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29055 GHANA

COUNTRY PROCUREMENT ASSESSMENT REPORT

2003

ANNEXES 1- 7

Vol. 3

June 2003 Ghana Country Department Africa Region

1

List of Main Annexes ANNEX 1: PERSONS WHO WORKED ON THE CPAR ............................................... 2

ANNEX 2: LIST OF PERSONS MET .............................................................................. 3

ANNEX 3: LIST OF REFERENCE DOCUMENTS ....................................................... 5

ANNEX 4: LIST OF PARTICIPANTS TO THE CPAR NATIONAL WORKSHOP OF MARCH 17-21, 2003..................................................................................... 6

ANNEX 5: CPAR MISSION – AIDE MEMOIRE .......................................................... 9

ANNEX 5A: LIST OF MISSION MEMBERS ............................................................... 14

ANNEX 5B: COMMENTS ON THE PUBLIC PROCUREMENT BILL...................... 15

ANNEX 5C OPENING ADDRESS BY DR. G.A. AGAMBILA, DEPUTY MINISTER OF FINANCE AT THE CPAR NATIONAL WORKSHOP, M-PLAZA HOTEL, ACCRA, MARCH 18, 2003 ......................................................... 22

ANNEX 6: SUMMARY ASSESSMENT FORMS......................................................... 24

ANNEX 7 : CPPR 2002 ACTION PLAN ....................................................................... 43

ANNEX 10: CUSTOMS AND PORTS CLEARANCE PROCEDURES ....................... 46

ANNEX 11: LIST OF PUBLIC SECTOR INSTITUTIONS .......................................... 74

ANNEX 12: LAWS GOVERNING PUBLIC PROCUREMENT................................... 84

2

ANNEX 1:

PERSONS WHO WORKED ON THE CPAR

Assessment Team

1. Mbuba Mbungu, Senior Procurement Specialist/Team Leader, World Bank 2. Oladipupo O. Adamolekum, Lead Public Sector Management Specialist, World Bank 3. George Otoo, Procurement Adviser, DIFD, UK 4. Roch Levesque, Senior Counsel, World Bank 5. Gerhard Tscharnnel, Consultant, World Bank 6. Tsri Apronti, Procurement Specialist, World Bank

Peer Reviwers (in addition to statutory reviewers within the World Bank)

1. Michael L.O. Stevens, Lead Public Sector Mgt. Specialist 2. Rogati Kayani, Lead Procurement Specialist – AFTPC 3. Els Hinderdael, Lead Procurement Specialist - ECSPS [ECA] 4. K. Abbey Sam, Civil Engineer, Private Consultant and Former Head of Ministry of Roads and

Transport, Ghana

Government Team

1. Michael Ayesu, Team Leader/Head, World Bank Desk, Ministry of Finance 2. Naana Dontoh, Chief State Attorney, Ministry of Justice 3. Freda Bartels Mensah, Ministry of Local Government 4. Frederick Boakye Yiadom, Ministry of Roads and Transport 5. Mr. Robert Kuwornu, Ministry of Local Government

Consultants

1. Richard V.C. Addai 2. Charles Taylor, Team Leader, Procure Consult 3. Cornelius Addablah 4. R.E. Asante 5. Daniel Kwagbenu 6. Peter Pease, OECD Consultant 7. Sjoerd H. Visser, OECD Consultant 8. David Siedl, ILO Consultant 9. David Taigman, ILO Consultant 10. Amanda Duff, Engineering Adviser, DFID 11. Ibrahim I. Alkabilla, Program Officer, ISODEC

3

ANNEX 2:

LIST OF PERSONS MET

Public Sector

1. Hon. Nana Akufo Addo, Attorney General and Minister of Justice 2. Dr. Alex Glover-Quartey, Office of the Head of Civil Service 3. Dr. Akoto Osei, Special Adviser, to the Minister of Finance 4. Mr. Victor Nortey, Coordinator, Public Procurement Oversight Group, MOF 5. Ms. Helen Allotey, Procurement Oversight Group, MOF 6. Ms. Agatha Gaise-Nketsiah, Program Coordinator, MOF 7. Prof. Kwaku Appiah-Adu, Director of Policy Coordination, Monitoring and Evaluation and Secretary to Central Tender Board, Office of the President 8. Mr. David Q. Annang, Policy Analyst, Office of the President 9. Mr. Sam Aning, Policy Analyst, Office of the President 10. Prof. Edward Asante, Deputy General Manager, GIMPA 11. Mr. Emmanuel Fianku – Deputy Director, Procurement Services, MOE 12. Mr. S.M. Ntim, GIMPA 13. Mr. Yaw Amprofi, District Chief Executive, Birim South District 14. Mr. M.K. Addae – District Coordinating Director, Obuasi District 15. Mr. Agbenu, Director, Management Services Office of OHCS 16. Mr. P.A.K Owusu-Sekyere, Ga District Assembly 17. Mr. P.J.N. Yebuah, Ga District Assembly 18. Mr. S.N.A. Attoh, Ga District Assembly 19. Capt. (Rtd.) Albert Ateere, Ga District Assembly 20. Mr. David K. Collinson, Ga District Assembly 21. Mr. Joseph Adjoteye, Ga District Assembly 22. Mr. Salisu Omaru, Ga District Assembly 23. Mr. Derek Boakye Yiadom, Ministry of Roads and Transport 24. Mr. Patrick Victor Engyam, Department. Of Urban Roads 25. Ms. Mabel Adjattor, Department. Of Feeder Roads 26. Mr. Archibald Dery, Ghana Highway Authority. 27. Mr. Stephen A. Tackie, Ghana Highway Authority. 28. Mr. J.K. Nsiah, Ghana Highway Authority. 29. Mr. J.A. Afful, Ghana Highway Authority. 30. Mr. Kwame Brewoo, Ghana Highway Authority. 31. Mr. Charles Afetornu, Department. Of Feeder Roads 32. Mr. Kwaku Opon Tutu, Department. Of Feeder Roads 33. Mr. K. Addo Okyere, Ghana Highway Authority. 34. Mr. S. Swanzy-Baffoe, Ghana Highway Authority. 35. Mr. Richard Kudjawu, Ghana Highway Authority. 36. Mr. K. Boama Djan, Ghana Highway Authority. 37. Mr. D. Oppong-Kusi, Department. Of Urban Roads 38. Mr. A.G. Beckley, Ministry of Roads and Transport 39. Mr. J.B. Koranteng York, Ministry of Roads and Transport 40. Mr. George Donkor, Ghana Highway Authority. 41. Mr. John Prempeh, Controller and Accountant General 42. Mr. J.A Lartey, Deputy Auditor General 43. Mr. EB lamptey Deputy Auditor General 44. Ms Cecilia Mensah, Deputy Auditor General 45. Ms Ruby Nyako, Deputy Auditor General

4

46. Mr. Richard Asiedu, Deputy Auditor General Development Partners

1. Nicolas Imboden, Executive Director, IDEAS Center, Geneva 2. Shinji Obuchi, Deputy Resident Representative 3. Karijin de Jong, Governance Adviser, DFID 4. David Kujper, First Secretary, Royal Netherlands Embassy 5. Liz Jraem, Deputy Head DFID, Ghana 6. Raymond Elder, USAID 7. Michael Wegener, German Embassy 8. Takanobu Kuroda, Embassy of Japan 9. Matthew Dally, JICA 10. Dennis Aggrey-Ampiah, UNDP 11. Muhammad Ali Rana, Deputy Res. Rep., UNDP 12. Fred Ampiah, UNDP 13. Emmanuel Debroise, AfD

Private Sector /Civil Society

1. Ntiriwa Addo France, Accounts Manager, Lintas Ghana 2. Christian W. Potyka, Program Co-ordinator, Promotion of the Private Sector 3. Ike Duker, Managing Director, Grown Agents, Ghana 4. Kofi M.S. Graham, Consultant Engineer 5. Bernard Moro, Project Manager, Crown Agents 6. Nadia Bolgobin, Consultant, Business & Public Ethics 7. Jacqueline A. Angate, Head, General Services, Ghana Supply Commission 8. Nana Kusi-Appiah, Director, Marketing, Ghana Supply Commission. 9. Nortey K. Omaboe, Chief Executive Officer, ENO Associates 10. M.S. Hijaz, Managing Director, African Automobile 11. Mr. Harin Glot, Anchester Company 12. Asante Kwame Ibrahim, Coordinator AISEC Company 13. Yaw Asamoah, Chief Executive, Ghana Integrity Coalition 14. Philip Owusu, Consultant

5

ANNEX 3:

LIST OF REFERENCE DOCUMENTS

No. Name Author Year 1. CPAR Procedures OPCPR May 2002 2. Ghana 1996 CPAR World Bank March 1996 3. Ghana CPPR Report Ghana Country Office July 2002 4. Ghana Poverty Reduction Strategy Paper

(GPRSP) Government of Ghana February 2

5. Country Financial Accountability Assessment Report for Ghana (CFAA)

AFTFM May, 2001

6. Ghana Country Assistance Strategy 2000-3003

Government of Ghana and World Bank Ghana Office

June 2000

7. SOE and Ex-post procurement Review Report

QK Team, Ghana office November

8. Value for Money Audit Report for Ghana

Crown Agents July 1998

9. Procurement Reforms Workshop Report Ministry of Finance March 2000 10. Procurement Reforms Proposal (PRP);

Consultants’ Inception Report Procurement Reforms Consultants October 2000

11. Procurement Reforms Proposal Consultants’ Review Reports Vol. 1 & II

Procurement Reforms Consultants January 2000

12. Procurement Reforms Proposal Ghana Ministry of Finance, Government of Ghana

November

13. Multi-Donor Budgetary Support Program Report

Development Partners for Ghana October

14. Other CPARs World Bank 15. Report of the Committee on Ghanaian

Contractors to access Donor funded contracts

Office of the Vice President Ghana January 2003

16. Financial Administration Bill Ghana Government December 5, 2002

17. Public Procurement Bill, 2003 Ghana Government February, 2003 18. Budget Statement 2003 Ghana Government February, 2003 19. Digest of Statistics Ghana Statistical Service 2001 20. Population and Housing Census Ghana Statistical Service March, 2002 21. Consultants Reports CPAR Consultants March 2003 22. Constitution of the Republic of Ghana Ghana Government 1992 23. Code of Conduct for the Ghana Civil

Service Office of OHCS Nov. 1, 1999

24 Civil Service law, 1993 Ghana Government May 14, 1993 25 Draft Standard Tender documents for

works PPOG December 2002

26 Customs and Excise Act, 2001 Ministry of Finance March 21, 200127 Environmental Protection Newsletter Environmental Protection Agency January 2003

6

ANNEX 4:

LIST OF PARTICIPANTS TO THE CPAR NATIONAL WORKSHOP OF MARCH 17-21, 2003

No. Name Organization Address/Telephone No. 1. M.K. Addae Adansi West Obuasi – 0582-40359 2. Helen Allotey MOF 663304 3. A. Okomey-Mensah Ecobuild Consult 024640571/232464 4. John Adraki AGI 779023/24 5. Peter Wartemberg MLGRD – LGPSU 514740 6. David A. Yankson Ghana Water Co. Ltd. 666781-3 7. Kofi Adu GAPVOD 254670-1 8. P.J. Naana Dontoh Attorney General’s

Department. 682117

9. E.B. Lamptey Audit Service 664928 10. Theo Codjoe SFO 663501 11. N.S.K. Appiah GIMPA 020-201-7965 12. Agatha Gaisie Nketsiah PUFMARP 669289 13. B.M. Oppong VIP (MOFA) CT. 3742, Accra 14. A. Mensah-Bonsu VIP (MOFA) CT. 3742, Accra 15. Vitus Azeem ISODEC Box MP 2989 16. Nuna Senaya Public Agenda 238829 17. Patricia A. Abel Procure Consult C/o CIPS Office, Labone 18. Bernard D. Moro Crown Agents Box GP 565, Accra 19. George Hutchful Fisheries Directorate Box 630, Accra 20. Doglas Zormelo Zormelo & Associates PMB Ct. 126, Cantonments 21. Alex A. Adusei DIC 772049 22. V.K. Geraldo NDPC 771775 23. S.B. Nyanteieyi MOF 662448 24. Fuseini Ahmed Abu Ghana Aids Commission 782262/3 25. Francis Arthur AGC 772287 26. T.K.A. Bibilazu MDPI 663998 27. D.K. Amoah Water Sector Res. Sec. 763648 28. Rex Asante Ghana Supply Comm. 228113 29. Gladys Ghartey MOF 669607 30. Doreen Adjei-Anim Procure Consult C/o CIPS Office, Labone 31. J.B.A. Ansah GOIL Box 3183, Accra 32. F.I. Dei-Amoah Metro Works (AMA) Box 772, Accra 33. Edem Heletsi MOFA Box M37, Accra, 677138 34. Anthony E. Owusu GSB Box MB 245, Accra 35. Gifty Biyira Min. Lands & Forestry Accra 36. Nii Okine Okantey SSNIT Box M149, Accra 37. Sally Abbey MWH Box M43, Accra 38. Steve Akuffo GH. Institute of Architects Accra 39. L. Solomon President, CIPS CIPS Ghana

7

No. Name Organization Address/Telephone No. 40. G. Otoo Proc. Adviser, DFID DFID UK 41. O. Edjeani Vice President, CIPS GH CIPS Ghana 42. Ike Duker MD, Crown Agents Tel. No 669798, Accra 43. S.Y. Amoh Manager Procurement, BOG Tel. No. 665279, 44. Yaw Amprofi DCE, B.S.D.A. 0882-2145 45. Nana Eshun 46. J.L.S. Abbey CEPA 779365 47. A.J. Gardnar DFID 48. Carl Lokko Procure Consult Labone, Accra 49. David Djanie SEC 666799/666836 50. E. Odartei Laryea CSIR Box M32, 024-772-330 51. Maame Bartels Mensah MLGRD Box M50, 020-8182285 52. Kwaku Duah Gateway C/o MOTI, Box M47, Accra 53. F.K.A. Dadzie 666911 54. Mr. Torgbor Torto GCAA PMB, KIA, Accra –

770558/776077 55. Amanda Duff DFID 024329309 56. W.K.Nuño CWSA 779102 57. Sulemana Ibrahim NIRP Box 1618, Accra 58. V.O. Nortey MOF Box M40, Accra 59. Dominic Tano Crown Agents Box GP 585, Accra 60. Ben Essilfie Procure Consult Box SK 29 61. Gifty Biyira Min. of Lands & Forestry Box M212, Accra 62. David Quist MOF Box M40, Accra 63. S.K. Ahomah MOF Box M40, Accra 64. M. Ayesu MOF Box M40, Accra 65. Togbe Adom Dray II TUC Box 701 66. Salifu Mustafa Nat. Media Commission 67. Rebecca Okine Gateway Secretariat Box M47, Accra 67. Ivan Ofei Gateway Secretariat Box M47, Accra 68. Abigail Kwashi MWH Box M43, 685522/19 69. Alhay S.I. Awudu AESL Box GP3969 70. P. Opoku-Mensah Bank of Ghana R.F.S.P., Accra 71. Samuel A. Twum SSNIT Box M149, Accra 72. C.W. Dartey DFR PMB, Ministries, Accra 73. K. Opon Tutu Department. Of Feeder Roads PMB, Ministries, Accra 74. Dr. Oboseh-Ocansey PEF 75. A.E. Owusu GSB Box MB 243 76. Muna Osei Bonsu GSB Box MB 243 77. Evelyn Awittor World Bank Box M27, Accra 78. Richard V.C. Addai Consultant Box 2985 Kaneshie,

0208173889 79. L. Hesse Department. Of Urban Roads 685682 80. A. Twumasi-Boakye Department. Of Urban Roads 685682 81. David A. Yankson Ghana Water Sector Ltd. 666781 82. Jacqueline Angate Ghana Supply Commission P. O. Box M35, 020-813-8114 83. Kwabena Nyarko Ag. SSIP – MOFA Box M37, Accra 84. Robert Dwamena ECG Box 521, Accra

8

No. Name Organization Address/Telephone No. 85. Sam Agbenu OHCS State House, Accra 86. William Apoyah ECG Box 5278 87. S.K. Duku PWD Box 2083 88. Sam Poku West Africa Business Ass. Box CT. 2873, 769393 89. Emmanuel Fianko FPMU/MOE Box M45, 231661/2- 020-813-

2869 90. Florence Amattey SSNIT Box M149, 667745 91. Sampson Amoah MOF Box M40, Accra 92. Godfried Funkor GNCCI Box 2325, Accra 93. Nana Asiedu-Kotwi Procure Consult Box TN 1867, Accra 94. Raymond Govina CAGD Box M79, Accra, 678804 95. Ibrahim Akalbila ISODEC Box MP2989, Accra 96. Mensah Ansah Joseph GIMPA Box 50, Achimota 97. A. Boaten-Sekyerehene Metropolitan Insurance Box 20084, Accra, Tel. 220966 98. Charles Taylor Procure Consult Box 4094 Accra 99. James Agblom Education Service Box M45, Accra, 683648/41 100. C. Adablah Sigma Consult Box M4, Accra, 760936 101. Tony Prempeh Ghanaian Times Box 2638, 223285 102. S. Swanzy-Baffor Ghana Highway Auth. Box 1641, Accra 103. Ralph Gorleku Procure Consult Box 4094, 772156 104. Roch Levesque World Bank Washington D.C. 105. Tsri Apronti World Bank Box M27, Accra 106. Charlotte Hayfron World Bank Box M27, Accra 107. Philip Opoku-Mensah Bank of Ghana BoG, Accra, 665899 108. Mbuba Mbungu World Bank Box M27, Accra 109. Lydia Sam World Bank Box M27, Accra 110 S. Visser Ideas Center Rue Rothschild 35 1202,

Geneva 112 Oladipupo O.

Adamolekun World Bank Togo Office

9

ANNEX 5:

CPAR MISSION – AIDE MEMOIRE

1. A joint World Bank, Government and Development Partners Mission took place in Ghana March 10-21, 2003. The list of Mission Team members is provided as Attachment 1 to this aide memoire. This aide memoire was discussed in a wrap-up meeting in the Ministry of Finance, Chaired by Dr. Akoto Osei, Special Adviser to the Minister of Finance and attended by Mission Team members of the Mission and Government officials. 2. Mission objectives The mission’s main objective was to finalize the assessment work and pave the way for finalizing a Country Procurement Assessment Review (CPAR). Specifically, the mission:

(i) Reviewed the reports prepared by the consultants on the various aspects of the CPAR (ii) Discussed the findings and recommendations and other related issues with relevant

government agencies and stakeholders; and (iii) Participated in a National Workshop to deliberate on the draft reports and reach a

consensus on key recommendations and required actions for improvements. 3. Review of Consultants’ Reports

The Mission as the first phase of its work reviewed the draft reports prepared by consultants selected to conduct fieldwork and data collection. The following seven subjects were covered:

(i) Contract management (ii) Labour standards in public contracts (iii) Procurement proficiency, capacity building and training (iv) Public sector management (v) Private sector participation (vi) Anticorruption initiatives and programmes (vii) Customs and ports clearance procedures

On the whole, the draft reports were satisfactory. In several cases, consultants’ strong commitment to the introduction of a better procurement system in their country (all the consultants are Ghanaians) appeared to have inspired them to undertake thorough analysis accompanied with some bold recommendations. The Mission provided feedback to the consultants and advised them on the presentations they would make at the National Workshop scheduled for the second week of the Mission’s work (see paragraph 7 below). 4. Review of the Legal Framework

The Mission discussed some provisions of the draft Procurement Bill with the Attorney General and Minister of Justice, drawing his attention to some modifications that would enhance the Bill’s primary objective of ensuring that Ghana’s procurement system would become more efficient and transparent. The specific issues discussed with the Minister are the following:

(i) Chairmanship of the Public Procurement Board; (ii) Mechanisms to handle reviews (complaints) and shortening of the review delays; (iii) Chairmanship of the Entity Tender Committees; (iv) Margin of preference; (v) Limit on participation in procurement proceedings on nationality basis; and

10

(vi) Evaluation and award criteria for goods/works contracts and services contracts.

