,4% Niger 2,5% Italy 3,1% South Africa 3,4% Kenya 3,5% Benin 4,0% Mali 4,5% Germany 7,6% Belgium 4,9% Tunisia 4,9% 2009 Page 27

35 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Graph 21 Awardee Country for International Competitive Bidding, in Contract Value, 2008 Niger Malawi Mozambique Madagascar Tunisia Rwanda 1,7% 1,4% 1,0% Others 1,0% 1,0% 2,1% 6,3% Ghana 2,5% Morocco 2,4% Senegal 3,3% Uganda 3,3% France 4,2% Mali 4,3% India 7,9% South Korea 8,2% Japan 19,5% China 29,9% 2009 Page 28

36 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 4. OTHER PROCUREMENT ASPECTS 4.1 Contract Financing In terms of contract financing, the share of the ADB (African Development Bank) virtually doubled from 26.7% in 2008 to 44.6% in The ADF (African Development Fund) window s share fell from 67% in 2008 to 54.7% in The relative importance of the NTF (Nigeria Trust Fund) remains marginal: it financed 0.2% of the contract value in 2008, compared to 0.7% in Concerning the number of contracts: the ADB window financed 4.8% in 2008, compared to 12.2% in The ADF window accounted for 93.8% in 2009, compared to 84.7% in 2008 (Table 11 and Graph 22). Table 11 Contract Distribution by Source of Financing from 2007 to 2009 Window No. of Contracts % Number of Contracts Total ( million) % Total ADB % 12.22% 4.80% % 26.69% 44.60% ADF % 84.67% 93.80% % 67.06% 54.70% NTF % 0.52% 0.10% % 0.70% 0.20% Other % 0.00% 1.30% % 5.55% 0.50% Total % % % % % % Graph Page 29

37 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND 4.2 Procurement Document Processing Timeframe The timeframes for processing procurement documents (by borrowing country and the Bank) were analyzed using a sample of 117 contracts in 2009, compared to 273 contracts in 2008, i.e. a 57% drop in the sampling size. In terms of proportion, the contracts represented 20% of the total number of 2008 contracts whereas, for 2009, the sample of 117 contracts was equivalent to 7% of the total number of contracts Procurement of Goods: Statistics show that the goods and works procurement process by executing agencies for Bank Group-financed projects in 2009 took an average of 8.0 months, from the initial receipt of the procurement documents to contract signature. This overall average conceals regional fluctuations in the average, ranging from a maximum of 13.5 months for the North Region to a minimum of 4.7 months for multinational projects. Specifically, the average time taken from receipt of the procurement documents and their approval by the Bank is 19 days. The timeframe from approval by the Bank of the procurement documents to receipt of bids averages 2.4 months. From receipt of bids to bid opening takes an average of 1 day; from bid opening to contract approval takes 3.6 months and from contract approval to contract signature 1.4 months (Table 12a). Table 12a Timeframe by Region for Procurement Document Processing in 2009 for National and International Competitive Bidding (Goods) MULTI Average in Average Processing Stages CENTRE EAST NORTH WEST SOUTH NATIONAL Days in Months Receipt Approv. RFP Doc Approval Receipt of Bids End RFP Bid Opening Bid Opening Contract Approval Contract Approval Contract Signature Average Timeframe by Region in Days Average Timeframe by Region in Months Procurement of Works: In the case of works, the average time taken between the initial receipt of the procurement documents to contract signature is 12.4 months. Regional fluctuations in the average range from a maximum of 19.3 months for the West Region to a minimum of 6 months for the South Region. Specifically, there is a time lapse of 26 days between the receipt of procurement documents and their approval by the Bank. From the approval of the procurement documents by the Bank to the receipt of bids by borrowers takes an average of 3.3 months. From the receipt of bids to bid opening takes an average of 2 days; from bid opening to contract approval takes 5.5 months; and from contract approval to the signing of contracts takes 2.7 months (Table 12b) Page 30

38 AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND Table 12b Processing of Procurement Documents in 2009 by Region for National and International Competitive Bidding (Works) Processing Stages CENTRE EAST MULTI NATIONAL NORTH WEST SOUTH Average in Days Receipt Approv. RFP Documents Approval Receipt of Bids End RFP Bid Opening Average in Months Bid Opening Contract Approval Contract Approval Contract Signature Average Processing Timeframe by Dept. in Days Average Timeframe by Region in Months Procurement of Consultancy Services: The average time taken for consultancy services from the initial reception of the requests for proposals to contract signature is 13.3 months (Table 13). It will be recalled that consultancy services require the submission of technical and financial proposals in separate envelopes and that they are evaluated in two stages. In accordance with Articles 2.14 and 2.19 of the Rules of Procedure for the Use of Consultants, each stage may require the Bank s approval which takes time. The average varies between a minimum of 2.1 months for the North Region to a maximum of 23.9 months for the South Region. Specifically, the average is: 19 days for borrowers to obtain approval of requests for proposals by the Bank (19 days for Goods and 26 for Works). Then, 6.1 months between the processing of approved documents and the receipt of proposals, (2.4 months for Goods and 3.3 for Works); 4 days between receipt and opening of proposals (1 day for Goods and 2 for Works); 5.1 months between opening of proposals and approval of evaluations (3.6 months for Goods and 5.5 for Works); 1.3 months between the approval of evaluations and contract signature (1.4 months for Goods and 2.7 for Works). Table 13 Processing of Procurement Documents by Region for Consultancy Services Processing Stages CENTRE EAST MULTI NATIONAL NORTH WEST SOUTH Average in Days Reception Approv. RFP Doc Approval Receipt of Proposals Average in Months End RFP Opening of Proposals Opening of Proposals Contract Approval Contract Approval Contract Signature Average Timeframe by Region in Days Average Timeframe by Region in Months Page 31