Many of the foreign companies fail to secure government contracts because of inadequate knowledge they may be having about procurement system in Tanzania. Even when they manage to apply for the floated government tenders, it ends to their disqualification due noncompliance of legal requirements and few technical requirements. Even for the foreign companies with good experience, best equipment, enough financial capacity and best personnel, still fall in the same trap.
The reasons behind their disqualification from government tenders mostly depend how they prepare their documentations, noncompliance of legal requirements and failure to adhere to the required procurement processes.
In a quick analysis, the list also runs submission of information in different formats, failure to submit non-core documentations even though they have low price. Most of them have best technical solutions. It is not their fault; they don’t have detailed information of Tanzania procurement system. These have negative impacts to government and companies, as they fail to secure best service providers/contractors and business opportunities respectively.
A foreign investor/foreign company should always be reminded that all government tenders start from the directives of government expenditures described in budgets. For the financial year (FY) 2022-2023 the government spending was so based on implementation of the Third Five Year National Development Plan (2021/22 – 2025/26) with the priorities on agriculture, livestock, fisheries, energy, investment and trade. These priorities give investor/companies the highlights of where the huge portion of the government funds will be spent.
It is estimated that Public Procurement in Tanzania spend more than 70 per cent of government budget. Seventy percent is equal to 29.03 tn/- (USD 12.63 billion) of the current financial year budget (41.48 tn/- equivalent to USD 18.03billion). More over according to Tanzania National e-Procurement System (TANePS) it is estimated that the total approved budget for planned procurement was 42.009tn/- (USD18.26 billion) as of May first 2023. This means that for the financial year 2022-2023 the government intended to spend USD 18.26 billion to the foreign and local suppliers, contractors, consultants and services providers. These funds dedicate to public procurement, come from the Government Source and Development Partners like World Bank, African Development Bank, IMF, UK Aid among others. I am pretty sure that, with this huge amount of money any business will be interested to try its fortune in Tanzania market share.
There are lot people out there, working on the name business development partner with low understanding of public procurement system misleading investors/foreign companies to secure government tenders without following procurement procedures. It is next to impossible to get the government tenders without following procurement legal process in the country. You can’t get government procurement contract out of these legal procedures. Therefore, I want to take interested foreign companies to the best legal way to secure government tenders.
First of all, before doing anything near to the procurement opportunities in Tanzania, a company must register with Tanzania National e-Procurement System (TANePS) (www.taneps.go.tz). Registration process requires the company’s name and place of registration, email address and name of the company representative(s). It takes minimum of five minutes to complete the registration. You will be required to pay 100,000/- (USD 45) for registration though mobile or bank transfers. After completion of the registration, company will be ready to apply any tenders of their area of interest.
Knowing Tanzania procurement legislations is another paramount thing for any local and foreign investor/company. Procurement legal set up in Tanzania is principally modelled on UNCITRAL mode law on Public Procurement. Currently, the public procurement is operated under Public Procurement Act No. 7 of 2011 and its regulations GN No. 446 of 2013 (both were amended in 2016).
Apart from procurement law, companies need to have to better understand of other laws relate to Public Procurement. These laws includes; Public Private Partnership Act Cap, 103 RE 2018; The Value Added Tax Act, CAP 148; The Income Tax Act, CAP 332; The Excise Duty Act CAP 147; The Tax Administration Act CAP 438; The Finance Act; The Workers Compensation Fund Act CAP 263; Engineering Registration Act No. 15 of 1997 (amended 2007); Contractors Registration Act of 1997 (amended 2008); Architects and Quantity Surveyors (Registration) Act No. 4 of 2010; The Occupational Health and safety Act of 2003; Employment and Labor Relations Act Chapter 366; and Environmental Management Act of 2004.
Then, it is institutions governing public procurement in Tanzania. Administration of Public Procurement is under the Ministry of Finance and Planning. Under the Ministry, there is Public Procurement Policy Division (PPPD) responsible for policy and advising role to the government on matters related to the public procurement. Public Procurement Regulatory Authority (PPRA) as the regulator of Public Procurement and administer all documents related to procurement process. Procurement and Supplies Professional and Technicians Board (PSPTB) deals with procurement profession and professionals. Public Procurement Appeal Authority (PPAA) where all matters regarding procurement complains, claims and disputes are settled. Any bidder grieved with decision of procurement decision done by government entities can take their matter to PPAA for judgement.
Furthermore, there are institutions related to Public Procurement. Bank of Tanzania (BOT) for currencies and foreign exchanges issues. Tanzania Revenue Authority (TRA) for taxes and duties matters. For construction companies, Engineers Registration Board (ERB), Contractors Registration Board (CRB) and Architect and Quantity Surveyors Board (AQRB) are institutions recommended to visit before applying any tender. Tanzania Bureau of Standard (TBS) for verification of standards, Tanzania Medicines and Medical Devices Authority (TMDA) for medical equipment, National Environment Management Council (NEMC) for environmental management issues and Occupational Safety and Health Authority (OSHA) for work places safety and health issues.
The information from the above institutions and legislation will help any potential bidder (foreign/local) to apply for government tenders with maximum possibility of compliance with all legal requirements.
Source of finance of the tender is also important thing to know, it helps to understand the extent of legal requirement to specific procurement. It can be either government only, development partner only or both. If source of fund is Government only, the Public Procurement Act will apply by 100 per cent. In case the tender is financed by World Bank, company must understand the World Bank Procurement Guidelines, documentations and all other requirements. This applies to all development partner.
CPSP Jackson William Musiba