The Lawyer in the Mission Team discussed comments on specific provisions of the Bill with the Coordinator of the Public Procurement Oversight Group [PPOG]. The main observations and suggestions of the Mission are summarized and provided as Attachment 2 to this Aide Memoire. 5. Discussion of findings and recommendations

The Mission met with some GoG senior officials and selected stakeholders to exchange views with them on some of the aspects to be covered in the CPAR. The Mission’s objective at the meetings was to probe further some of the findings and recommendations in the consultants’ reports. We discussed contract management with a large group of senior staff of the Ministry of Roads and Transport; procurement proficiency, capacity building and training with officials at GIMPA and with senior staff of Ghana Supply Company; curbing procurement-related corruption activities with the head of Ghana Integrity Institute; and transitional arrangements before and after enactment of Procurement Bill with the Director of Policy Coordination and Monitoring in the Office of the President and key staff of PPOG in Ministry of Finance. 6. National Workshop on CPAR, March 18-19

The National Workshop organized by the GoG CPAR team had two main objectives: (i) to discuss CPAR Mission’s findings and (ii) to agree on key recommendations and an action plan. Dr. G.A. Agambila, Deputy Minister of Finance, opened the Workshop and his opening address, which set the stage for the workshop, is included in this Aide Memoire as Attachment 3. About 110 participants drawn from across the public service, the private sector, civil society groups, and the donor community attended the Workshop. Following seven presentations by consultants on the seven themes that the Mission had discussed with the participants proceeded to discuss the issues raised in four Syndicate Groups. The Groups were requested to discuss specific points highlighted by the consultants, identify appropriate actions, and specify timelines and the responsible parties. The discussions in the groups were frank and lively and specific time bound actions were recommended. 7. Benchmarking, Monitoring and Evaluation.

Workshop Participants highlighted the importance of an effective oversight and benchmarking, monitoring and evaluation system of procurement activities. They stressed its crucial importance in addressing issues such as those under contract management, procurement capacity building, anti-corruption measures and the implementation of the new procurement Bill. The team of Consultants from OECD, Paris participated in the work of the Mission with a view to determining key performance indicators for an effective benchmarking and monitoring and evaluation system. They also sought to identify the procurement entities that would be suitable to start a pilot benchmarking and evaluation survey. The OECD Consultants will propose a pilot monitoring and evaluation system that will track the steps taken to support implementation of the Bill as well as the level of compliance with the Bill by the procurement entities. The Swiss Government, following a GoG-OECD meeting in Paris in January 2003, has agreed to provide technical assistance to Government in its efforts to develop a benchmarking, monitoring and evaluation system that would become operational after the enactment of the Bill. The Mission recommends that the Ministry of Finance request the Swiss Government to define its support [in financial terms and timing] to enable Government integrate it in its transition plans for implementing the Bill. 8. Main Recommendations of the Mission

While the CPAR will provide detailed recommendations and an action plan for improvements in the public procurement practices, the mission recommends the following actions be taken by Government for immediate gains:

(i) Transition arrangements for establishing the Public Procurement Board

11

The Mission endorses the suggestion of forming a Task Force in the Ministry of Finance to enhance the work of the PPOG in overseeing the implementation of priority actions notably, establishment of the Public Procurement Board and capacity building activities that would enable stakeholders comply with the new Procurement Law. Mission noted that PPOG has already prepared plans for these priority actions.

12

(ii) Establishment of procurement units In most Procuring Entities, the procurement function is diffused between various officials as a result of which it is difficult to identify officers accountable and responsible for procurement. The Mission recommends the creation of a procurement unit in each Procurement Entity. Such Units would ensure there are specific staff accountable and responsible for procurement function and a focused capacity building for procurement proficiency. A good example is the Unit recently established in the Ministry of Lands and forestry, staffed with officers that have attended procurement courses.

(iii) Stores and supplies

The Consultants’ reports which were endorsed by the National Workshop revealed that there is a lot of wastage in public stores resulting from poor storage facilities, poor stores organization and lack of proper record and stock keeping, which encourages theft. Stores constitute a very large amount of public money. The Stores Inspectorate Unit that used to check on the proper upkeep of stores has not been functional for over 10 years. These Heads of procuring entities have the overall responsibility for proper upkeep of stores, including total supply chain. The Mission recommends that Ministry of Finance take action to remedy the situation and stop further wastage by (a) requiring the heads of entities to take action to remedy the situation; and (b) reinstate the role of Stores Inspectorate Unit so that it can advise the Ministry of Entities not ensuring proper upkeep of stores.

The reports also indicated that there are large quantities of public stores waste at the ports because the importing public entities do not collect them in time or do not collect them at all. The Mission recommends that CEPS notify Heads of Entities that do not collect their stores in time with a view of sanctioning officials that cause such wastage.

(iv) Process for payments to contractors

The process for payment to contractors, and suppliers is long [over thirty steps from invoice to receipt of check] and often over-centralized, thus sometimes forcing contractors to come from upcountry to follow-up payments in Accra. This process is adding to cost of public contracts and undermines the efficiency of the private sector. The mission recommends that the Accountant General reduce significantly the number of payment steps as well as decentralization of contract payments without losing accountability.

13

(v) Sole source contracts While it is prudent for Government to source development financing through supplier credits, the way contracts under such supplier credits are entered into and administered does not achieve value for money. The current method of renegotiating such contracts through a contract by Crown Agents is a fire fighting mechanism and does not still ensure economical use of public funds. This problem will be significantly addressed by the application of the provisions in the procurement Bill. The Mission recommends that such contracts be subjected to competition and that the Ministry of Finance ensures compliance.

9. Next steps

In the following weeks, the Bank will prepare a draft CPAR report and submit it to the Government CPAR Team and members of the Assessment Team for review and comments. The Bank will, taking into account the comments of Government CPAR Team and members of the Assessment Team, revise the draft CPAR report and circulate it widely within the Bank, Government Team and Development Partners for further review and comments, after which the Bank will revise the report and submit it to Government for approval. On receipt of Government approval, the Bank will finalize the report and distributed it to all relevant parties. It is expected that the final report will be distributed before June 30, 2003.

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ANNEX 5A:

LIST OF MISSION MEMBERS

1. Mr. Mbuba Mbungu – Senior Procurement Specialist/Team Leader, World Bank 2. Oladipupo O. Adamolekum – Lead Public Sector Management Specialist, World Bank 3. George Otoo, Procurement Adviser, DFID, UK 4. Roch Levesque, Senior Counsel, World Bank 5. Gerhard Tscharnnel, Consultant, World Bank (Part-time) 6. Tsri Apronti, Procurement Specialist, World Bank (Part-time) 7. Peter Pease, OECD, Consultant 8. Sjoerd H. Visser, OED Consultant

Government Team

1. Michael Ayesu, Team Leader/Head, World Bank Desk, MOF 2. Naana Dontoh, Chief State Attorney, Ministry of Justice 3. Freda Bartels Mensah, Assistant Director II, MLGRD

Consultants

1. Richard V.C. Addai 2. Charles Taylor 3. Cornelius Addablah 4. R.E. Asante

Task Assistants

1. Lydia Sam, World Bank 2. Charlotte Hayfron, World Bank

15

ANNEX 5B:

COMMENTS ON THE PUBLIC PROCUREMENT BILL

The Mission discussed some provisions of the draft Procurement Bill [Part A of the comments] with the Attorney General and Minister of Justice, drawing his attention to some modifications that would enhance the Bill’s primary objective of ensuring that Ghana’s procurement system would become more efficient and transparent. The Lawyer in the Mission Team discussed the comments on specific provisions of the Bill with the Coordinator of the Public Procurement Oversight Group [PPOG]. The main observations and suggestions of the Mission are summarized in two Parts below.

PART A: COMMENTS WHICH WERE RAISED WITH THE ATTORNEY GENERAL OF GHANA

1. Chairmanship of the Public Procurement Board 2. Mechanisms to handle reviews (complaints) and shortening of the review delays 3. Chairmanship of the Entity Tender Committees 4. Margin of preference 5. Limit on participation in procurement proceedings on nationality basis 6. Evaluation and award criteria for goods/works contracts and services contracts

1. Chairmanship of the Public Procurement Board

For greater independence, the Bill should mention that the Chairperson of the Public Procurement Board would be selected from the private sector as provided for in the initial draft Procurement Bill. This would ensure that the Public Procurement Board is not perceived as being dominated by government officials, and that it is an independent party in the conduct of reviews. A private sector Chairman/Chairwoman would be more independent of influence by government officials in discharging his/her duties. By not specifically providing in the Bill that the “Chairperson of the Public Procurement Board will be selected from the private sector” as in the earlier draft, there would be a great element of risk of the nominating official being influenced to nominate a public official or a sitting Minister and hence putting the Chairman in a situation of a conflict of interest.

2. Mechanisms to handle reviews on appeals and complaints and shortening of the review

delays

In order to maintain balance between public and private partners, modern procurement laws attempt to provide to losing bidders an effective way to submit contract award protests. The Bill intends to provide an autonomous status to the Public Procurement Board, which would allow it to conduct independent reviews on appeals and complaints. Section 7 of the Bill provides that the Board could create committees and, as such, an “Appeals and Complaints Review Committee” should be established with arbitration or quasi-arbitration powers to act as an independent protest mechanism.

16

The “Appeals and Complaints Review Committee” should be composed on an ad-hoc basis to deal with specific complaints. There should be three members which should preferably be: an official of the government, a magistrate or prosecutor and a lawyer from private practice. One member of this committee should be a member of the Board. Revising Article 7 of the Bill should provide this provision.

In order to have an effective review process, the review delays mentioned in Part VII of the Bill should be reduced by half. 1

3. Chairmanship of the tender committees

A major objective of the Bill is to place accountability and responsibility for procurement on the Heads of public Entities, those given responsibility for service delivery and hence use of public funds. The initial draft Procurement Bill provided for Heads of Procuring Entities e.g. Chief Directors for Ministries, Heads of Departments, Chief Executives of District Assemblies and State Enterprises, etc to head the Entity Tender Committee throughout the public service. In the version of the Bill tabled in Parliament, this responsibility is assigned to the Minister of each entity. While Ministers are ultimately accountable for the MDAs under them both before Parliament and the public, they are expected to provide policy direction and leadership and oversight to ensure public servants perform efficiently. The chairmanship of an entity's Tender Committee is a technical/administrative function. As such, this technical (procurement) function needs to be assigned to the most senior administrative official in the entity, and he/she would be held accountable for carrying out the function efficiently and following the agreed procedures. The roles and accountabilities would then be clear since a Minister, who is politically accountable for a given ministry, department or agency, would have an oversight role over all the procurement entities under him while the administrator, who chairs the Entity Tender Committee, will be directly accountable to the Public Procurement Board, ensuring that all the rules and regulations of the Board are followed in respect of every procurement activity handled by the Tenders Committee. Furthermore, a Minister's chairmanship of Entity Tender Committees would prevent him/her from focusing on his/her policy-making role and the direction of implementation of government programs and projects. There would be extra workload in cases where, in addition to heading a Ministry, Department or Agency, some Ministers are also responsible for several subvented agencies and state-owned enterprises). 2

1 More precisely in Sections 78 and 79 of the Bill 2 In countries where a new political leadership team succeeds another after an election, as was the case in Ghana in 2001, it is not unusual that the new team might not feel fully satisfied with the level of performance of the inherited administrative leadership. The problem of performance could be compounded by a problem of trust. These are very important issues that need to be addressed through established public service procedures regarding the appointment and deployment of senior administrative officials. The approach that works in many democratic states (that witness change of political leadership team after periodic elections) is for a new political team to use the criteria of technical competence and nonpartisanship (in the party political sense) to deploy or appoint senior administrative officials. In some countries, each minister can appoint an approved number of special advisers (assistants), using the criteria of

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4. Preference

In order to provide for equity, uniformity and consistency in the application of the margin of preference,3 the percentage of the margin of preference and its conditions of application to domestic contractors should be clearly stated in the Bill.

Furthermore, for more clarity, a definition of “domestic contractor” or a reference to the specific law providing such definition should be included in the Bill.

The Bill should also state that the preference would be applied only when mentioned specifically in the invitation to bid.

The details of the margin of preference should be mentioned in the law and not in the regulations which could be amended following a less formal procedure. Section 95 should be revised accordingly.

5. Limit on participation in procurement proceedings on nationality basis

For the same reasons of equity, transparency and uniformity mentioned in paragraph 4, the conditions of application of the limitation to the participation in procurement proceedings on the basis of nationality should be clearly set out in the Bill. 4 This would avoid a discretionary application of such exclusion.

loyalty and shared political positions. Normally, a special adviser/assistant is also expected to have expertise and/or experience in some area of a minister's work. The head of Government - President or Prime Minister, approves (the number of special advisers/assistants)). 3 Section 59 of the Bill. 4 Section 24 of the Bill.

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6. Evaluation and Award criteria goods, works/services contracts

Goods/works:

The evaluation criteria should always be non-discriminatory, and quantified in monetary terms in order to lead to transparent evaluation and allow bidders to submit an effective protest to the procuring entity. 5

The award of the contract should be to the “lowest evaluated responsive bidder.” As such, Subparagraphs 58 (3)(b)(i) and (ii) should be collapsed.

Paragraphs 58 (4)(c) and (d) should be removed since these should not be taken into account while evaluating a proposal.

Services:

Evaluation of proposals: Paragraphs 68 (2)(c) and (d) should be removed since these should not be taken into account while evaluating a proposal.

Selection procedure where price is a factor: This might be a problem of terminology in Paragraphs 72 (2) and (3). Shouldn’t Paragraph (2) refer to “minimum technical score” instead of “minimum qualifying mark,” and paragraph (3) to “technical scores” instead of “quality scores”?

PART B: DETAILED COMMENTS ON THE LAW DISCUSSED WITH THE REPRESENTATIVE OF THE PUBLIC PROCUREMENT OVERSIGHT GROUP (PPOG) COORDINATOR

Section 1—Public Procurement Board

Paragraph (3) leaves the door open to interpretation, and the Board should only enter into contracts and transactions which are “inherent” to its functions, as such, the word “reasonably” should be removed, or the words “reasonably related,” replaced by “inherent”.

Section 3—Functions of the Board

i. Paragraph (c) should refer clearly to Standard Bidding Documents.

ii. Paragraph (p) mentions that the Board will “maintain a register of suppliers, contractors and consultants and records of prices.” To avoid any confusion with a formal registration of suppliers, the said Paragraph would benefit from a redrafting which would mention that a database of suppliers, contractors and consultant and a record of prices would be maintained in order to assist in assessing market prices.

Section 14—Scope of Application

5 See Subparagraph 49 (4)(e) of the Bill.

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(i) Paragraph (1) should encompass concessions, “régies”, and “affermages”, and more generally, the operation of public services.

(ii) Paragraph (a) provides for a very broad exception to the application of the Bill when “the Minister decides that it is in the national interest to use a different procedure.” This comment applies also to paragraph (3).

Section 35—Two-stage tendering

Subparagraphs (1) (c) and (d) should be removed. These are not of the nature of the two-stage tendering procedure.

Section 36—Procedures for two-stage tendering

Subparagraph (4)(e) should be revised to remove the discretion granted to the procurement entity. In a two-stage tendering procedure, a supplier or contractor should always have the choice, if it does not wish to submit a final tender, to withdraw from the tendering process without forfeiting its tender security.

Section 39—Conditions for use of Single-source procurement

Single-source procurement should not be justified on the basis of the considerations mentioned in subparagraph (1)(d)(iv).

Sections 37 to 42—Sections dealing with: Restricted tendering, Single-source procurement and Request for quotation

These Sections should be regrouped under a new Chapter entitled “Other methods of procurement.”

Section 49—Contents of tender documents and use of standard tender documents

(i) Paragraph (1) should specify that the changes acceptable to the Board

be specified in the SBDs.

(ii) Subparagraph (4)(f): The drafting is ambiguous since, on one part, it mentions that the terms and conditions of the procurement contract “as known” should be in the invitation document, and on the other part, that the contract form to be signed should also be in the invitation document. If the terms of conditions are not final, how can the contract be included? Furthermore, the terms and conditions of a procurement contract should always be known when a tender is issued.

Section 53—Period of validity of tenders; modification and withdrawal of tenders

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Paragraph (2) should state that any request to extend the validity of a tender must be made prior to the expiry of the tender.

Section 54—Tender securities

Subparagraph (2)(b): The form and the terms of the tender security should also be acceptable to the procurement entity.

Section 63—Prohibition of negotiations with suppliers or contractors

Subparagraph 63(2)(b): There should be no negotiation with the lowest tender. Should the intent be to reduce the scope, all tenderers should be able to propose a new price in order to maintain fairness and transparency in the process.

Section 81—Suspension of procurement proceedings

(iii) Since it is often impossible to determine the chances of success of a

protest, Subparagraph (1)(d) should refer to elements of proof indicating a likelihood of success.

(iv) Paragraphs (2) and (3) should be removed. A contract already in force should not be suspended during the review process. Doing so could be very costly to the Government.

Section 85—Code of Conduct

To be effective, the Code of Conduct should be part of the rules governing public servants. With regard to the Suppliers, Contractors and Consultants, specific provisions should be inserted in the Criminal Code.

Section 88—Investigation by the Board

Instead of conducting an investigation, it would be preferable for the Board to appoint a person to ascertain the facts, which could then lead to a formal investigation by a magistrate or a prosecutor. Section 89 should be revised accordingly.

Section 91—Offenses relating to procurement

This Section seems to mix administrative and criminal offenses. The law should deal only with administrative issues, and the Criminal Code should address the criminal issues.

General comments:

Payment provisions should be included in the law to specify the delays of payment and the interest rate which will be applicable in case of late payment by the Government. This would add to the process since it would improve the disbursement procedures and as such the process would gain in transparency.

It is difficult to comment on a few Sections since we do not have the documents referred

to in, i.e., Paragraph 16(3), Section 26, paragraph 27(4)(a)(v), and the definition of “professional body” in Section 96.

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It could prove helpful if the law provided for specific means of procurement for community participation in some specific instances.

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ANNEX 5C

OPENING ADDRESS BY DR. G.A. AGAMBILA, DEPUTY MINISTER OF FINANCE AT THE CPAR NATIONAL WORKSHOP, M-PLAZA HOTEL,

ACCRA, MARCH 18, 2003

Mr. Chairman,

The Country Director, World Bank Hon. Members of Parliament Representatives of Development Partners Ladies and Gentlemen

1. It gives me great pleasure to welcome all of you to this very important workshop on

Country Procurement Assessment Review, CPAR for short.

2. As specified in our invitation letter, the CPAR is a mandatory exercise of the World Bank and is to be conducted every four years in borrowing member countries. It is an exercise organized in collaboration with the Government of Ghana and interested Development Partners. For that matter, we currently have with us representatives from DFID, OECD< the Netherlands and AFD.

3. The objective of the CPAR is to identify weaknesses in current procurement practices

and in the on-going reforms and to find appropriate measures for possible improvement.

