Rwanda: Public Procurement Still Marred By Payment Delays

10 September 2020

The Rwanda Public Procurement Authority (RPPA) is pushing contract management to be added to e-procurement in a move it hopes will finally eliminate late payment complaints raised by private contractors hired to execute government projects.

According to the RPPA Act, for every purchase exceeding Rwf100, 000, a public entity is expected to issue a tender notice, inviting contractors through an open bidding process.

Public agencies, ministries, public universities and schools procure goods and services through a process guided by the public procurement law.

Goretti Buhiga, the Director of the Monitoring and Audit at RPPA, told a panel discussing the observation of laws during public procurement processes.

Buhiga explained that the issue of delays in payments continues to haunt public procurement even when the laws are clear.

"I am aware of that issue of non-payment. There is an issue of errors made in the process of budgeting where the money in the coffers is much less than the cost of the tender. Then when it comes to time for paying, there are challenges," she said.

She explained that to fix the issue, RPPA is currently requesting government institutions to share copies of the invoices and details of payment.

"If an invoice has not been cleared, we need them to explain why. We need to determine if it's the institutions that delay payments of investors or if it is the ministry of finance itself," she said.

Looking for solutions

Buhiga explained that there are ongoing plans to update the system and add contract management among others to eliminate some of the issues that they have.

"When that part is up and running, invoices will cease being issued by hand. The system will clearly indicate when the request for payment was made, and reason why if any, there was a delay. We will know who exactly to hold accountable," she said.

Particularly picking out districts, a recent survey conducted by the Strengthening Rwandan Administrative Justice (SRAJ) Project to explore the state of public procurement at the local level said that it was unfair to delay paying contractors while expecting the latter to deliver procured services according to agreed-upon deadlines.

Seth Karamage, the Resident Country Director of the SRAJ project, blamed the delays which put bidders in a financially vulnerable situation.

"The law does not require the procuring entity to pay interest for payment delays unless this is specifically stipulated in the contract. A clear instruction on this issue in the law or in RPPA regulations as a default stipulation should be adopted to ensure greater fairness and improve contractor performance," he suggested.

Payment of salaries

The panelists also touched on the issue of contractors who continue to complete or abandon their projects without paying their workers.

Alexandre Twahirwa, a legal expert and analyst, reminded that although the law is clear, the issue of contractors who fold business without paying their workers was worrying.

To prevent cases of non-payment of wages for works done in the context of public or private contracts, Article 122 of the labour law provides that a successful bidder who sub-contracts a part of the tender to a third party is responsible for payment of employees' salaries in case the sub-contractor has not paid employees' salaries.

Twahirwa reminded that to ensure this, a successful bidder who is awarded a tender is not entitled to any payment without proving that they had paid the debt related to salaries of employees.

In case the contractor fails to pay employees' salaries, the procuring entity retains the amount equivalent to the unpaid salaries until the contractor proves that they had paid the employees.

He also invoked Article 99 of the procurement law that stipulates that if the successful bidder (contractor) does not pay all the workers, or for goods or supplies and services acquired from third parties while executing the contract, the procuring entity deducts payments equivalent to the amount due from their invoice and make such payments.

"It is surprising that we have these two laws that are very clear but we are still dealing with the same issue of non-payment. It needs to be looked into," he said.

Buhiga said that plans to sensitise locals especially the ones that are mostly hired by contractors are in the pipeline.

"It's imperative that we educate them about their rights and the value of having signed documentation that supports the fact that one is working for a particular contractor.

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