THE COPPERBELT UNIVERSITY

DEPARTMENT OF OPERATIONS AND SUPPLY CHAIN MANAGEMENT

PROGRAMME: BSc PURCHASING AND SUPPLY
COURSE: BSP 382 PURCHASING AND SUPPLY TACTICS AND OPERATIONS
INSTRUCTIONS

Total marks 10% of CA

1. Your work should be word processed; New Times Roman; 12; 1.5 Spacing;
maximum of 5 pages inclusive of References and Cover Page;

2. Clearly indicate the group members’ names and SIN;

3. Use the University’s Recommended Referencing Style;

4. Correct citations and good arguments will attract more marks

5. Submissions after the Due Date will not be accepted.

The following article was extracted from the Zambia Daily Mail of 7 th September, 2017 in the
Editor’s Comment section and shall be used purely for academic purpose only. Please take
note that due to time lapse, people, positions and perceptions etc might have changed.

GOVERNMENT BLEEDING THROUGH PROCUREMENT

Government’s decision to review the Public Procurement Act to enable the benchmarking of
prices for routine goods and services that are procured to ensure uniform prices is indeed
welcome and long overdue. It is in public domain that Government is the most abused by
suppliers where overpricing of goods and services is concerned. It is indisputable that this is
one of the areas where Government’s real financial hemorrhage lies.

Minister of Finance Felix Mutati recently revealed that about 15 percent of the country’s
gross domestic product is spent on public procurement of routine goods and services. Given
that in 2016 Zambia’s gross domestic product was worth US$19.55 billion, it means
US$2.9325 was all gobbled in public procurement of routine goods and services. While we
may not contend with the need to procure routine goods and services such as stationery,
cleaning services, fuel and many others, we are concerned that Government is paying far
much more than what is obtaining on the market. For the amount spent, Government is

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getting very little value because suppliers have a tendency of inflating prices far beyond the
market value.

The Minister of Finance is, therefore, justified in questioning the economic logic in the
exorbitant pricing offered by some suppliers. “Why should one borehole be paid at K40,000,
while a similar one is paid for at K10,000 but in the same locality? Why should a ream of
paper cost so much when supplied to Government but cost less at the market shops? These
are the issues, we want addressed once the Public Procurement Act is revised,” Mr Mutati
said. While it is acknowledged that Zambia is a free economy where prices are not pre-
determined, it however, defies economic logic to have a huge variance in pricing as the
minister has pointed out. It does not make sense for Government to pay three times more
than the obtaining market value. Unfortunately, this is what Government has been subjected
to over the years in its procurement of goods and services.

We know that road construction is yet another area where Government has been financially
bleeding profusely. Some analysts actually estimate that building a road in Zambia costs
three times more than in Botswana, which has a bad topography being a desert.
Government has continued to lose money through overpricing of stationery, furniture,
cleaning prices, conference facilities and workers clothing procured.

For instance, a suit which would ordinarily fetch K1,000 at market value would be sold at
the price three times more because it is Government buying for employees for Labour Day.
Where are suppliers getting this notion from, that Government does not need to get value
for money spent?

This certainly points to the prevalence of corruption in our procurement systems where
suppliers and government officials collude to inflate prices for their benefit. This is a huge
disservice to a country like ours, which still has a long way to go in its development journey.
Inflation of prices by supplier is daylight robbery as it deprives the many poor Zambians of
resources which could be channeled to other needy areas. It is, however, reassuring that
Government is awake to the need for fiscal sustainability aimed at reducing wasteful
expenditure and avoiding the escalation of debts.

Mr Mutati assured that Government is undertaking various reforms to revamp the

economy, and among the reforms being reviewed is the Public Procurement Act. “We want
to understand the pricing for routine goods and services that Government pays for,” he said.
Surely, time for wasteful expenditure is over, as suppliers must be made to account for
every Kwacha that Government pays them.

While it commendable that a progressive pronouncement has been made, it is hoped that
those charged with the responsibility of implementation will do so in the shortest possible
time to save Government from further loss of money.

REQUIRED

As a group of fresh graduate from CBU having acquired skill and knowledge in purchasing
and supply, analyze the case above and identify areas that would have led to this scenario as
presented by the author of the article above and propose recommendations that government
and other concerned stakeholders would use to mitigate the cited challenges in the case
above.

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