Ladies and Gentlemen,

4. In the Budget Statement presented to Parliament by the Hon. Minister of Finance on 27th February 2003, the Government indicated that it would spend an estimated amount of ¢21,347.6 billion this year. Out of this amount ¢5,450 billion would be spent on Personal Emoluments; ¢3,426.8 billion spent on external debt service and ¢3,108.1 billion spent on domestic interest payments. The rest of the total payments, about ¢9,362.7 billion, representing 43.8 percent would invariably be spent on procurement. It is clear that year in, year out, almost half of the nation’s budget is disbursed through procurement related activities. It is also estimated that as much as 90 percent of all development partners in-flows are spent through procurement related activities.

5. Despite this huge expenditure on procurement, it is common knowledge that the process

is fraught with all kinds of problems, leading to a loss of substantial resources of the state to individuals associated with the process. Reports of the forensic audits conducted on twelve (12) public institutions in 2001 revealed that most of the fraudulent activities that took place in these institutions were perpetrated through procurement.


6. Government, realizing the negative impacts of deficiencies in our procurement processes,

especially their harmful effects on our economy, and on our efforts to reduce poverty, has in the past few years instituted several measures to address these problems. Notable among these is the Procurement Bill, which has now been gazetted and has been presented to Parliament for consideration and approval. The Bill is designed to ensure transparency in public procurement, encourage competition and ensure value for money in all procurement.

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7. A new Financial Administration Bill has also been presented to Parliament for passage

into law, while an Internal Audit Bill has been submitted to Cabinet for consideration. It is hoped that when all these bills are passed into law and the provisions implemented fully, they will bring sanity into the public procurement process and enhance public financial administration the country.


8. One may ask: if all these reforms are in the pipeline, why organize this CPAR? As I said

earlier, the CPAR is a mandatory exercise conducted every four years and this current exercise should have been done two years ago. However, and most importantly, this review offers us an opportunity to identify other essential issues that have not been adequately addressed in the current reforms. Such issues would become the basis for future reforms.

9. This workshop offers an opportunity to review the findings and

recommendations of the consultants and to set the stage for our reform agenda. It is therefore necessary for all of you to participate fully in the discussions. Your discussions will then come out with recommendations for Government’s consideration. I wish to assure you that president’s Kufuor’s Government is determined to implement all appropriate measures needed to improve Ghana’s economic performance and the general well being of our people.


10. It is my hope that together, we will have every fruitful deliberation. I on this note declare

the workshop opened.

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ANNEX 6:

SUMMARY ASSESSMENT FORMS

A. Comparison of National Competitive Bidding Procedures and World Bank Policy Summary of the Public Procurement System

ASPECT of Procurement Yes No World Bank Policy 1. Are there eligibility restrictions based

on nationality of bidder and/or origin of goods (other than primary boycotts)?

X Not allowed

2. Are there primary boycotts, which are established by law?

X Only primary boycotts are acceptable

3. Are bidding opportunities advertised in the local press?

Not all the time. Only for works

X Required

4. Are prospective bidders allowed at least 30 days for bid preparation (except for commodities/small goods contracts)? Not all the time.

X Required

5. Are contractors/suppliers pre-qualified for large/specialized contracts?

It not mandatory and no thresholds are set. Registration Lists are used instead

X Required

6. Is minimum experience, technical and financial requirements (for pre -or post-qualification) explicitly stated in the documents?

Not all the time.

X Required

7. Is an invitation to pre-qualify advertised for each procurement involving large or complex potential contracts?

Not all the time.

X Required

8. Are joint ventures with local firms required for foreign firms’ eligibility?

X Not allowed

9. Are joint venture partners jointly and severally liable?

X Required

10. Are there set limitations to the number of firms who can bid for a contract?

X Not allowed

11. Are parastatals allowed to bid? X Acceptable only if they (i) are financially autonomous, (ii) operate under commercial law and (iii) are independent from borrower and its purchasing/contracting authority

12. Are bidders required to register with a local or federal authority as a prior condition for bidding?

X Not Acceptable as an eligibility criterion.

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13. Are extensions to bid validity allowed? X Acceptable only if justified by exceptional circumstances

14. Are there restrictions on the means of delivery of bids?

X Not allowed, except when bidders have to submit physical samples. Then they can be required to deliver bids by mail, by courier, by hand, etc.

15. Is preference given to suppliers or contractors based on region or locality of registration, small size, ethnic ownership, etc.?

X Not allowed

16. Are there restrictions on sources of labour and material?

X Not allowed, except for unskilled labour, if available locally

17. Public bid opening required? Does it occur immediately or closely following the bid submission deadline? Not Always

X Required

18. Is a “two envelope” bid opening procedure permitted for procurement of goods or works? 6

X Not allowed

1. 19. Is automatic rebidding required if too few bids are received?

X Acceptable, provided all responsive bidders are allowed to bid, the process is efficient and no serious delays result

20. Is “bracketing” used in bid evaluations? 7

X Not allowed

21. Is award made to lowest evaluated qualified and responsive bidder?

X Required

22. Are price negotiations conducted with “winning” bidders prior to contract signature?

X Not allowed, except where the bid price is substantially above market or budget levels and then only if negotiations are carried out to try to reach a satisfactory contract through reduction in scope and/or reallocation of risk and responsibility which can be reflected in a reduction in Contract Price. (See Guidelines para 2.60)

21. Are price adjustment provisions generally used?

X Not required for short-term contracts unless domestic inflation rate is high, but allowed for contracts of 18 months or more in duration. Formula method preferred to documentary evidence

22. Are the terms and conditions used in goods and works procurement generally

X Required (to be acceptable they should be balanced, reasonable and clearly address the most important issues

6 All technical envelopes are opened first and, after review, price envelopes of all or only qualified/responsive bids are opened in the second round. 7 Rejection of bids outside a range or “bracket” of bid values.

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appropriate for the size and nature of contract intended?

that lead to problems during performance, e.g. risk allocation, payment, inspection, completion/acceptance, insurance, warrantees, changes, contract remedies, force majeure, governing law, termination, etc.)

23. Are contract scope/conditions modified during implementation?

X Acceptable, but advance Bank approval of changes subject to prior review needed if required under the Loan Agreement.

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(b) Summary of the Public Procurement System

Section A – Legal Framework

GENERAL FEATURES

1. Identify predominant legal system (i.e. Common/Civil Law; Socialist; other)- Common/Civil Law

2. Identify form of government (i.e. federal or centralized) Centralized

3. Does the Constitution (if there is one) contain any provision directly bearing on public sector procurement? (If so, describe) The constitution regulates expenditure of public funds through parliamentary approval and requires Government to ensure sound management of the economy in such a manner as to maximize the rate of economic development. The Constitution also underpins the need to eradicate corruption and abuse of power. By implication this requires sound procurement practices.

4. Is the country a signatory (or planning to become one) to the Agreement on Government Procurement of the World Trade Organization? YES

5. Does the basic contract law contain any provision directly bearing on public sector procurement? (If so, describe) No

6. Is there a separate body of law, which regulates public sector procurement, or is it governed by regulations issued under an organic finance act? There is no separate body of law. There is some regulation under the Finance Act but very scanty.

7. Is the system clear, comprehensive and consistent? No Does it cover all essential aspects with no unduly complicated, unnecessary, conflicting or outdated regulations? Are rules found in various distinct sources or within a well-coordinated legal framework? Procurement regulations and procedures for procurement of Goods are under Ghana Supply Commission Law, which had mandatory responsibility for goods procurement for Government Ministries, Departments and Agencies [MDAs]. Ghana Supply Commission no longer plays this role, so MDAs including Local Authorities do their own procurement but without clear procedures to follow for procurement of goods and services. In procurement of goods and services, there is extensive use of local shopping [often from three suppliers], selective tendering [often using same firms], and sole sourcing. Unethical means like requesting for quotations by telephone and use of messenger are used. There are some basic rules for works procurement under Tender Board regulations that require entities to do open bidding, but often selective tendering is used. Rules cannot be found in one coordinated document. Procurement under all World Bank-financed projects follow World Bank guidelines and procurement procedures manuals are used for each project to cover for deficiencies in national rules.

8. Is the hierarchy of the sources of procurement rules well established? No

9. What is the scope of coverage for the procurement legal framework? Does it cover sub-national government? Does it include coverage of all government procurement including security and military procurement? The Tender Board regulations and the Ghana Supply Commission Law do not cover parastatals, and state commercial enterprises, which operate under their own rules, which are again not common to all.

10. Are there separate procurement rules established for parastatals? Describe. No

11. Is the procurement function decentralized? If so, describe basic structure, name the main decentralized procuring entities and indicate their role, rights, and responsibilities. Procurement is highly decentralized to Ministries, Departments, Agencies, Local Authorities, Parastatals and State

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Commercial Enterprises. But in most in most entities the procurement function is diffused among administrative functions instead of there being procurement units specifically responsible for procurement.

12. Is there an entity (ies) with oversight responsibilities for procurement functions throughout public administration (e.g., with primary regulatory powers, responsible for harmonization of rules and monitoring of compliance)? If so, identify and describe responsibilities and structure. NO

13. Is there a Central Tender Board or a similar institution? What are its duties and responsibilities? There is a Central Tender Board in the Ministry of Finance, which only adjudicates on works tenders only. Recently it got mandate to open tenders and conduct evaluation of bids for procurement of works above a defined threshold.

14. Does the system allow/facilitate the introduction of new and innovative techniques and contracting practices without compromising basic principles? In the absence of clear regulations, innovative officials can introduce them, but it is rarely done.

15. Are there rules/procedures regarding bidder suspension and debarment? NO

16. Is the country a member of regional trade/customs agreements? (If so, specify) Ghana is a member of Economic Commission for West African Countries.

17. Are there primary/secondary boycotts? (Specify) NONE

18. Are there provisions regarding preferences for particular categories of suppliers of goods, works and services? (Specify There is only the preferences allowed under Bank financed contracts under international competitive bidding procedure

19. Are there arbitration rules applicable to procurement contracts? Are they consistent with international rules such as those embodied in the UNCITRAL Model Law on Arbitration? (Highlight major differences) The Arbitration Law of Ghana governs arbitration.

20. Are there laws or regulations governing policies and procedures for awarding concessions/contracts for private sector provision/operation of power, water or other infrastructure facilities? (BOO, BOT, etc.) Do any general conditions of contract apply as a matter of law or regulation? Power, Water and Roads agencies have monopoly in their respective areas. There is no restriction on private sector participation. Rules are being prepared to encourage private sector participation.

BASIS OF TRANSPARENCY

1. Is there a legal or regulatory requirement for public disclosure of procurement legal texts? NO

2. Are there mandatory requirements for maintaining written records of procurement? To what extent are they available to the general public? The Financial Administration Regulations 1979 [being revised through a Financial Administration Bill 2003] requires records of all financial transactions be kept, and by implication including procurement filing. But the agencies rarely keep proper records. The records are not available to general public.

3. Are requirements for advertisement of contracting opportunities adequate? Does the country have a national gazette (or other similar publication) published in a timely fashion? Is it easily available to the general public? Advertisement requirements are not adequate and these. Adverts are not placed in the Government Gazette as it is rarely read by contractors and suppliers; newspaper are used as they are regularly published and widely.

4. Are requirements regarding public bid opening, if any, appropriate? No. Public Bid opening is not mandatory.

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5. Are negotiations after bid opening or award selection allowed? Do the rules on negotiated procurement, if any, provide the basis for a fair and transparent process? There is extensive use of negotiations under very unclear rules.

6. Are conditions for use of various procurement methods clearly established? Is there an explicit requirement that open competitive bidding is the preferred or default method? There are no clear conditions for use of various procurement methods for goods and services but there are rules for procurement of works, differentiating what goes by open tender and by other methods.

7. Is there a requirement for public notice of contract awards? NO

8. Are there clear and appropriate requirements for bid and contract securities? There are rules for performance securities but not for bid securities.

9. Are qualification requirements for bidders, if any, fair and appropriate for the purpose of the contract? These are not fair. Only registered contractors are qualified to bid.

10. Do requirements for bid examination and evaluation provide the basis for a rational and fair process? They are not fair. For example for works contracts District Assemblies require an engineer’s estimate in the tender box prior to bid opening and all bids below that estimate are rejected as too low to enable a contractor perform satisfactorily.

12. Are summaries of information about public procurement published (e.g. number of bids received, number of contracts awarded, names of successful bidders)? If so, describe scope and frequency. NO

13. Does government hold regular meetings with the business community to discuss public procurement issues? NO

14. Is there a conflict of interest policy in effect? (If so, describe its essential features). The Constitution has a provision for “code of conduct for public officers” which requires public officers not to put themselves in a position where their interest conflicts with the performance of their office.

15. Are there laws on bribery of government officials and are they enforced? Do government bidding documents and contracts contain anti-bribery and anti-corruption conditions? The penal code includes bribery as an offence; sometimes people are prosecuted if found to have been involved in bribery. No such conditions are specified in the bidding documents. The District Tender Board rules require Board Members to declare their assets to the Auditor General as long as they are members. This requirement is intended to deter Board Members from taking bribes. This is not enforced at all, nor is bribery taking checked.

BASIS OF ACCOUNTABILITY

1. Are government employees expected to follow a published code of ethics? If so, describe its basic features. Yes, the code of conduct for public officers contained in the Constitution and the civil service code of conduct provide that every public officer must not allow his private interest to affect or influence his official duties. These codes do not appear to be enforced.

2. Is there an accessible and secure process for bidders to report bribes by others and solicitation/extortion of bribes by government officials? No. Since there is excessive use of non-open tender procedures, bidders would not report for fear of not being selected for bidding opportunities.

3. Do bidders have adequate access to administrative or judicial review/appeal? Yes, but it is rarely used.

4. Are there measures/initiatives to curb/control corruption, e.g. anti-corruption statutes and/or bodies,

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whistle-blower statutes, comprehensive reforms of the civil service/judiciary, regional initiatives, provisions in the criminal law, anti-bribery provisions, etc.? (If so, describe). The criminal law contains provisions for curbing corruption. The private sector participation in anti-corruption is virtually absent. There are civil society groups formed to create awareness on the fight against on corruption and they report potential cases to government for action. Often Government prosecuting machinery does not take action and there is no provision in the constitution allowing for private prosecution which organizations like CHIRAJ could use. There is no anti-corruption bill but there is a Serious Fraud Office [SFO] that handles fraud and corrupt cases. There is a general perception that most cases handled by SFO are politically motivated.

Section B – Trade/Customs Practices

1. Are foreign firms engaged in trade with the country required to use a local agent? NO

2. Is there evidence of any trade malpractice affecting public sector procurement? There is evidence of under-invoicing to avoid payment of the proper duty.

3. Is inspection conducted according to generally established procedures? Are there indications that the inspection is not effective? Yes, but the procedures are slow.

4. Do preshipment/post-shipment inspection, if any, unduly increase the procurement lead-time? Yes, there is a post-shipment inspection conducted by four companies, two of whom are efficient and two are inefficient. The study conducted under the CPAR indicates that the inspection takes much longer than it should.

5. Is counter-trade used? Barter agreements? For what percentage of the country’s total trade? No

6. Are the ICC’s INCOTERMS generally understood and commonly used in the Country? Are other trade terms used? The terms are not commonly understood by ordinary importers, but FOB, CIF, C & F, and CIF terms are frequently used.

7. Are licensing and customs procedures generally transparent and efficient? YES

8. Are “facilitation” payments normally necessary to clear goods through customs, obtain work permits for expatriate labour, process monthly payment certificates/invoices? Honest traders do not resort to “facilitation” payments but fraudulent traders make use of “facilitation” payments to get their way through dishonest officers and avoid paying duty. There is a general perception that there is widely spread corruption as customs and ports official are take facilitation fees.

9. Are staff familiar with shipping and other trade documents? With documentary credits? YES

Section C - Financial/Budgetary Framework

1. Are banks capable of issuing Letters of Credit? Yes, but in most cases the process is much slower than wished by suppliers.

2. Are banks generally creditworthy? Yes, the Banking industry is stable, even though some banks like Rural Banks have low capital base and lend little.

4. Are the requirements for issuance of bid, performance, and other securities to suppliers/contractors reasonable? Yes, the only problem is that most suppliers and contractors lack adequate security.

5. Do suppliers/contractors have reasonable access to credit? Credit is available but most local suppliers/contractors lack adequate security and are discouraged by high interest rates [average 35%].

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6. Do implementing agencies obtain budgetary authorizations for contract payments falling due beyond the current financial year? Yes, usually agencies provide in their budget for contract funds that might overflow into the following year. If this is not done, there could be complications with payment as there would be no budget provision.

7. Are major projects or programs clearly identified in government budget estimates? Yes

8. What procedures are followed to ensure the procuring entity obtains budget authorization prior to inviting bids? There is a budget calendar that all public entities must follow. Normally entities should invite bids for contracts provided for in the budget but there are numerous cases where contracts have been entered into without budget provision. This one reason for debt to contractors in the roads sector.

9. Do procuring entities reliably receive the monies authorized? Or is the budget subject to revision during the year by a restrictive cash release system? Government disburses funds on quarterly basis, often very little in the first and second quarters. The procurement entity do not receive whole amounts for a particular contract at once. This is one cause of late payments to contractors. Late payments is a major cause of delay in project implementation due to contractors and suppliers slowing down or stopping work/delivery pending receiving due payments. This has encouraged corruption [bribery] to facilitate timely or early payment.

GENERAL RISK ASSESSMENT

1. Is staff working in public sector procurement area held in high regard? NO 2. Are pay levels for staff working on procurement comparable to that for other public and private sector technical

specialists? Procurement staff in the civil service earn normal civil service salaries. Those in PMUs working on Donor-financed projects earn high salaries equal to private sector. Those in parastatals earn better than their colleagues in civil service even though they do similar jobs. For example engineers in the Ghana Highways Authority earn more than their colleagues in the Departments of Urban Roads and in Feeder Roads, even though they carry out similar jobs.

3. Does a code of ethics exist that staff working in procurement are expected to follow? There is no specific code of ethics for procurement staff.

4. Are the authorities relating to procurement clearly delegated to the entities carrying out the process? Are the applicable procedures clearly defined? Authorities in almost all entities are not fully delegated; higher officials and politicians often interfere to influence the outcome of contract awards. There are no clear procurement procedures.

5. Are procurement decisions overridden by higher governmental agencies? If so, by whom? To what degree is the procurement decision-making process independent and based on transparent criteria? Decisions are often ridden by officials above procurement staff and politicians. Decision-making process is about 40% independent and is not based on transparent criteria. In some agencies like District Assemblies and some parastatals, the procurement function is taken over by administrators.

6. Does the highest level of government encourage/support/enforce compliance with existing procurement regulations? Are violations investigated and procurement/other responsible officials held accountable? There is little government encouragement/support/enforcement of compliance. There are no investigations unless there is a whistle blow [a rare occasion] on a very obviously flawed procurement action.

7. Are there indications suggesting price-fixing in open bidding? Price-fixing is widely practiced because it encouraged by the procedures followed, i.e. sole source, selective

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tendering and shopping procedures often using same firms, sometimes one firm is asked to complete all bids, requests of bids by telephone or messenger, post contract negotiations, and uncontrolled extensions of contracts.

ORGANIZATION

1. Is appropriate information on procurement adequately disseminated (i.e. procurement staff are aware of updated rules and thresholds, and other issues relevant to their assigned responsibilities)? No.

2. Are the procurement and supply management functions clearly distinguished?

3. Is contracting authority reasonably delegated (i.e. there are no unnecessary levels of approvals or cumbersome procedures)? Yes, in some parastatals and ministries of Roads and Works

4. Are the thresholds for contracting authorities regularly updated? No.

5. Do procuring entities have internal quality and control mechanisms? Are they regularly audited? There are no internal controls, no internal audit and external audits are often three years behind and hardly cover procurement sufficiently due to lack of clear rules against which to audit transactions.

6. Are procurement staff experienced in international procurement? Yes, in entities that carry out high value contracts like in roads, water and power etc. Under World Bank projects, proper ICB rules are rarely followed.

7. Do adequate formal and on-the-job training programs exist for entry- and higher-level staff that contribute to proper professional career development? Does knowledge of procurement lead to career advancement? Training is adhoc as there is really no procurement cadre or a defined procurement function in the public sector.

8. Are there additional training resources in the country that are currently utilized or that could be utilized to complement Government/donor-administered programs (e.g. universities and private institutions)? There are emerging some private companies like Ghana Supply Company that are now offering procurement training.

9. Did previous training programs (if any) lead to an obvious improvement in the quality/productivity of procurement work? Yes, procurement training organized through World Bank programs has had a very positive effect. It has interested a lot of people in procurement work and has begun to shape a procurement cadre in the public sector.

10. Do procurement staff have adequate project/contract management capabilities? It depends on the procuring entity. For example those who handle Donor-Finance projects and those handling large works contracts [like Ministry of Roads or Power] have adequate capabilities but all the rest do not have adequate capabilities.

11. Are procurement agents used? Under what circumstances? How are they selected? Describe normal basis for compensation and contract duration. Engineering firms are frequently used for works contracts but there is little use of procurement agents for goods and services. They are selected on basis of sole source or selective bidding.

12. Is procurement monitoring and administration computerized? How adequately do procurement entities track the key steps in the procurement process and collect appropriate project-related cost and schedule information? There is no procurement monitoring.

PROCUREMENT PLANNING

1. Are project implementation units adequately staffed with trained procurement, planning, scheduling, expediting and cost estimating personnel? Yes

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2. Is overall planning for complex goods, works and other contracts done in sufficient detail to produce realistic project definition, achievable completion schedules, and accurate cost estimates? NO. This is a major issue across all entities. In the entities that deal with works contracts, there are major issues of contracting on basis of incomplete designs, wrong technical options and over estimates for price and completion time.

3. Is the early technical and financial planning well coordinated so that projects are fully funded when work needs to begin, based on accurate cost estimates? NO

4. Are appropriate methodologies used to plan multiple inter-related procurement activities on large projects (e.g. the critical path method)? Procurement planning is very weak across all entities.

5. Are project components appropriately packaged for procurement purposes? Only for Donor financed projects.

6. Are completion schedules generally met for goods, works and consultant services contracts? If not, what is the major cause for slippage? Is sufficient time generally allowed for external reviews/clearances? Completion schedules are not generally met because of weak management capacity of procurement staff, poor procurement planning, unpredictable cash releases for payments and political interference. Generally time for reviews is not a problem, the problem is getting decisions made in a timely manner, particularly if there is interference.

7. Do procurement units regularly conduct market surveys to update their knowledge of prevailing prices for goods and works? Sometimes.

8. Are procedures and methodologies for planning procurement of recurrent items (i.e. inventory control, forecasting of future requirements, classification, coding, accounting/financial management, spare parts management, and delivery systems) adequate? NO

DOCUMENT PREPARATION

1. Do standard documents exist for goods, works and other types of contract? List. Are other international contract formats used? If so, identify. They exist for works contracts.

2. Are these documents, if any, readily adaptable to specific contract situations (i.e. by modifications made through a Bid Data Sheet, Special Conditions of Contract or similar)? They are straightforward documents based on British practice.

3. Are there separate documents for international and national competitive bidding not financed by the Bank? NO

4. Do Instructions to Bidders (ITBs) contain all information necessary to prepare responsive bids and clearly understand evaluation criteria and their method of application? YES

5. Do they contain other necessary information, such as eligibility requirements, basis of bid, language and currency of bids, common currency for purposes of evaluation, source and date of the exchange rate, etc.? Are sample forms and other appropriate sections of the documents provided? They contain a lot of information but they are not as well structured, as World Bank SBDs. Evaluation and contract award criteria are often very unacceptable. For example some entities use merit point system for evaluation of works giving e.g. price 50%, staff 20%, equipment 20%, etc. District Assemblies use engineer estimate as the basis of award, i.e. all bids below the estimate are disqualified.

6. Are bidders required to provide bid security in an appropriate amount as a condition of responsiveness of their bid? Not all the time.

7. Is pre- or post-qualification provided for? YES, but under very unclear rules.

8. Are qualification criteria appropriate and clearly described? Not in all cases.

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9. Are conditions of contract equitable? Do they provide adequate coverage for most important commercial and legal issues (for the method of procurement, size, nature and type of contract used) and provide adequate protection to the Government, without putting undue risk on bidders? In the absence of procurement procedures for goods and services, this is not possible. For works there is some element of equitable and adequate conditions.

10. Are standard purchase orders used for shopping? Yes in some entities.

PREQUALIFICATION 1. Is prequalification carried out when appropriate? What types of contracts is it used for? Works? Goods?

Other? No. The register of contractors is used as a pre-qualification method for works contracts. For goods and services, some agencies keep a register.

2. Is the prequalification process fair and transparent? Are decisions made promptly? Are foreign firms allowed to apply? Pre-qualification by registration is not transparent as some firms buy registration and the register is rarely updated. Foreign firms are allowed to register.

3. Are standard prequalification documents used? Do they clearly and completely describe all the prerequisites for submitting responsive applications for prequalification? Is financial information routinely requested and critically evaluated to assess an applicant’s financial capacity to perform? There are no prequalification documents.

4. Do procuring entities verify prior to contract award if a successful bidder continues to meet prequalification requirements? There is no evidence that this is done.

5. Are suppliers required to have a local agent in order to qualify to bid for goods or services?

6. Do procuring entities maintain updated lists of qualified suppliers and contractors and updated market information on commonly procured goods, including spares and consumables? Is supplier and contractor performance routinely evaluated and are any standing lists of prequalified suppliers and contractors updated and modified based on this information. Can newcomers readily apply and be qualified? Some entities keep the lists but there is no evidence these are updated. The rules for new comers to be registered are clear in the case of works but not for goods and services. In fact there is a perception that most entities keep the same list and keep on recycling invitations to bid between same firms.

7. Is the procedure for registration of domestic contractors fair, providing timely access to the bidding process to all potentially qualified bidders? Are bidders should be allowed to register by mail and, if the conditions in the country allow, through the internet? Registration rules are not clear; some firms buy registration and the current practice does not offer equal opportunity to all bidders.

Is registration permanently opened to bidders for registration or update, is there a Deadline imposed in relation to a specific bidding process? Is the time taken for Registration reasonable? Registration is in theory open throughout but the rules are not clear and there is no mechanism to

complain if denied registration.

ADVERTISEMENT

1. Are contracts to be awarded by competitive bidding publicly advertised? Ye s to some extent but often selective tendering and shopping procedures are used.

2. Is sufficient time allowed to obtain documents and prepare bids? While the Tender Board rules for works contracts require that bids be advertised in newspapers and radio, there is no mention of the number of

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days bidders should be given to respond.

3. Do the requirements specify use of publications or websites that are readily available to the public and are known to the private sector as sources of information on public procurement opportunities? No there is no mention of use of websites.

COMMUNICATIONS BETWEEN BIDDERS AND THE PROCURING AGENCY

1. Are requests for clarifications answered promptly and completely in a written form? No, there are cases where no response is given for such requests for clarifications. Most requests for clarification are neither answered on time nor properly answered. This is in any case not monitored.

2. Are clarifications, minutes of the pre-bid conference, if any, and modifications of the documents promptly communicated to all prospective bidders? There is no evidence that this is done, as it is not monitored.

3. Are bidders afforded sufficient time to revise their bids following a modification of the documents? In a few cases this is done in major works contracts.

4. Do procuring entities maintain accurate records of all communications with the bidders (before and after the deadline for submission)? Record keeping has been determined to be very poor across all entities.

RECEIPT OF BIDS AND OPENING

1. Are bids received prior to the deadline securely stored? Usually bids stay in a locked tender box till time of opening.

2. Are public bid openings conducted? Yes, for works contracts.

3. If so, are they conducted at a specified place closely following the deadline for submission? This is the rule and is often observed but there is a possibility that some bids opened by the Central Tender Board may not be opened at the place specified in the bidding documents.

4. What information is read out at the opening ceremony? Are minutes kept? Bidders name and bid price are read out and minutes kept.

5. Do bid opening procedures differ for goods, works or other types of contracts? If so, how? Bids for works contracts are opened publicly as per rules but as there are no rules for goods and services, various opening procedures are adopted by the entities.

BID EXAMINATION AND EVALUATION

1. Are evaluations conducted by qualified evaluating committees? Not all the time.

2. Are evaluating committees appointed ad hoc for each evaluation? This is done in a majority of Entities. In some entities there are separate evaluation committees for procurement of goods and works.

3. Is responsiveness determined on the basis of the documentary requirements described in the documents and according to established practice? There is evidence of entities not specifying the requirements and also of entities not following the specified requirements.

4. Are bid evaluations carried out thoroughly and on the basis of the criteria specified in the documents? Not in all cases.

5. Is the successful bidder’s qualification to perform the contract determined solely on the basis of the criteria stated in the documents? (See above) If not, what other criteria are considered? No, some bidders are

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disqualified on other criteria like a past failure to perform, even though it might not have been caused by the client’s failure to meet certain contract conditions.

6. Are evaluations normally completed within the original bid validity period? No

7. Are bid evaluation reports prepared containing all essential information (i.e. a clear and complete description of the evaluation process, including the reasons for rejecting any bid as non-responsive, how the stated evaluation criteria were applied, and how the successful bidder’s qualifications were verified)? The quality of the evaluation report varies from entity to entity.

8. Describe any significant differences between goods and works procurement relating to the above. Reports on bids for works contracts are often thorough as they are subject to a Tender Board review, which is not the case for bids for goods and services.

CONTRACT AWARD AND EFFECTIVENESS

1. Are contracts required to be awarded to the lowest evaluated responsive bidder who has been determined to be qualified to perform the contract satisfactorily? There is no such express requirement.

2. Are negotiations conducted with bidders, before or after selection? Usually before selection. This is one of the weakest aspects of the current procurement system.

3. Are additional Government approvals required before contracts can be made effective? Yes, for large contracts or some specific contracts with peculiar interests the Sector Ministers or Head of entity may require to approve contracts before they can be made effective. For Works contracts by MDAs, the Ministry of works has to approve them before any payments can be made.

4. Is performance security required in a reasonable amount and in a reasonable format? Yes, but performance security from insurance companies are impossible to collect and that is why they cost literally nothing and contractors prefer them to bank guarantees.

5. Describe any differences between goods and works relating to the above. NONE.

CONTRACT ADMINISTRATION

1. Are there manual or computerized procurement and/or contract monitoring systems? NO

2. Are suppliers and contractors generally paid on time? What is the normal time lapse from invoice submission to final payment? NO. There is evidence of payments not made for as long as three years.

3. Are there appropriate procedures to monitor delivery of goods and services to verify quantity, quality and timeliness? No. Partial deliveries and poor quality of delivered goods are some of the most serious procurement problems.

4. Are contract changes or variations handled promptly in accordance with the contract conditions and established practice (i.e. change/variation orders are given and/or confirmed in writing, constructive change orders are avoided, unit rates in the contract are honoured but the supplier or contractor is allowed to agree to any new unit rates introduced and the completion schedule for each change or variation, etc.)? No. This is one of the major causes of cost overruns, delayed completion and complaints by contractors.

5. Do procuring entities normally make a good faith attempt to resolve disagreements through informal negotiations? Sometimes

6. If this fails, are the resulting disputes handled in accordance with the contract conditions? Rarely

7. Are supplier and contractor claims handled fairly based on a clear recognition of both parties’ obligations under

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the contract? No

8. Are contract managers/administrators skilled in resolving problems in a timely manner and dealing with unforeseen circumstances arising during the life of the contract? Do they adequately document all actions of contractual import taken by the purchase/employer during implementation? No. Contract management skills are generally very deficient.

9. Are contractual remedies utilized only when appropriate and in accordance with the contract conditions? Very rarely.

10. Are contracts generally completed on schedule and within the originally approved contract price? Or are cost and time overruns frequent? If so, in which sectors and for which particular kinds of contracts? Are fair final acceptance procedures used and certificates issued in a timely fashion? Generally, contracts are not completed on schedule and within the originally approved contract price. Cases of re-negotiation abound. Most construction engineering works are not completed on schedule and in some cases re-negotiated up to three or four times before completion. The main reason for re-negotiation of prices is the inflationary trend in the economy, delayed payment for the work already done and political interference.

11. Are contracts generally administered in a fair and equitable manner (e.g. the purchaser/employer grants extensions of time when delays are attributable to its untimely action, fair compensation is provided to offset additional costs caused by its mistakes, etc.)? No. See item 10 above.

12. Are under-inspection, over-inspection and/or improper rejection of goods, materials or methods of carrying out the works a common problem? No. Payments are often delayed, damages are not claimed and interest payments on delayed payments are paid to contractors at the Bank rates of about 35%, so contractors do not worry about delayed payments as finally they collect huge interest payments.

13. Are disruptions of the supplier’s or contractor’s orderly performance common? Yes

14. Can any of the improper contract administrative practices identified above, be attributable to a problem identified in the local procurement environment? Specify This is caused by late payments, political interference that make it difficult for managers to terminate contracts, poor contract management and a change of government or management in case of parastatals.

15. Are procurement evaluations/audits conducted? If so, describe scope, frequency, which carries them out, etc. No

RECORD KEEPING

1. For contracts to be awarded on the basis of competitive bidding, does the procuring entity maintain a complete record of the process? This would include e.g. copies of all public advertisements, prequalification documents (if used), the prequalification evaluation report documenting any decisions not to prequalify certain potential bidders, the bidding documents and any addenda, a record of any pre-bid meetings, the bid opening minutes, the final bid evaluation report (including a detailed record of the reasons used to accept or reject each bid, copies of bids, appeals against procedures or award recommendations, a signed copy of the final contract and any performance and advance payment securities issued, etc Record keeping is poor in all entities, even in Bank-financed projects.

2. Are adequate contract administration records maintained? (These would include contractual notices issued by the supplier, contractor, purchaser or employer; a detailed record of all change or variation orders issued affecting the scope, quantities, timing or price of the contract; records of invoices and payments; certificates of inspection, acceptance and completion; records of claims and disputes and their outcome; etc.) Same as above.

3. For small contracts or purchase orders for goods procured using shopping procedures, is a database maintained showing the current market price for commonly needed items? Very rarely

4. Are periodic reports prepared on overall procurement activities? By and for whom? No

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Section E - Public Sector Selection of Consultants

1. Are procuring entities capable of carrying out a professional selection process for consultant services? Do they administer consultant contracts effectively? No. Many entities do not ensure quality performance before payment. There cases of consultants who have abandoned work due to poor administration and failure to effect payment in a timely manner.

2. Is the winning consultant firm normally chosen by comparing competitive proposals submitted by a list of qualified firms? Where do implementing agencies obtain the information necessary to develop lists? Specify what other methods are used and when they are used. There are no rules for selection of consultants. Entities normally have lists of known consultants.

3. Do requests for proposals clearly describe the selection process and evaluation criteria? NO

4. Do the Terms of Reference describe the requirements of the assignment clearly and completely, including background, scope and objectives, deliverables, time frame, anticipated staff-time, and government contributions? No

5. Is selection based only on technical considerations or also on price? There are no clear rules on how selection is done; sometimes selection is treated like procurement of goods.

6. Are technical criteria detailed and appropriate and their relative weights reasonable?

7. If price is also a selection factor, are technical evaluations completed before opening and consideration of price proposals? Are the relative weights chosen for each factor appropriate? No

8. Are there standard conditions of contract? Are they fair and equitable to the consultant? Do they adequately protect the interests of the client? No

9. What form of compensation is used? Unit rates? Lump sum based on milestones? Other? Usually lump-sum contracts and unit rates are used.

10. Are consultants required to submit proposal, performance and/or advance payment securities? No

11. Is there a conflict of interest policy provision included in the conditions of contract? (If so, describe) No

12. Are evaluations conducted by committees with appropriate expertise? Yes

13. Are general criteria broken down into appropriate detailed criteria agreed by the evaluating committee before conducting the evaluation? No

14. Are all criteria applied consistently, fairly and impartially by the evaluators? Are the individual score sheets kept as part of the procurement record? No

15. Are evaluations conducted individually by each member of the committee and the results averaged? NO

16. Are new factors or weights added after the issuance of the request for proposals, which are considered during the evaluation? This a likely event.

17. Are evaluation reports prepared containing essential details of the process, results, and matters to be taken up during contract negotiations? Reports are often poor due to lack of selection rules.

18. Are evaluations normally completed within the time originally requested for the validity of proposals? No.

Section F - Procurement Performance

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STATISTICS

1. What are the approximate annual values of public procurement for goods, works, and consultant services, respectively? If possible, distinguish between procurement for projects and ongoing programs. Approximate value is US$ 600 million average for FY 2001-2003 (2003 is estimated) and breakdown is not available.

2. What are the approximate percentages of goods, works, and consultant services financed by external donors? The data is not available

3. What percentage of public procurement follows competitive bidding procedures? Other Methods? The data is not available.

4. What percentage of competitively bid procurement is donor financed? The data is not available.

GENERAL EXPERIENCE

1. Are government organizations generally perceived by suppliers/contractors/consultants/the public as fair and efficient in their procurement practices? They are not perceived to be efficient. The suppliers/contractors/consultants complain of poor attitude of public staff, lengthy payment process, failure to make payments in a timely manner and demand for facilitation fees.

2. Which of the following factors are considered to be problems by persons familiar with public procurement in the country?

Yes

No

Inappropriate or outdated laws and regulations X

Poor compliance with and enforcement of existing laws X

Poor information about procurement needs X

Shortage of experienced professional staff X

Poor training of procurement staff X

Low pay for procurement staff X

Poor procurement training X

Weak procurement planning X

Poor procurement methods and procedures X

Lack of good standard procurement documents X

Poor technical specifications (Goods only? Works?) X

Cumbersome contract approval procedures X

Lack of clear delegation of contracting authority X

Interference by higher level officials X

Inadequate appeals mechanism X

Lack of anti-corruption measures and enforcement X

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EXPERIENCE WITH WORLD BANK-ASSISTED PROJECTS

1. How many Bank projects have been completed in the country? Are now underway? In which sectors?

So far the Bank has financed 136 Loans, credits and grants in Ghana, of which 20 projects are on-going as of December 2002 with a total un-disbursed amount of US$ 600, million. The financial data is as follows:

Amount in US$ million

Total principal sum 4458

Disbursed 3850

Cancelled 135

Undisbursed amount 600

The projects are in Agriculture and Rural development, Infrastructure, Human Development [i.e. Education, Health, HIV/Aids, Community Development] and in Private and Financial Development Sectors.

2. Which organizations have been responsible for procurement on these projects? Almost all public entities.

3. What thresholds for ICB, IS, NS, and prior review for goods, works, and consultant services are currently in effect for ongoing projects? Are they the same for all projects? How long have they been in effect? Goods - US$100,000; WORKS – US$500,000-2,000,000; CONSULTANTS: FIRM – US$100,000, INDIVIDUAL – US$50,000. These normally apply for all projects.

4. Do project audits/completion reports/supervision reports indicate significant procurement problems? Have any cases of misprocurement occurred? Describe. Yes. SOE and procurement audit reveal problems in all sectors especially in the use of the shopping, sole source and selective tendering methods. Cases of possible mis-procurement have been detected while mis-procurement has been declared on two contracts.

5. Have procurement issues caused serious implementation delays, cost overruns, and disbursement delays? Describe. The main causes of delay are (a) lack of capacity in the entities, (b) inordinate delays in clearing goods at the port; (c) delayed payments to suppliers/contractors; and (d) lack of applying remedies in case of poor performance by suppliers, contractors and consultants.

6. Does the Bank receive a large number of complaints about procurement procedures, selection decisions in the country? Yes.

7. Are contracts generally awarded within the planned, usual time frame that would be required for similar operations by other experienced and efficient organizations? No

8. Are there serious problems or conflicts between national and/or local practices and World Bank guidelines, which should be, addressed on an interim basis pending implementation of recommended long-term action plans? There major conflicts. These are resolved by requiring projects to use specially prepared Procurement Procedures Manuals.

Section G - Private Sector Procurement

1. Is there a reasonably well-developed private sector, which freely trades goods and procures works and other services? Yes

2. Does the private sector compete actively in opportunities advertised by the government? Is this evidenced by number of bids/proposals received when open competition is sought? Yes. The private sector is often attracted by

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Bank financed contracts because they are sure of payment, transparent rules and equal treatment.

3. Do private sector companies feel comfortable in exercising their right to complain or seek remedies under the public procurement system (to the extent the system provides for this right)? Yes. This is now happening as a result of including the private sector in procurement seminars where they learn about their rights and how Bank financed procurement is conducted.

4. What is the performance record of private sector companies on government contracts? (Is there evidence of deliberate under pricing, poor performance on government contracts or excessive price increases after contract award during performance)? Performance rating is a mixture of poor and satisfactory depending on the entity. Yes, there is evidence of deliberate under pricing, poor performance, excessive delays in completion and excessive cost overruns.

5. Is there evidence that private sector companies are aware of requirements and have the capacity to submit acceptable bids/proposals (i.e. understand the system)? Are many bids/proposals rejected for procedural reasons? Yes. Many bids are rejected for failure to submit bid securities in the form of bank guarantees and in the required amounts.

6. Has there been any experience with private sector contracts for the provision, operation, maintenance of infrastructure for various public services (BOO/BOT/BOOT/etc.)? Describe. No

7. Do private sector companies have access to commercial loans at a reasonable interest rate? No. The commercial rates are over 35%. The 2003 Budget statement indicates that Government will improve land titling processes in order to enable private sector have securities for bank credit.

8. Are bonds commonly used? Is so, is there a regulatory authority overseeing the activities of bonding companies? Is there a mechanism to suspend companies that have not honoured their obligations to pay or execute bonds? Is there a satisfactory track record of calling of bonds? Yes, the National Insurance Commission oversees the activities of the insurance industry and suspends companies that have not honoured their obligations. There is no evidence of a satisfactory track record of calling of bonds, as the are rarely claimed.

SECTION H - EMERGING AREAS OF INTEREST

1. Is military expenditure covered by the public procurement systems laws and regulations? Briefly

describe coverage and exceptions. We have not reviewed procurement under military expenditures.

2. Does the public procurement system and accompanying control environment (including the financial accountability system) control the flow of funds so as to ensure that funds budgeted for valid expenditures are not diverted to finance illicit activities (e.g. money laundering, terrorism)? No

3. Does the country have policies aimed at promoting environmentally and socially responsible procurement? Briefly describe coverage or initiatives that will contribute to such procurement practices. There are very minimal policies.

Summary Assessment of Risk

RISK TO BE MANAGED RATING 1. Loss of economy and inefficiency in procurement H 2. The exclusion of certain eligible bidders from competing for bids

H

3. Unfair and inequitable treatment of suppliers and contractors H

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4. Lack of integrity, fairness and public confidence M

L=Low, M- Medium, H-High

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ANNEX 7 :

CPPR 2002 ACTION PLAN

No Issues Root cause Action Indicator

Deadline for starting the Action

Responsible Entity/person

Status of implementation as on March 30, 2003

1 Effectiveness Delays (Achieving credit effectiveness within 6 months.

1. Leaving outstanding issues unresolved and making these conditions of effectiveness 2. Inadequate stakeholder consultation, including early briefing of Parliamentarians.

1. Complete all stakeholder consultation, technical, financing, policy fiduciary and implementation aspects before negotiations. 2. Bring on board MOF and AG’s office early in the preparation.

Confirmation that there are no outstanding issues at negotiations.

All new projects not appraised as at July 1, 2002

MDAs, MOF and WBCD/TTL

BEING ACTED ON

No Issues Root cause Action Indicator Deadline for starting the Action


Status of implementation

2 Slow pace of project implementation (increase pace of resource utilization)

1. Inadequately prepared Project Implementation Manuals [PIM], Annual Workplans/Budget [WAP/B], and Procurement Plans [PP], and non-adherence to these.

1. For all on-going projects; update PIM and current AWP/B; submit the updates to the responsible Minister for approval and upon approval submission to the Minister of Finance for information,

Updates and Plans submitted to MOF.

August 31, 2002

Project Managers, Ministers, MOF//WBD and TTLs

PARTIALLY BEING ACTED ON

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2. Inadequate review procedures.

review and comments (if any). 2. For all on-going projects; prepare AWP/Bs and PPs for FY 2003; submit these to the responsible Minister for approval and upon approval submission to the Minister of Finance for information, review and comments (if any). 3. Review progress semiannually and send report to MOF

Plans submitted to MOF. Review meetings held and reports prepared.

September 30 2003, and thereafter prepared annually by September 30. Review reports sent to MOF within 2 weeks of the review meeting.

No Issues Root cause Action Indicator Deadline for starting the Action


Status of implementation

3. Weak Monitoring and Evaluation systems (all projects need to monitor and evaluate performance and impact)

1. M & E not considered a useful management tool, 2. Unclear roles and responsibilities for M&E.

1. All projects to update key indicators in the PIM and develop and operationalize M & E systems

M&E systems produced.

December 31, 2002

Project Managers, TTLs and MOF/WBD

NOT ACTED UPON

4 Mainstreaming PMUs (use of existing MDA structures; Consultants and/or

Creation of parallel systems [hence lack of ownership] and unclear roles and responsibilities of

Develop transition plans linked to the MTEF

PMUs mainstreamed and transition plans developed.

All new projects MDAs and TTLs PARTIALLY BEING ACTED UPON

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Technical Assistance to be used only where necessary).

MDA line managers.

5. Sustainability Inadequate financing, planning and capacity for post-credit portfolio support

Develop transitional plans linked to the MTEF

Transition plans developed

Ongoing projects immediately. Those closing June 2002, 3 months after

Project Managers/TTLs

NOT ACTED ON

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ANNEX 10:

CUSTOMS AND PORTS CLEARANCE PROCEDURES

EXECUTIVE SUMMARY

1.0 INTRODUCTION

The importance of Customs and Port Clearance procedures in Ghana’s trade with the rest of the world is a vital one especially, in the wake of Ghana’s vision to strive to become the gateway to West Africa in international trade. There are several obstacles in the way of Ghana attaining her avowed status indicated above. There are problems of under-developed infrastructure as typified by inadequate berthing space, under-capacity cargo handling equipment, bad roads, obsolete and largely inoperative railway system and an under-developed telecommunication system. There is also the problem of cumbersome procedures for clearing cargo, which invariably has always led to delays in clearance.

2.0 TERMS OF REFERENCE This report is tasked to critically assess the Customs and Ports Clearance system, particularly within the context of the World Bank financed Trade and Investment Gateway Project, and come up with recommendations as to how efficiency and economy can be improved to enhance better procurement practices and utilization of public resources.

3.0 METHODOLOGY Methodologies employed by me include face to face interviews with various stakeholders in the goods clearance industry, administration of questionnaires to selected importers, field studies, internet search, information search from manuals and reports and in one case telephone interview. Key stakeholders interviewed included Customs, Excise and Preventive Service (CEPS), Ghana Ports and Habour Authority (GPHA), the Co-coordinator’s Secretariat of the Gateway Project at CEPS and selected importers. Others were the Tema Container Terminal, the Gateway Services Limited, the Controller and Accountant General’s Department, Ministry of Finance and the Ghana Shipper’s Council.

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4.0 THE PROCESS

4.1 DESTINATION INSPECTION

Customs and Ports Clearance procedures begin with the application by the importer for the Final Clean Valuation Report, which is issued by any one of four (4) inspection companies after validating the import.

4.2 FINDINGS Importers, more often than not, tend to flout the prescribed arrangement for inspection, which requires that they lodge their advance shipping documents, twenty one (21) days prior to arrival of the vessel, with the inspection company. There is also the issue of false declaration by unscrupulous customs house agents with a view to avoiding duty payment. The 21-day period for document verification is too long in the light of modern developments and improvements in information technology and transport.

4. 3 RECOMMENDATIONS Public education on the need for efficient planning of imports including progressing of orders is required. The determination of a more realistic time-table for the submission of shipping documents for import validation purposes. Random physical inspection of selected low risk (yellow) FVCR goods will keep customs house agent on their toes to refrain from fraudulent deals.

5.0 SECURING IMPORT DUTY AND TAX LIABILITY

Import Duty, Value Added Tax (VAT) and other levies may be paid prior to Entry of the cargo by cash or certified cheque to CEPS. 5.1 EXEMPTIONS/TREASURY CREDIT NOTES (TCNs) Alternatively, such liability may be secured by exemption letters duly approved by Parliament or Treasury Credit Notes (TCNs) issued by the Controller and Accountant General’s Office.

5.2 PERMITS Permits may be issued for the clearance of goods, which qualify for statutory exemption or for which specific budgetary allocation has been provided for the payment of duties and other related taxes and levies.

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5.3 RECOMMENDATIONS Streamlining of the process of issue of both the exemptions and TNC through a specially equipped one-stop secretariat. Ministries Departments and Agencies (MDAs) of government may be permitted to use fax documents to initiate processing of exemptions and TCNs and only submit original documents to confirm their claim at the point of collection of the approved exemption/TCN. Procurement planning must include provisions for expedited customs and ports clearance.

6.0 CARGO ENTRY AND CLEARANCE

6.1 TEMA PORT DOCUMENTATION - FINDINGS The information system used for processing and verification of the customs entry form, Single Administrative Document (SAD), is known as the Automated System for Customs Data (ASSYCUDA). It is a semi-automated system.

6.2 ISSUES �� Capacity of the computer room to process documents is not up to par. �� Entry is only permitted to begin with the berthing of vessel. �� Errors in declaration. �� Errors in Cargo Manifest. �� Frequent interruptions due to power failure (back up power generator is unreliable) �� The chances of document misplacement are real. �� In most part, Customs officials behave as though they were doing declarant a favour and

ought to be rewarded for it fittingly.

6.3 RECOMMENDATIONS Full automation of the system of clearance i.e. full application of the GCNET. �� Continuous training of Declarants and Customs Officers. �� Improvement in the remuneration and conditions of service of the Customs Officer. �� Penalty imposition on carriers for errors in manifest.

7.0 OUTDOOR ACTIVITIES – FINDINGS 1. Lack of linkages and co-ordination between the Customs Long Room on

one hand, and outdoor operations including those of GPHA and Shipping Companies/Agents often leads to delayed positioning of cargo for examination.

2. Payment for handling charges is centralized at one revenue collection point, which creates congestion and gives way to corrupt practices.

3. Cargo handling is still largely concentrated in the hands of GPHA despite gains made by Tema Container Terminal in the last year.

4. Insufficient capacity in terms of handling equipment. 5. Physical examination of goods has been scaled down to about 60%

physical turnout under the Gateway Project due to the advent of x-ray examinations.

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6. Cargo examination and release takes between 24 to 30 hours in the main port as opposed to 6 hours at the Tema Container Terminal. However, throughput time has decreased significantly, resulting in about 140% increase in transit cargo and almost 300% increase in trans-shipment, though, this is partly due to political unrest in La Cote d’Ivoire.

7.1 RECOMMENDATIONS

��Complete automation of clearance process. ��Total privatization of cargo handling operations both shore-based and land-

based.

7.2 THE GHANA TRADE AND INVESTMENT GATEWAY PROJECT

As part of the strategies to attain middle income status by the year 2002, the Ghana Trade and Investment Gateway Project was initiated with the objective to make Ghana the trade and investment gateway to West Africa and to increase the participation of the private sector in development of the national economy. The project, as an integral part of the Ghana Trade and Investment Gateway Programme, is designed to attract a critical mass of export oriented investors needed to accelerate development and also to facilitate trade. A major objective of the project is the modernization of the frontline agencies, which are the first points of contact by investors by re-engineering them into trade facilitators. CEPS are arguably, the most important and sensitive of such agencies. The overall expectation from CEPS is the reduction of the cost of doing business in the country, which will contribute to the facilitation of both domestic and international trade.

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7.3 THE GHANA COMMUNITY NETWORK SYSTEM (GCNET)

AND CARGO CLEARANCE The GCNET in a nutshell is an information technology solution designed to facilitate a fast and effective processing of customs related operations. The pilot scheme of the GCNET is currently operational at Kotoka International Airport (KIA).

7.4 IMPACT OF THE GCNET

Dramatic improvement in speed and reliability compared to the Assycuda. Manifest verification and validation of declaration is done scientifically without any human failings and interruptions. Manual procedures in the CEPS Long Room such as face vet, computer input, accounts verification, numbering, detaching and dispatching are all eliminated. In principle, this could limit or even eradicate the incidence of corruption. The Ghana Customs Management System, GCMS, has an in built correction system, which sends an immediate feedback to declarants listing all errors for immediate correction. Cargo examination is reduced from 100% to 10% for statutory free goods and 20% for all dutiable goods. Declarants have ready access to customs database containing customs codes, regimes tariffs and exchange rates, which cut down on chances of making errors in the entry.

7.4 DRAWBACKS

For low risk cargo, a fraudulent importer with the connivance of a foreign supplier and a compliant customs house agent could under-declare quantity or intentionally misclassify his import cargo in the absence of x-ray examination. Only part of the text of the Harmonized System Code is displayed on the screen, which may not be helpful for effective classification. The system does not provide sufficient space for a detailed record of examination.

7.5 RECOMMENDATIONS

Institution of random examination, no matter how infrequent, shall keep importers of low risk cargo on their toes. The provision of x-ray examination as is being done at Tema is another control measure. Improvement in the software package for the system to provide full coverage of the clearing process.

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8.0 TAKORADI PORT

Though smaller in size than Tema, Takoradi port possesses excess capacity for its current level of clearance activity and clearance here is faster than at Tema. Cargo delivery for low inbound traffic however, is uneconomic which is also complicated by a dearth of ship support services such as dry dock facilities and victuals. In the main part, importers themselves seem to be oblivious of the facilities at Takoradi or tend to avoid it out of habit of being used to Tema. RECOMMENDATIONS

Sustained public education on the gains of using the port at Takoradi as against

Tema, e.g. ��Faster clearance times ��Less incidence of demurrage ��Better handling of cargo ��Good road to Kumasi and beyond ��Cheaper hotel rates ��Abundance of haulage trucks that mostly return empty to the hinterland

after delivery of timber products. Provision of Support Services by government or the creation of an enabling environment for private participation in their provision.

9.0 LAND FRONTIERS

Traffic through these frontiers is usually limited to Intra-Ecowas trade. Processing of cargo at the land frontier is much simpler than at the ports. Imports are examined directly without any document processing except for the verification of invoices. Duties and taxes are subsequently computed for importers to pay. Release is instantaneous following duty payment.

9.1 THE PROPOSED INLAND PORT OF BOANKRA

The project is yet to take off and therefore inspite of all the envisaged benefits, it will suffice to say that, it has the potential to considerably ease the pressure on Tema Port as far as cargo clearance is concerned. There are indications that work on the construction of this port will begin before the end of this year following completion of feasibility studies.

9.2 WAREHOUSING

Basically, there are two ways in which warehousing may be proceed: i) Bonded Warehousing ii) State Warehousing

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9.3 BONDED WAREHOUSING

This is an alternative regime to Home Consumption to which import cargo may be cleared. Effectively, this means a deferral of duty payment and transfer of cargo into a bonded warehouse situated outside the port area. Declaration to this regime may also be due to an importer’s inability to secure a mandatory permit or certificate for clearance.

9.4 IMPLICATIONS FOR EFFECTIVE GOODS PROCUREMENT

This facility makes it possible to clear imported cargo in bits as and when an importer finds money to pay duty and other taxes and levies. For transit cargo, it may provide a temporary abode while arrangements are being made to move cargo across country. For security reasons, it may be a better way of warehousing bulk cargo imported under a bank guarantee for purposes of monitoring and accountability. In all these cases, bonded warehousing frees up significant space in the port area and therefore facilitates the attainment of optimum throughput of cargo.

9.5 RECOMMENDATIONS

Government must encourage bonded warehousing as a way of facilitating customs and ports clearance in line with the objectives of the gateway project. The modalities for bonded warehousing must be streamlined to make the process simple, efficient and secure. Any attempt to discourage bonded warehousing, as was made in recent years by CEPS regulations for reasons of deferred duty payment must be weighed against the wider benefits of improvement in international trade. After all, on a sustainable basis, bonded warehousing enhances revenue collection by enhancing import throughput both in the short run and in the long run.

10.0 STATE WAREHOUSING

This represents storage facility for goods imported into the country which one way or the other fall short of the regulations governing import and clearance procedures. There are basically two ways imported goods may find their way to the state warehouse.

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10.1 THE UNCLEARED CARGO LIST

Under the customs regulations, imported goods that are entered but not cleared after twenty-one (21) days of discharge of goods from the vessel shall be transferred to the state warehouse under the cover of Uncleared Cargo List (UCL).

10.2 DETENTION GOODS

Prohibited goods or goods requiring special permits that are detained pending investigations shall also be sent to the state warehouse under the cover of detention receipt.

10.3 REASONS FOR NON-CLEARANCE OF CARGO EXCESSIVE TAXES

Occasional importers may find the import duties, taxes and levies imposed on their goods too high and choose to abandon such goods.

i) Inability of importers to raise funds to pay duty taxes and levies in time. ii) Default in freight settlements, demurrage and port handling charges. iii) Delayed acquisition of necessary clearance documents including

permits, licenses and reports. iv) Goods are sometimes imported only to ensure that government votes are utilized even when such goods may never be needed.

11.0 TAX CUT

Import duties, despite government’s good intentions, are too high for most goods. A reduction in duty and tax rates shall go a long way towards eliminating smuggling, under-invoicing and under-declaration of the quantum of imports. Revenue redeemed from these underground dealings could more than compensate for lost revenue emanating from tax cuts. Imported goods would become affordable to the ordinary man resulting in a higher standard of living.

11.1 REALISTIC NATIONAL BUDGET

The National Budget must be based on the justified real needs of Ministries, Departments and Agencies, MDA to eliminate wastage.

11.2 SCHEDULING OF DUTY PAYMENT

This implies spreading out duty payment over a period of time. For credible institutional importers and distinguished individuals, this facility will serve to expand trade and facilitate import clearance, provided sufficient safeguards are exercised to avert tax evasion.

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11.3 TRANSIT CARGO AND TRANS-SHIPMENT Transit and trans-shipment cargo throughput has increased considerably in the past two or three years, though this is partly due to the political instability in La Cote d’Ivoire. In the main, however, this increase in transit and trans-shipment activity is due to improvements in our customs and port clearance system.

11.4 CONCLUSIONS

Customs and Port Clearance procedures have been rather cumbersome in the past, leading to delays in the clearance of cargo. Reasons for this trend have ranged from poor procurement planning which is often lacking in effective progressing of orders and bereft of adequate provision for custom clearance, through poor infrastructure, fractured and disjointed information technology systems and customs processes and procedures that have tended to be skewed towards revenue collection. The attitude of customs officials, particularly the junior officer corp, has not been particularly helpful to the course of efficient cargo clearance. Many of them have tended to put their personal interest of lining their pockets, in the light of woefully poor conditions of service and salary levels, above the interest of the state, i.e. the promotion and enhancement of trade with the rest of the world. In recent times, efforts have been made to improve the infrastructure situation and also information technology systems deployed in processing cargo clearance. Thanks to the Gateway Project. This has led to dramatic improvements in the throughput time of cargo.

12.0 CUSTOMS AND PORTS CLEARANCE PROCEDURES

12.1 INTRODUCTION

Customs and Ports Clearance Procedures represent the tail-end activities leading to the delivery of procured goods to the premises of the indenter. It is a vital link in the procurement process and any delays at this stage may lead to untold additional costs in the form of rents and demurrage and also physical deterioration. Yet, it is one stage that has often been embroiled with cumbersome bureaucratic processes. The objective of this report is to critically analyze the system of goods clearance at the major entry points in the country against the background of the rules that govern their operation. The methodologies I employed include face to face interviews with various stakeholders in the goods clearance industry, administration of questionnaires to selected importers, field studies, internet search, information search from manuals and reports and in one case telephone interview. Key stakeholders interviewed included Customs, Excise and Preventive Service (CEPS), Ghana Ports and Habour Authority (GPHA). The co-coordinator’s secretariat of the Gateway Project at CEPS and selected importers. Others were the Tema Container Terminal, the Controller and Accountant General’s Department and the Parliament.

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My expectation is that, I would have identified all the major bottlenecks in clearance procedures by the end of my report as well as efficiency enhancing features, which will then enable me to propose practicable recommendations for the improvement of the process.

12.2 PREAMBLE

Customs and Ports Clearance procedures form a vital link in the standard procurement procedures of Ghana. A critical evaluation of its effectiveness in enhancing the procurement process in any exercise that seeks to streamline the procurement system in Ghana cannot be over-emphasized. Without a doubt, the legislative instrument, that sets out the functions and roles of Customs, Excise and Preventive Service (CEPS) places a great deal of emphasis on the collection of import duties by CEPS at all ports of entry and for good reasons. Indirect taxes form over 70% of total government revenue in Ghana. It is, therefore not surprising to note that customs clearance procedures tend to be skewed towards revenue collection. The promulgation of the CEPS law, 1986 (PNDCL.144), as a separate enactment has given rise to the need to consolidate all major enactments relating to the collection and management of the revenues collectable and accountable by CEPS. In fact, the CEPS (management) Law, 1993, states clearly that the object and function of the Customs, Excise and Preventive Service is to collect and account for all duties taxes, revenue and penalties payable under this law. Revenue collection ranks as the number one function of CEPS to which all other functions must be subservient. Of course, this is not by any means a suggestion that CEPS is not alive to its other functions of checking smuggling and prohibited imports, regulating the process of clearance of goods. There is, however, the need to review the role of the functional responsibilities of CEPS in facilitating clearance of goods in our ports, within the wider context of expanded trade, which the export and import act of 1995 seeks to promote among other things. Specifically, this act seeks to revise the laws relating to external trade and to provide conditions for the optimum development and efficient conduct of Ghana’s export and import trade. It prescribes the completion of Exchange control form A2 and Ghana Export form as control documents for exports of traditional and non-traditional exports respectively. An exporter shall submit the completed Exchange Control Form A2 or the completed Ghana Export Form to the Commissioner of customs Excise and Preventive Service, CEPS, at the time of exportation. An exchange control form A2 shall be used for only one export transaction and shall be valid for three months from the date of endorsement by the Bank of Ghana subject to renewal for a further period of three months. In the case of overland export of logs and unprocessed lumber, the validity of the Exchange Control Form A2 shall expire after one (1) month. Where an exporter is required

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to obtain a permit, license or certificate for the exportation of any category of goods, under any other enactment, that person shall produce to the Commissioner, at the time of exportation, a certified copy of the permit, license or certificate in addition to any other documentation required to be furnished or produced under the act.

12.3 COMMERCIAL IMPORTS

The act also stipulates that any person desiring to import goods into Ghana for commercial purposes shall complete an import declaration form, IDF, showing the nature of the import, the value and the origin. For the purpose of ensuring that the quality, quantity and price and other specifications of the import conform to the particulars declared on the IDF, invoice, Bill of lading and other related documents, all commercial imports shall be subjected to inspection, initially carried out on pre-shipment basis but now converted to destination inspection since 1999. Upon validation of the import, the inspection company may issue the Final Clean Valuation Report (FVCR) to cover such import for its clearance through any point of entry. Like exports, where an importer is required under any other enactment to obtain a permit, licence or certificate for the importation of any category of goods, that person shall produce to the Commissioner of CEPS a certified copy of the permit, licence or certificate in addition to any other documentation required to be furnished or produced under the act before taking delivery of the goods.

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13.0 CUSTOMS AND PORTS CLEARANCE PROCEDURES

13.1 DESTINATION INSPECTION Customs and ports clearance procedures start with the application by the importer for the Final Clean Valuation Report (FCVR) from the inspection companies numbering four (4) in all. These are:

i) Gateway Services Limited ii) Bivak International iii) Ghana Link Network Service, and iv) Inspection and Control Services

Each of these has its specified intervention area based on geographical location of the exporting country.

13.2 INSPECTION PROCESS An importer has to submit a copy of his commercial invoice together with his import declaration form. IDF, duly completed, to the inspection company twenty-one (21) days before the vessel carrying his goods arrives at the Ghanaian port. This is to allow the inspection company sufficient time to conduct all investigations necessary to validate the import before issuing the FCVR. Furthermore, the importer must furnish the inspection company with the final invoice as well as the original bill of lading seven (7) days before the FCVR is to be issued. In performing its function of price-verification, the inspection companies utilize the rule of transaction value, which refers to the normal price generally paid or payable for the goods when sold for export to the country of importation. One distinct advantage that inspection company officials readily point to is that destination inspection puts the functions of determining the appropriate value of imports, quality and quantity verification in the hands of the customs authorities of the importing country. In this way, professionalism and commitment to duty are optimized.

Another clear advantage of destination inspection is the involvement of inspection companies in the physical inspection of goods, which adds Department and width to the hitherto unilateral physical inspection by CEPS. However the provisions regarding the submission of advance documents are unrealistic for all practical purposes. Improvement Information Communication and Technology as well as in transportation have drastically cut down the time that is required to conclude an international trade transaction. The three (3) weeks

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notification period required for the completion of destination inspection is therefore too long. In fact, in the case of airfreight, three (3) weeks may be all the time it takes to conclude an international trade transaction. Inspection companies take advantage of this to cover up their own inefficiencies. It could also be argued that destination inspection as opposed the pre-shipment inspection does not adequately protect the importer against acts of fraud such as short-shipment and the shipping of inferior goods which are only ascertained after arriving in the country. Though this is the subject of another discussion it is relevant to mention that re-export may be implied here putting more pressure on port facilities. This issue may be dealt with in the terms of the trade contract and may be resolved by arbitration but such course of action may not adequately compensate the importer for his time wasted and lost opportunity. 13.3 ISSUES More often than not importers flout the prescribed arrangement for inspection. It is a normal sight to see importers submit the application for destination inspection days after the vessel carrying their goods has arrived at the Ghanaian port of destination. Under such circumstances importers try various means to circumvent or short circuit the procedure and when that fails, as it should, blame is unduly apportioned to the inspection companies for delayed processing. There is also the issue of deliberate false declaration by unscrupulous customs house agents with a view to avoiding duty payment. The 21-day period for document verification is too long in the light of modern development in information technology. 13.4 RECOMMENDATIONS

Penalty consideration for late submission of shipping documents distinct from implied penalty payments in demurrage and rent and interest charges may be instituted. Public education on the need for efficient planning of imports including progressing of orders is required. The determination of a more realistic timetable for the submission of both the advance copies of shipping documents and the final invoice and bill of lading. The newly appointed inspection companies ought to be assisted in their capacity building exercise to strengthen them for greater efficiency. Random physical inspection of selected low risk (yellow) FCVR goods will keep customs house agents on their toes to refrain from fraudulent deals.

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14.0 SECURING DUTY AND TAX LIABILITY

At the same time, as he is processing his final clean valuation report, the importer has to think of how he is going to finance the payment of his import duties and taxes. Payment is done in the long room through Bank of Ghana agencies and may be done by cash, certified cheques or alternatively such liabilities may be secured by exemption letter duly approved by Parliament or Treasury Credit Notes (TCNs) issued by the Controller and Accountant General’s office on the authority of the Ministry of Finance. 14.1 ISSUES Cash and cheques used for the payment of import duties and other import related taxes and levies such as Value Added Tax (VAT) ECOWAS Levy, inspection fees etc. may not involve any delays so far as provision would have been made for such payments in the general procurement or purchasing plan. However, a great deal of delays in the customs and port clearance procedures result from delays associated with establishing title to claim of exemption and the processing and issue of exemption letters and TCNs.

14.2 STATUTORY EXEMPTIONS The power to grant exemptions from duty payment is vested in Parliament and invariably backed by legislative instrument, LI. There is general exemption provisions for Educational, Medical and some Agricultural items donated by Non-Governmental organizations, NGOs. Such general exemptions may be revised from time to time. There are also specific exemptions associated with special projects executed under donor funding under which all items illegible for exemption are listed and presented to Parliament for approval. This type of exemption is only valid for the period of project duration. The role of the Ministry of Finance in the processing and issue of exemptions is to ascertain that the ministry, department or agency, MDA, applying for the exemption is illegible under the provision of the LI quoted. Second, the Ministry of Finance verifies to ensure that items exempted under a particular LI are, indeed cleared for their intended purpose. The ministry, thus, plays only a monitoring role in the issue of exemptions. The process of issuing exemption starts with the importers filing a claim for the specific exemption under the provisions of a specific LI. The application must be forwarded to the Parliament for consideration and approval through the supervising ministry. Approval is then communicated to the Ministry of Finance,

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which in turn forwards the approved exemption to the head office of CEPS. The Commissioner or his deputy for operations then endorses the approved exemption for use by the importer. The endorsement by CEPS alone takes two (2) days, at best, a fact confirmed by a Deputy Commissioner of Customs. Optimistically the bureaucratic process may take up to three (3) weeks.

14.3 TREASURY CREDIT NOTES

The issue of the TCN is not any better than that of the exemption letter. Application for the issue of TCN is first sent to the Controller and Accountant General’s office, complete with the custom’s entry form duly filled and the duty declaration endorsed by CEPS. The director of budget refers the application to the Ministry of Finance for certification. This is to ensure that the MDA making the request has made the necessary budgetary provision for the amount. Once approval in granted, the entry is sent back to the Controller and Accountant General’s office for the issue of the TCN contingent on the actual availability of funds in the accounts of the requesting MDA. The process of approval may take up to eight (8) weeks, depending on the timing of the request for TCN.

14.4 PERMITS

Where it can be established clearly that an MDA qualifies for exemption under the provisions of a specific LI or that such an MDA has made provision in its annual budgetary allocation for the payment of duties for a particular consignment, CEPS may grant a permit for the clearance of the consignment pending the issue of the exemption letter or the transfer of funds into the accounts of the MDA from the consolidated fund.

14.5 RECOMMENDATIONS

An exemptions secretariat staffed with well trained and experienced personnel and equipped with an appropriate integrated information system will go a long way towards cutting down the processing time for both exemption and TCN. Government departments may be permitted to use fax documents to initiate action for the issue of exemptions/TCNs and only submit original documents to confirm their claim at the point of collection of the approved exemption/TCN. Procurement planning must include provisions for expedited customs and ports clearance.

15.0 CARGO ENTRY

15.1 TEMA PORT

15.2 DOCUMENTATION

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Customs entry is deemed to have been made when an importer submits his filled out Single Administrative Document (SAD) complete with all the required taxes or exemption/TCNs and supported by all relevant shipping documents as well as the FCVR. The custom entry is received, vetted and processed at the customs long room to ensure that the self-declaration made by the importer is consistent with the supporting documents and also the harmonized code. The information system used for processing and verification of the custom entry form (SAD) is known as the Automated System for Customs Data (ASSYCUDA). The architecture of this system shows that it is yet to be developed into integrated information system in which files and databases can be commonly shared by all users. In this current state of disjointed and independent processing units, clearance documents have to be moved from one seat to another after elaborate booking at each stage.

15.3 ISSUES

• Capacity of the computer room to process documents is not up to par. • Entry is only permitted to begin with the berthing of vessel • Errors in declaration • Errors in Cargo Manifest • Frequent interruptions due to power failure (back up power

generator is unreliable) • The chances of document misplacement are real. • In most part, Custom officials behave as though they were doing

Declarants a favour and ought to be rewarded for it fittingly.

15.4 RECOMMENDATIONS For a mission critical system, like custom entry processing, a fully integrated information system with a mesh topology and a back up power supply is a minimum requirement. This would ensure uninterrupted communication between various work stations and a continuous flow of work. It will also cut down drastically on the average throughput time. Finally, it would reduce the degree of human intervention and cut down on the incidence of corruption.

• Continuous training of Declarants and Customs Officer. • Improvement in the remuneration and conditions of service of the Customs

Officer. • Penalty imposition on carriers for errors in manifest.

16.0 OUTDOOR ACTIVITIES

Long room processing, which can be interminably slow, ends with a process called Striking, which essentially matches the data on a Declarant’s entry (SAD) to the cargo manifest to ensure that there are no discrepancies. The entry is then booked, after detaching various copies, and physically distributed to all the examination points accompanied by Delivery Orders (DOs).

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Copies of the DO's are deposited at the operations base of the Ghana Ports and Habours Authority (GPHA) as notice for them to position all relevant containers within twenty-four (24) hours. The declarant receives a copy of the DO through his pigeonhole with which he proceeds to pay handling charges on his/his client’s cargo to both the shipping company/agent and GPHA.

16.1 ISSUES

Lack of linkages and co-ordination between the Customs Long Room and outdoor operations including those of GPHA and Shipping Companies/Agents often leads to delayed positioning of cargo for examination. Payment for handling charges to GPHA is centralized at one revenue collection point. This creates congestion and gives way to corrupt practices. Cargo handling functions at the port have been virtually monopolized by GPHA in the past. With the coming into existence of Tema Container Terminal, pressure on GPHA is expected to ease, though vehicles are sill controlled by GPHA except containerized vehicles handled by Roro and allied companies which go to Tema Container Terminal. Insufficient capacity in terms of handling equipment. This leads to delayed positioning of containers for examination and manipulations in the human factor. On numerous occasions, GPHA has had to rely on Maersk Sealand and other shipping companies and Atlantic Port Services, a purely stevedoring company, to help her out with land-based container handling. However, the recent appointment of Tema Container Terminal (TCT), as an additional landside cargo handling company has introduced some measure of competition, which augurs well for the future cargo clearance. Commissioned in April 2002, TCT has a static capacity of 4,000 TEU’s (Twenty Equivalent Units). In the nine (9) months it operated last year, TCT handled 20,000 TEU’s. It handles containers for OT Africa Lines (OTAC), Delmas, Saf Marine, Maesk-Sealand, Mitsui OSK Lines and Messima Lines. Service delivery is faster at this terminal than pertains at the port. Goods may be examined and cleared within six (6) hours compared to between twenty-four (24) to thirty-six (26) hours that it takes in the main port. To improve stevedoring activities, six (6) private additional companies have been appointed in addition to Atlantic Port Services to help decrease ship turn-around time including Speedline, CTS, GGS, EMS, Order and Dashrood. The seven private stevedoring companies together handle about 70% of stevedoring activities at Tema leaving 40% in the hands of GPHA.

`16.2 RECOMMENDATIONS

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Granted that in a manual system entries have to be physically distributed to the examination centers at the outdoor, the process could be improved with an increase in the number of dispatch clerks to service specific examination centers. Distribution of entries and DOS could be done more frequently. Ultimately, a computer-based information system that enables CEPS to share information with GPHA and the shipping companies would facilitate cargo/container release and positioning for examination. Payments to Cargo Handling Companies ought to be decentralized. Designated banks may be authorized to run agencies for revenue collection. Cargo handling would be ran more efficiently if it is completely privatized with GPHA playing a supervisory role as landlord.

16.3 EXAMINATIONS

Physical examination of goods which, at the discretion of the customs examination officer, could be carried out at one hundred (100) percent physical turn-out has been systematically scaled down under the Gateway programme to about 60% physical turnout. This has been largely made possible due to the advent of X-ray examinations, which has eliminated multiple examinations in the case of low risk cargo. Medium or high-risk cargo may have up to two examinations though the desired situation is to have only one combined examination involving the customs tasks force, the inspection company and the primary customs examination team. These improvements in examination are the result of the introduction of the Customs Risk Management System (CRMS), which has led to the classification imported goods into three (3) broad categories:

• Green for minimum risk goods • Yellow for medium risk goods, and • Red for high-risk goods.

Green designated goods are those with low duties and duty-free goods, e.g. raw materials. Such goods, often accompanied by authentic invoices, may be released without examination. Yellow designated goods are normally homogeneous goods with good invoices and other shipping documents and examination thereof is limited to x-ray scanning. Red designated goods are deemed high-risk goods, which are therefore subjected to thorough physical turnout examination. Ultimately, CEPS aims at cutting down physical examination to twenty (20) percent of all imports.

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The current improvements in customs examination at Tema do not seem to have translated into a significant increase in import cargo throughput due to a slow down in general economic activities in the last couple of years. The throughput time, however, has decreased significantly which has resulted in about 140% increase in transit cargo and almost 300% increase in trans-shipment (see table 1). This, though, is partly due to the political unrest in La Cote d’Ivoire. Combined examination has drastically cut down on manipulation for financial gain both on the part of the declarant/importer and the customs officer. It is worthy to note that exports procedures are much simpler and straightforward particularly because most exports are free from tax

16.4 RELEASE

Upon successful examination goods are released by CEPS. Following this, release is also sought from GPHA, where waybills for exiting the custom area are issued.

16.4 GATE CLEARANCE Random Customs examination may take place at the gate thought often times; there is no justification for this. GPHA security always checks genuineness of all documentation before cargo is cleared to exit gate. The process of clearing cargo at Tema port takes three (3) to four (4) days in the best-case scenario.

17.0 THE GHANA TRADE AND INVESTMENT GATEWAY PROJECT

As part of the strategies to attain middle income status by the year 2020, the Ghana Trade and Investment Gateway project was initiated with the objective to make Ghana the trade and investment gateway to West Africa and to increase the participation of the private sector in development of the national economy. The project, an integral part of the Ghana Trade and Investment Gateway Programme, is designed to attract a critical mass of export-oriented investors needed to accelerate development and also to facilitate trade. At the center stage of the Gateway Project is the adoption of the Free Trade Zone concept as a strategy to attract a sufficient number of export-oriented Foreign Direct Investment (FDI) to help spur the country to achieve the expected goals under vision 2020. It also aims to put Ghana on a global manufacturing and service network by providing conducive investment environment. A major objective of the project is the modernization of the frontline agencies, which are the first points of contact by investors by re-engineering them into trade facilitators. CEPS is, arguably, the most important and sensitive of such agencies. The overall expectation from CEPS is the reduction of the cost of doing business in the country, which will contribute significantly to the facilitation of both domestic and international trade.

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To enhance this trade facilitation role effectively, the Gateway Project aims at reducing the bureaucratic processes in trade particularly the paper work (from 27 to 8 documents and forms), simplifying current regulations, bringing valuation procedures in line with internationally accepted standards, and computerizing the clearance procedures with funding from the Public Finance and Management Project (PUFMAP) and a ¢5.4 billion supplement under the Gateway Project.

17.1.1 THE GHANA COMMUNITY NETWORK SYSTEM (GCNET)

AND CARGO CLEARANCE

17.2 KOTOKA INTERNATIONAL AIRPORT (KIA)

One of the key innovations of the Gateway project is the Ghana Community Network system, GCNET, which is composed of a fully integrated customs management software connected over a metropolitan area network to various parties interacting with customs in the process of importing and exporting consignments to and from Ghana. It is an information technology solution designed to facilitate a fast and effective processing of customs related operations. The pilot scheme of the GCNET is now operational at the KIA. The GCNET is made up of two main components:

17.3 GHANA CUSTOMS MANAGEMENT SYSTEM (GCMS)

This system is intended to provide the Ghana Customs, Excise and Preventive Service with a fully integrated computerized system for the processing and management of customs declarations and related activities. It is designed to work in an Electronic Data Interchange (EDI) environment, where manifests and single administrative documents are electronically received and automatically processed.

17.4 GHANA TRADE NET

This is the platform enabling GCMS to share data with all parties involved in the processing of trade documents and customs clearances.

17.5 THE GCNET IN ACTION

17.6 OF THE MANIFEST

The first step of any import processing in relation to customs clearance is the submission of the manifest, which is the list of all cargo, carried on a vessel for a given voyage. The carrier’s agent enters the manifest data in the manifest front-end software, FES, and validates it once completed. He then sends the manifest data to TradeNet in the form of an EDI message. Upon receipt, the TradeNet will automatically forward the message for GCMS integration. Upon the successful integration into GCMS of the manifest, the system will then accept Declarations and cross reference against Bills of Lading/Airways Bills.

17.7 SUBMISSION OF DECLARATION

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The declarant upon noticing his cargo in the manifest which is circulated on the GCMS or upon picking up his cargo arrival notice from the carriers agent, enters the data of his declaration onto the FES and when completed validates it on his work station. Once the validation is complete, the Declarant transmits the Declaration in the form of an EDI message also called CusDec (Customs Declaration) to TradeNet. The CusDec is relayed to GCMS for back-end validation upon being received by TradeNet. The GCMS validation process is performed at four (4) levels: (See Appendix 1)

i) Manifest Matching ii) Checking of Reference Codes iii) Computation of Duties and Taxes v) Filtering through the Selectivity Module.

In most cases, the complete validation process is performed in less than one (1) minute. Once all levels have been successfully processed, the Declaration is validated and a legal Declaration Number is generated.

Upon validation, three possible options may emerge:

i) In the case where errors are detected during validation, GCMS will reject the declaration. In most cases, this is due to the fact that no manifest has been found for the Declaration. In such cases, GCMS sends a response back to the declarant, listing all errors detected. The declarant is then to correct errors and re-submit.

ii) Declaration maybe validated and not selected by the Risk Assessment Module. The Document Verification office shall process such declaration straight away and the Declarant notified through an electronic response, CusRes, which means Customs Response Declaration.

iii) Declaration may be validated and selected by the Risk Assessment Module. In such cases where the GCMS Risk Assessment Module has found upon checking against reference tables that the consignment is medium to high risk, GCMS sends a response back to the Declarant stating that the declaration has been selected. The Compliance Office shall process this declaration. Once validation is complete, GCMS sends the CusRes to TradeNet, which in turn relays it to the Declarant. The whole validation process would normally take two (2) minutes.

Upon receipt of the CusRes from GCMS, the Declarant shall print the Declaration from his FES at his office and attach all supporting documents such as the Bill of Lading, Invoice, Packing List, FCVR, IDF and where applicable permit/certificates and exemptions for submission to the verification or compliance office as the case may be. In the case of dutiable cargo, the Declarant shall at this stage proceed to any of the participating banks and settle applicable duties, taxes and other charges. The bank is networked to GCMS and will confirm payment electronically. At Document Verification, the verification officer checks all supporting documents and if they are correct, confirm clearance of the consignment in GCMS. Documents selected to the Compliance Office are subjected to more detailed review and routed to the Examination Section where physical examination is systematically conducted. Following successful examination, the consignment is then cleared on the GCMS.

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The entire process can be completed within four (4) hours. This, indeed, is a revolutionary improvement on the throughput time of cargo clearance.

17.8 IMPACT OF THE GCNET

In terms of speed and reliability the GCNET is such a dramatic improvement on the Assycuda. Entries processed per day for January 2003 were 34% higher than January 2002 (See Table 2). Cargo throughput for January 2003 also rose by 16.5% over the figure for January 2002 (See Tables 3A and 3B). These are modest gains. The real test of efficiency improvement is to be seen in the throughput time for import cargo, which has been reduced by 86% from an average of thirty (30) hours to four (4) hours. What remains to be done is for the business community to take advantage of this landmark improvement in the clearance procedures and step up their business activities. Decrease in cargo throughput time both at Tema and Kotoka International Airport holds promise for an expanded sub-regional trade with the rest of the world in which Ghana can feature prominently as the gateway. Manifest verification and validation of declaration is done scientifically without any human failings and interruptions. Manual procedures in the CEPS Long room such as face vet, computer input, accounts verification, numbering, detaching and dispatching are all eliminated. In principle, this could limit or even eradicate the incidence of corruption. GCMS has an in built correction system, which sends an immediate feedback to Declarants listing all errors for immediate correction. Cargo examination is reduced from 100% to 10% for statutory free goods and 20% for all dutiable goods. Declarants have ready access to customs database containing customs codes, regimes, tariffs and exchange rates, which cut down on chances of making errors in the entry.

17.9 DRAWBACKS

There is, however, potential danger with the clearance of low risk cargo through the verification office. Without prejudice to the good nature of man, a fraudulent importer with the connivance of a foreign supplier and a compliant customs house agent could under-declare quantity or intentionally misclassify his import cargo in the absence of X-ray examination. Only part of the text of the Harmonized System Code is displayed on the screen, which may not be helpful for effective classification.

The system does not provide sufficient space for a detailed record of examination.

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Institution of random examination, no matter how infrequent, shall keep importers of low risk cargo on their toes to refrain from fraudulent deals. The provision of X-ray examination as is being done at Tema is another control measure. Improvement in the software package for the system to provide full coverage of the clearing process.

18.0 TAKORADI PORT

The layout and procedures in this port are akin to what pertains at Tema. The volume of traffic is, however, considerably lower than Tema, which means that despite its smaller capacity, Takoradi port possesses an excess capacity for its current level of activity. Clearance of cargo is therefore faster than at Tema. Most timber exports go through this port.

ISSUES

18.1 ECONOMIES OF SCALES

Import traffic is low and for that reason, shippers and carriers find it expensive to deliver cargo through Takoradi. Cargo delivery is economic only beyond certain minimum volumes or weight. To complicate this situation, there is a distinct dearth of support services for ships. Victualling, stores, bunkering, ship repair or dry dock facilities are mostly available at nearby Tema port, which makes it a better alternative to Takoradi as far as the carrier is concerned. Tema port has more deep berth space that can accommodate larger vessels than Takoradi. There is less waiting time at anchorage for want of berthing space in Tema than Takoradi for such vessels. For the above reasons, such ships are reluctant to call Takoradi port. Inbound cargo is often carried over to Tema, and to ports of Nigeria, Cameroon and Gabon and only delivered on the return trip to Europe while the vessels also pick up timber products for export. Obviously, this increases delivery time and again re-emphasizes the competitive position of Tema. In the main part, importers themselves seem to be oblivious of the facilities at Takoradi or tend to avoid it out of a habit of being used to Tema.

18.2 RECOMMENDATIONS Sustained public education on the gains of using the port Takoradi as against Tema, e.g.

�� Faster clearance times �� Less incidence of demurrage �� Better handling of cargo �� Good road to Kumasi and beyond �� Cheaper hotel rates

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�� Abundance of haulage trucks that mostly return empty to the hinterland after delivery of timber products.

Provision of Support Services by government or the creation of an enabling environment for private participation in their provision.

19.0 LAND FRONTIERS

Traffic through these frontiers is usually limited to lntra-Ecowas trade. However, import traffic through the Aflao land frontier consists of a fairly significant amount of cargo imported through the port of Lome. Processing of cargo at the land frontier is much simpler than at the ports. Imports are examined directly without any document processing except for the verification of invoices. Duties and taxes are subsequently computed for importers to pay. Release is instantaneous following duty payment.

19.1 THE PROPOSED INLAND PORT OF BOANKRA

The project is yet to take off and therefore inspite of all the envisaged benefits, it will suffice to say that, it has the potential to considerably ease the pressure on Tema Port as far as cargo clearance is concerned. There are indications that work on the construction of this port will begin before the end of this year following completion of feasibility studies.

19.2 WAREHOUSING

Basically, there are two ways in which warehousing may proceed: i) Bonded Warehousing ii) State Warehousing

19.3 BONDED WAREHOUSING

This is an alternative regime to Home Consumption. In a situation where an importer does not have a ready market for his import or does not have enough money to pay off his import duty and tax liabilities to the state, he may clear his goods to the bonded warehouse regime. Effectively, this means deferral of duty payment and transfer of cargo into a bonded warehouse situated outside the port area. The institution of a bond over a warehouse effectively renders it a customs area. Such a warehouse shall have two security locks, one for the warehouse owner or administrator and the other for CEPS. It shall also have a customs office within the premises of the warehouse. Declaration to this regime may also be done for any reason(s) that delay the immediate clearance of cargo to the Home Consumption regime such as the importer's inability to secure a mandatory permit or certificate.

19.4 IMPLICATIONS FOR EFFECTIVE GOODS PROCUREMENT

This facility makes it possible to clear imported cargo in bits as and when an importer finds money to pay duty and other taxes and levies. For transit cargo, it may provide a temporary abode while arrangements are being made to move cargo across country.

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For security reasons, it may be a better way of warehousing bulk cargo imported under a bank guarantee for purposes of monitoring and accountability. In all these cases, bonded warehousing frees up significant space in the port area and therefore facilitates the attainment of optimum throughput of cargo.


Government must encourage bonded warehousing as a way of facilitating customs and ports clearance in line with the objectives of the gateway project. The modalities for bonded warehousing must be streamlined to make the process simple efficient and secure. Any attempt to discourage bonded warehousing, as was made in recent years by CEPS regulations for reasons of deferred duty payment must be weighed against the wider benefits of improvement in international trade. After all, on a sustainable basis, bonded warehousing enhances revenue collection by enhancing import throughput both in the short run and in the long run.

20.0 STATE WAREHOUSING

This represents storage facility for goods imported into the country which one way or the other fall short of the regulations governing import and clearance procedures. There are basically two ways imported goods may find their way to the state warehouse.

i) THE UNCLEARED CARGO LIST

Under the customs regulations, imported goods that are entered but not cleared after twenty-one (21) days of discharge of goods from the vessel shall be transferred to the state warehouse under the cover of Uncleared Cargo List (UCL). There are several containers for government departments and corporations/companies on UCL. The CEPS officer in charge of the state warehouse at Tema Port confirmed in an interaction with him that despite several notification letters to institutions like Volta River Authority (VRA), Electricity Company of Ghana (ECG) and the Ministry of Energy they possess between themselves about thirty (30) containers on UCL.

ii) DETENTION GOODS Prohibited goods or goods requiring special permits that are detained pending investigations shall also be sent to the state warehouse under the cover of detention receipt.

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20.1 REASONS FOR NON-CLEARANCE OF CARGO EXCESSIVE TAXES i) Importers may find the import duties, taxes and levies imposed on their goods

too high and choose to abandon such goods. ii) Inability of importers to raise funds to pay duty taxes and levies in time. iii) Default in freight settlements, demurrage and port handling charges. iv) Delayed acquisition of necessary clearance documents including permits,

licences and reports. iv) Goods are sometimes imported only to ensure that government votes are utilized

even when such goods may never be needed.

20.2 CONSTRUCTIVE WAREHOUSE

In the advent of containerization, a great deal of space can be saved in the ports by constructive warehousing, whereby cargo is transferred to container depots situated inside and outside the port under the cover of UCL. Currently, there are over one hundred (100) containers constructively warehoused in the port with another three hundred (300) at the Tema Container Terminal and the Maersk-Sealand Container depot both outside the port. A similar arrangement could be made for vehicles. In principle, goods not cleared after eight (8) weeks may be sold by public auction.

20.3 RECOMMENDATIONS i) TAX CUT

Import duties, despite government’s good intentions, are too high for most goods. A reduction in duty and tax rates shall go a long way towards eliminating smuggling, under-invoicing and under-declaration of the quantum of imports. Revenue redeemed from these underground dealings could more than compensate for lost revenue emanating from tax cuts. Imported goods would become affordable to the ordinary man resulting in a higher standard of living. ii) REALISTIC NATIONAL BUDGET The National Budget must be based on the justified real needs of Ministries, Departments and Agencies, MDAs, to eliminate wastage.

20.3 SCHEDULING OF DUTY PAYMENT

This implies spreading out duty payment over a period of time. For credible institutional importers and distinguished individuals, this facility will serve to expand trade and facilitate import clearance, provided sufficient safeguards are exercised to avert tax evasion. For example, the improved bonded warehousing system centralized at Jamestown with computerized documentation could be hooked up in a wide area network with all bonded warehouses in the country to monitor and control the clearance of goods for which duty payment has been scheduled over time. This would avert the unauthorized removal of goods from the warehouses and its concomitant loss of state revenue. Duty payment could

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then be administered on a pro-rata basis as and when portions of the goods are cleared from bond.

20.4 TRANSIT CARGO AND TRANS-SHIPMENTS The potential for transit and transshipment has always been constrained by an under developed infrastructure. Inadequate berthing space, under-capacity shore and landside handling equipment, bad roads, in-operative railway system and an under-developed telecommunication system. However, there have been some modest improvements in telecommunications, roads and the operational capacity of our ports in the past decade, though much needs to be done still. Ghapoha has been engaged in modernizing the ports of Tema and Takoradi, whilst Ghana Civil Aviation Corporation has carried out extensive expansion works on passenger and cargo terminals and also improved its runway. Whilst all these improvements are designed to facilitate trade through decreased throughput time for cargo, Customs clearance procedures have tended to lag behind in improvement. Worse still, the attitude of the average customs officials to work has been anything but enthusiastic. Many of them have tended to expect to be paid bribes for doing their work. In the area of transit cargo, customs officials have always viewed escorts as a bothersome function, which is often performed with very scanty staff. Corruption seems to be so endemic particularly, within the ranks of juniors customs officers that the introduction of the GCNET, which seek to reduce the interaction of Declarants with customs officers, is, indeed, a timely measure in our drive toward making Ghana a gateway to West Africa. As indicated elsewhere in the report, transit and trans-shipment cargo throughput has increased considerably in the past two or three years (See Table 4).

20.5 CONCLUSIONS Customs and Port Clearance procedures have been rather cumbersome in the past, leading to delays in the clearance of cargo. Reasons for this trend have ranged from poor procurement planning which is often lacking in effective progressing of orders and bereft of adequate provision for custom clearance, through poor infrastructure, fractured and disjointed information technology systems and customs processes and procedures that have tended to be skewed towards revenue collection. The attitude of customs officials, particularly the junior officer corp, has not been particularly helpful to the course of efficient cargo clearance. Many of them have tended to put their personal interest of lining their pockets, in the light of woefully poor conditions of service and salary levels, above the interest of the state, i.e. the promotion and enhancement of trade with the rest of the world. In recent times, efforts have been made to improve the infrastructure situation and also information technology systems deployed in processing cargo clearance. Thanks to the Gateway Project. This has led to dramatic improvements in the throughput time of cargo.

21.0 GENERAL RECOMMENDATIONS

1. Total automation of document processing i.e. total application of GCNET to all our major

entry points.

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2. Effective procurement planning which also requires that procurement must be placed in the hands of committed procurement professionals.

3. Promotion of clearance of cargo to other regimes other than the Home Consumption regime such as Bonded Warehouse and Duty Scheduling.

4. Improvement of the working conditions and remuneration of CEPS officers particularly is the area of pensions.

5. Reduction in duty rates and taxes with a view to eliminating smuggling, under-invoicing and under-declaration of size of imports now very prevalent. The impact of the elimination of these vices on total revenue even from reduced taxes will be positive, in my opinion aside enhancing the living standards of Ghanaians.

The success of this measure will depend on the degree of motivation of the workforce of CEPS.

6. Privatization of port handling operations.

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ANNEX 11:

LIST OF PUBLIC SECTOR INSTITUTIONS

A. Central Management Agencies

Agency 1 Public Services Commission 2 Office of the Head of Civil Service 3 Office of the President 4 Office of the Vice-President 5 Civil Service Council 6 Office of the Council of State 7 Ministry of Finance and Economic Planning 8 Accountant General’s Department

B. Ministries

Ministry 1 Defence 2 Finance 3 Works & Housing 4 Education 5 Environment, Science & Technology 6 Trade & Industry 7 Roads & Transport 8 Mines & Energy 9 Lands & Forestry 10 Foreign Affairs 11 Interior 12 Health 13 Food & Agriculture 14 Employment & Social Welfare 15 Justice 16 Local Government & Rural Development 17 Communications 18 Tourism 19 Youth & Sports 20 Parliamentary Affairs 21 Regional Integration

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C. Departments

Department 1 Department. Of Social Welfare 2 Department. Of Crops Services (Agriculture) 3 Extension Service Department (Agriculture) 4 Animal Production Department (Agriculture) 5 Fisheries Department. (Agriculture) 6 Veterinary Services Department (Agriculture) 7 Town & Country Planning Department 8 Labour Department 9 Registrar General’s Department 18 Public Works Department 11 Department of Co-operatives 12 Department of Urban Roads 13 Department of Forestry 14 Geological Survey Department 15 Department of Parks & Gardens 16 Ghana Wildlife Department 17 Mines Department 18 Survey Department 19 Rent Control Department 20 Department of Factories Inspectorate 21 Meteorological Services Department 22 Information Services Department 23 State Protocol Department 24 Department of Rural Housing & Cottage Industries 25 Attorney General’s Department 26 Lands Department

D. Local Government I. Regional Administrations/Coordinating Councils

Regional Coordinating Council 1 Greater Accra Region 2 Eastern Region 3 Western Region 4 Central Region 5 Ashanti Region 6 Volta Region 7 Brong Ahafo Region 8 Northern Region 9 Upper East Region 10 Upper West Region

II. District Assemblies 3. Greater Accra

District Assembly 1 Accra Metropolitan Assembly 2 Tema District Assembly 3 Dangbe East District Assembly 4 Ga District Assembly

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5 Dangbe East District Assembly

4. Eastern Region

District Assembly 6 New Juaben District Assembly 7 Akwapim North District Assembly 8 Kwahu South District Assembly 9 Yilo Krobo District Assembly 10 Manya Krobo District Assembly 11 Birim South District Assembly 12 West Akim District Assembly 13 East Akim District Assembly 14 Suhum/Kraboa Coaltar District Assembly 15 Kwaebibirim District Assembly 16 Asuogyaman District Assembly 17 Fanteakwa District Assembly 18 Afarm Plains District Assembly 19 Birim North District Assembly 20 Akwapim South District Assembly

Western Region

District Assembly 21 Shama Ahanta East Metropolitan Assembly 22 Sefei Wiaso District Assembly 23 Wasa West District Assembly 24 Nzema East District Assembly 25 Wasa Amenfi District Assembly 26 Aowin-Suaman District Assembly 27 Ahanta West District Assembly 28 Mpohor/Wassa East District Assembly 29 Juabeso-Bia District Assembly 30 Bibiani/Anhwiaso/Bekwai District Assembly 31 Jomoro District Assembly

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Central Region

District Assembly 32 Cape Coast District Assembly 33 Upper Denkyira District Assembly 34 Awutu/Efutu Senya District Assembly 35 Mfantsiman District Assembly 36 Asikuma Odoben-Brakwa District Assembly 37 Twifo-Hemang-Lower Denkyira District Assembly 38 Agona District Assembly 39 Assin District Assembly 40 Ajumako-Enyan-Asiam

District Assembly 41 Gomoa District Assembly 42 Komenda-Edina-Eguafo-Abirem District Assembly 43 Abura-Asebu-Kwamankese District Assembly

Ashanti Region

District Assembly 44 Kumasi Metropolitan Assembly 45 Amansie East District Assembly 46 Adansi West District Assembly 47 Ejisu-Juaben District Assembly 48 Sekyere West District Assembly 49 Offinso District Assembly 50 Asante-Akim North District Assembly 51 Atwima District Assembly 52 Ahafo-Ano North District Assembly 53 Kwabre-Sekyre District Assembly 54 Amansie West District Assembly 55 Bosomtwe/Kwanwoma District Assembly 56 Afigya Kwabre District Assembly 57 Ejura/Sekyedumase District Assembly 58 Asante-Akim South District Assembly 59 Ahafo-Ano South District Assembly 60 Adansi East District Assembly 61 Sekyere East District Assembly

Volta Region

District Assembly 62 Ho District Assembly 63 Krachi District Assembly 64 Denu District Assembly 65 Keta District Assembly 66 Jasikan District Assembly 67 Sogakope District Assembly 68 Kpandu District Assembly 58 Hohoe District Assembly 70 Akatsi District Assembly 71 Nkwanta District Assembly 72 Kadjebi District Assembly

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73 Adidome District Assembly Brong Ahafo Region

District Assembly 74 Sunyani District Assembly 75 Dormaa District Assembly 76 Berekum District Assembly 77 Asunafo District Assembly 78 Atebubu District Assembly 79 Nkoranza District Assembly 80 Wenchi District Assembly 81 Techiman District Assembly 82 Sene District Assembly 83 Kintampo District Assembly 84 Jaman District Assembly 85 Tano District Assembly 86 Asutifi District Assembly

Northern Region

District Assembly 87 Tamale District Assembly 88 Yendi District Assembly 89 Gonja West District Assembly 90 Bole District Assembly 91 Nanumba District Assembly 92 Mamprusi East District Assembly 93 East Gonja District Assembly 94 Savelugu-Nanton District Assembly 95 Gushiegu/Karaga District Assembly 96 West Mamprusi District Assembly 97 Zabzugu-Tatale District Assembly 98 Saboba Chereponi District Assembly 99 Tolon-Kumbungu District Assembly

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Upper East Region

District Assembly 100 Bawku East District Assembly 101 Bolgatanga District Assembly 102 Kassena/Nankani District Assembly 103 Builsa District Assembly 104 Bawku West District Assembly 105 Bongo District Assembly

Upper West Region

District Assembly 106 Wa District Assembly 107 Lawra District Assembly 108 Sissala District Assembly 109 Jirapa-Lumbussie District Assembly 110 Nadowli District Assembly

SUBVENTED AGENCIES CATEGORY I No Name 1 Armed Forces Sports Control Board 2 Confiscated Assets Committee 3 National Revenue Secretariat 4 Ghana Science Association 5 Institute of Chartered Accountants 6 Institute of Statistical Social & Economic Research (ISSER) 7 Development and Application of Intermediate Technology 8 Ghana National ATLAS Project 9 Ghana National Science and Technology 10 Public Servants Housing Loans Board 11 Technical Services Centre 12 National Teacher Training Council 13 Integrated Community Centers for Employable Skills 14 Ghana Academy of Arts and Sciences 15 Encyclopedia Africana Project 16 Organization of African Trade Union Unity 17 Opportunities Industrialisation Centre 18 Ghana Co-operative Council 19 Ghana Co-operative College 20 Local Government Training School 22 National Association of Local Authorities 23 Pan African Writers Association 24 All African Students Union 25 Ghana Book Development Council 26 Armed Forces School 27 Ghana Education Service Council Secretariat

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SUBVENTED AGENCIES CATEGORY II

No Name 28 Forestry Commission 29 Ghana Highways Authority 30 National Council for Tertiary Education 31 Immigration Service 32 Prisons Service 33 Police Service 34 Serious Fraud Office 35 General Legal Council 36 Law Reform Commission 37 Council for Law Reporting 38 Prices & Incomes Board 39 National Population Council 40 Statistical Service 41 Fisheries Commission 42 Ghana Veterinary Council 43 Environmental Protection Agency 44 National Accreditation Board 45 National Board for Professional and Technical Examination 46 Divestiture Implementation Committee 46 Customs Excise & Preventive Service 47 Internal Revenue Service 48 Lands Commission 49 Minerals Commission 50 Ghana National Commission on Children 51 National Council on Women and Development 52 Ghana F.A.O. Representative (Rome) 53 National Road Safety Committee 54 Commission on Human Rights and Administrative Justice 55 National Electoral Commission 56 National Commission for Civic Education 57 National Service Secretariat 58 Narcotics Control Board 59 Legal Aid Board 60 Ghana Education Service 61 Non Formal Education Division

SUBVENTED AGENCIES CATEGORY III

No. Name 62 Council for Scientific and Industrial Research 63 Institute of Professional Studies 64 Institute for Education Planning and Administration 65 Land Title Registry 66 National Theatre of Ghana 67 National Board for Small Scale Industries

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68 Tertiary Institutions (University of Ghana, Kwame Nkrumah University of Science and Technology, University of Cape Coast)

69 Kwame Nkrumah Memorial Park 70 School of Mines (Kwame Nkrumah University of Science and

Technology) 71 Christian Health Association of Ghana 72 Grains and Legumes Development Board 73 Irrigation Development Authority 74 Ghana Export Promotion Council 75 Ghana Tourist Board 76 Ghana Standards Board 77 Technology Transfer Centre 78 Government Technical Training Center 79 Ghana Library Board 80 School of Administration 81 Institute of Africa Studies 82 Institute of Adult Education 83 College of Art (Kwame Nkrumah University of Science and

Technology) 84 University of Ghana Medical School 85 Volta Basin Research Institute 86 University Research Stations 87 Regional Institute for Population Studies 88 School of Medical Science (Kwame Nkrumah University of Science

and Technology) 89 School of Agriculture (University of Cape Coast) 90 Ministry of Energy – Technical Division 91 State Enterprises Commission 92 Boadi Cattle Project (Kwame Nkrumah University of Science and

Technology) 93 Noguchi Memorial Institute 94 Technology Consultancy Center (Kwame Nkrumah University of

Science and Technology) 95 Accra Polytechnic 96 Cape Coast Polytechnic 97 Takoradi Polytechnic 98 Kumasi Polytechnic 99 Tamale Polytechnic 100 Ho Polytechnic 101 Distance Education 102 University College of Education - Winneba 103 Saint John’s Ambulance Brigade 104 Center for Scientific Research into Plant Medicine 105 Jachie Training Center 106 Jirapa Orphanage 107 Abor Rehabilitation Center 108 Ghana National Commission – Local (UNESCO) 109 School of Engineering (Kwame Nkrumah University of Science and

Technology) 110 Institute of Renewable Natural Resources (Kwame Nkrumah

University of Science and Technology) 111 School of Performing Arts 112 Ghana Institute of Languages

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113 University of Development Studies 114 Universities of Ghana (London) 115 Dental School, Korle-Bu 116 National Sports Council 117 National Youth Organizing Committee 118 National Sports College, (Winneba) 119 Pharmacy Board 120 Medical & Dental Council 121 National Vocational Training Institute 122 School of Social Work 123 Ashanti Mampong Babies Home 124 Ghana Atomic Energy Commission 125 Ghana News Agency 126 Ghana Institute of Journalism 127 National Film and Television Institute 128 Legon Center for International Affairs 129 Veterans Association of Ghana 130 Ghana Armed Forces Staff College 132 National Symphony Orchestra 133 Museum and Monuments Board 134 W.E.B. du Bois Memorial Centre 135 School of Communication Studies 136 Ghana Investment Promotion Center 137 School of Mines – Tarkwa 138 Nurses and Midwives Council 139 Regional Maritime Academy

SUBVENTED AGENCIES CATEGORY IV

No. Name 140 Abibigroma Theatre Company 141 Ghana Broadcasting Corporation 142 Ghana Dance Ensemble 143 Ghana Institute of Management and Public Administration 144 Hotel Catering and Tourism Training Institute (HOTCATT) 145 Ghana Regional Appropriate Technology Industrial Services

(GRATIS) 146 Ghana Universities Press 147 Management Development and Productivity Institute 148 Ghana News Agency 149 International Students Hostel 150 Land Valuation Board

STATE OWNED ENTERPRISES

SOE

1 Ghana Post Company

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2 Ghana Broadcasting Corporation 3 Graphic Communications Group 4 New Times Company 5 Ghana News Agency 6 Assembly Press Limited 7 National Theatre of Ghana 8 Ghana Cocoa Board 9 Ghana Supply Commission 10 Ghana Irrigation Development Company 11 Grains & Legumes Development Board 12 Kpong Farms 13 Ghana Food Distribution Corporation 14 Precious Minerals Marketing Corporation 15 Volta River Authority 16 Electricity Company of Ghana 17 Ghana Oil Company Limited 18 Tema Oil Refinery 19 OSA Transport Limited 20 Ghana Airways Limited 21 Ghana Ports & Harbours Authority 22 Ghana Civil Aviation Authority 23 Ghana Railway Corporation 24 Ghana Highway Authority 25 Volta Lake Transport Company Limited 26 GIHOC Distilleries 27 Ghana Trade Fair Company Limited 28 Ghana National Procurement Agency 29 Bonsa Tyre Company Limited 30 Tema Development Corporation 31 Ghana Water Company Limited 32 Community Water & Sanitation Agency 33 State Housing Company Limited 34 Architectural & Engineering Services Limited

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ANNEX 12:

LAWS GOVERNING PUBLIC PROCUREMENT

The Core Laws 1. The Constitution: is the basic source of all laws in Ghana and any law inconsistent with the constitution is a nullity to the extent of its inconsistency. It is the basic law that regulates expenditure of public funds by requiring all public expenditure to be budgeted for and approved in an Appropriation Bill before it is disbursed. The procurement related provisions in the Constitution deal with Establishment Of Funds (Article 175), Disbursement Of Public Funds, Loans (Article 181) acquired by Government require Parliamentary approval, Directive Principles Of State Policy (guaranteed human rights and freedom), Article 35(8) (The need to eradicate corrupt practices and the abuse of power), Maximization Of Economic Benefits [Article 36(1)], and interest of Ghana under Foreign Treaties (dealing with other nations and requiring Government to protect the interest of Ghana). 2. Standing Orders of Parliament; these are laws on financial provisions relating to public expenditure, Budget and Appropriations. 3. Financial Administration (SMCD 221); this is the single most comprehensive document regulating public procurement and expenditure. The document contains general principles regulating public expenditure and does not contain comprehensive procurement regulations. Important provisions of this law include establishment of Consolidated Fund, role of the Minister of Finance, certification for payment and liability and offences. This law will be repealed on coming into force of the Financial Administration Bill and a Central Internal Audit Agency Bill that have been submitted to Parliament and Cabinet respectively for their action. Financial Administration Regulations 1979 (FAR) 4. The FAR is the most detailed instrument on public expenditure and accountability. The important sections deal with accountability (requiring every public officer to keep proper records of all transactions and produce such documents for inspection when called upon to do so), compliance with Government policy and law (making it the duty of a head of department to secure the effective use of public funds). The “ambit of Government policy” regarding procurement was never clearly spelt out in this document. Other important provisions in this law included public interest (requiring public officers to report any case where application of the law or financial instructions leads to results contrary to public interest), reporting (each head of an MDA to report on the work of the department during the financial year giving statistical data of the work done in relation to the appropriations granted within 3 months of the financial year, including reporting on procurement of works), public supplies and equipment (providing regulations on acquiring public supplies and equipment), annual reports (requiring head

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of department to prepare an annual report and financial statements of its transactions, which shall be separately certified by the Auditor-General), economy (which charges public officers with the duties of exercising financial control to ensure that purchases are made and applied for public purposes in the most economical manner), advance payments (which allows advance payment to contractors), responsibility for supplies (makes heads of the MDAs responsible for departmental procurement, assisted by the Director of Supplies), accountability (making a head of department accountable for the proper care, custody and use of public supplies and equipment from the time of acquisition until they have been used or otherwise disposed of in accordance with the regulations), sources of funds (provides sources of funds), procurement planning (requiring each head of department to draw up supply and equipment schedules for his department), sources of supplies (indicating that these would be procured by the Ghana Supply Commission), common user items (making provision for one department to be made responsible for the acquisition of the common user items), and emergency supplies (making provision for procedures in respect of emergency supplies). 5. The provisions in the FAR are very descriptive on what is required but do not outline clearly the procurement regulations and other provisions of a modern law that ensure that procurement is not done in a discretionary manner to enable public officials not comply. Many of the provisions are now out of date in view of changes over time. The GSC and AESC ceased to be Government sole procurement agent for goods and works, respectively; they become a private companies. The role of the Director of Supplies has been redundant over 10 years. The FAR does not provide any rules for procurement of works and services. The provisions in this law would provide sound fiduciary management if they had been followed with any gaps carefully made good. The law will be replaced with a new Financial Administration Bill and a Central Internal Audit Agency Bill that have been submitted to Parliament and Cabinet respectively. 6. Contract Act, Act 25: the Law of Contract in Ghana is based mainly on the principles of Common Law and Equity developed by the English and the Ghanaian courts. For this reason the Contracts Act, 1960, [Act 25] does not take a complete overview of the law of contract but has only addressed certain grey areas in the common law in order to streamline contractual rights and obligations of parties. This law is particularly important because it applies to contracts and transactions entered into by the Government. The Contracts Act deals with the rights and obligations of contracting parties after a contract is frustrated and parties are accordingly discharged from their obligations. The Act codifies the common law rule that parties to a contract must, in the event of frustration be restituted to the position they were in before the contract was entered into. This implies that at the time of discharge by frustration sums paid in pursuance of the frustrated contract are recoverable and sums payable cease to be payable. Where, however, a party incurs expenses before the time of discharge or before the occurrence of the frustrating event, the court may allow such a person to recover the expense so incurred. This is to ensure that as much as possible no party suffers too much loss by virtue of the frustration. This makes the rights of third parties or non-contracting parties under a contract enforceable unless there is a provision in the contract purporting to exclude any liability of a person who is not a party thereto. This position is generally

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considered novel in a common law jurisdiction country since it is a clear departure from the general common law principle, which ties enforcement of contractual rights to the provision of consideration of one form or the other. On capacity to enter into contract, the Act treats corporations as individuals of full age and capacity regardless of the age of the authorized representative of the corporation. This Act appears to be not followed. Another law on Government contracts is AFRCD 58 that regulates Government contracts, but many Government officials are not aware of its existence, as it is never followed. 7. Government Contracts Decree (AFRCD 58); the key provisions of this decree include the introduction of sanctions on persons carrying out procurement duties. Though this law is in force it appears persons involved in public procurement are completely oblivious of its existence. 23. Local Government Act, Act 462: The main purpose of the law is to give effect to the constitutional requirement for the decentralization of Government business. The Act makes provision for the creation of District Assemblies (DA) as the highest political body in each district. DAs are defined to include Metropolitan and Municipal Assemblies. Under this Act DAs are empowered to initiate programmes for the development of infrastructure and provision of works and services in the district and for the execution of approved development plans for the district. The Act required each DA to have a District Tender Board (DTB) to advise; (i) the DA on the award of contracts to be financed exclusively from the resources of the DA; and (ii) the Minister for Finance on contracts by funds provided by the MFEP, subject to thresholds set periodically by the Minister of Finance. The phrase “financed exclusively from the resources of the Assembly” appears to exclude some resources currently secured from Development Partners for DAs. The LIs and frequent directives from the Ministry of Finance regulate District Tender Boards. 8. Divestiture of State Interests (implementation) law, 1996 PNDC l326: this law was passed to regulate the disposal of some specific types of state assets. Under the law a “divestiture” involves the disposal of any “interests” held by the state in any statutory corporation, company or partnership. “Interest” includes ownership of shares, debentures, securities and other properties. This law does not affect procurement of goods, works and services. 9. Local Government (District Tender Boards) (establishment) regulations, 1995 LI 1606: this Legislative Instrument mandates each District Assembly to establish a District Tender Board to advise the DA on the award of contracts financed exclusively from the resources of the DA and which have been approved by the Government to be performed within the District. The phrase “financed exclusively” from the resources of the DA is suggestive of a very restricted ambit for the DTB. However, in practice the DTB’s work has in no way been restricted in scope to funds “exclusively” from the resources of the DAs. Whilst the DTB is designed to advise on “award of contracts” the law is applicable to contract for works and not for goods and services. Each DTB forms Technical Evaluation Teams to evaluate bids for each specific contract and to make recommendations to the DTB. The provision assumed that all awards of contract in the

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DAs would always be advertised for competitive bid, which is not the case as there is extensive use of sole source and selective methods. The basic flaw of this law is that it is not clear on procedures for advertising and submission of bids, evaluation and award criteria. There is a provision on use of engineer’s estimate, which requires that an engineer’s estimate be posted into the bid box prior to opening of bids and with the bids. In this case bids shall be invalidated if it is detected that a bidder had information on the engineer’s estimate and in some DAs if the bid is below the engineer’s estimate. The law makes no provision as to who would do the “detection” or how it would be done. The law provides an ambiguous regulation on public bid opening that it would be “as publicly as possible” at a duly constituted meeting presided over by the Chairman of the DTB. The law does not show how public the opening should be nor give guidelines as to the records to be taken at the public opening. It provides for use of a bracket method in evaluation of bids, that a winning bid must fall 20% within the engineer’s estimate. Donor projects awarded by DTB do not use the bracket method. The DAs pay a very heavy premium by continued application of the bracket method and engineers estimate. The law makes two important anti-corruption provisions, one on conflict of interest situations and the other for declaration of assets by Tender Board. These provisions are not complied with as the law lacks the necessary detail to facilitate compliance, such as the format for asset declaration and whose duty it is to ensure compliance. 10. Road Fund Act, Act 536: The Road Fund was set up to “finance routine, periodic maintenance and rehabilitation of public roads in the country and to assist metropolitan, Municipal and District Assemblies in the exercise of their functions relevant to public roads under any enactment”. This is one of specific sources for funding procurement. The Act requires the Managers of the fund (Road Fund) to ensure total and timely accountability of the fund, to prepare and publish procedures for the disbursement of the funds, to review the annual expenditure programs of the road implementing departments and bodies, and to determine the certification necessary to ensure that work is completed according to specification. The determination that work is completed is already with the implementation agencies. 11. Ghana Highway Authority Act, Act 540: This law established Ghana Highway Authority with full procurement authority for roads construction. The principal procurement provision requires GHA to carry designs for programmed trunk road improvement and rehabilitation, construction plans, specification, cost estimates and other documents required for proper biding of the programmed works. GHA has power to carry out all forms of public procurement, i.e. goods, services, works and disposal of public assets. A member of GHA Board who is directly interested in any matter being considered or dealt with by the Board must disclose the nature of his interest at the meeting of the Board with respect to the matter, or face removal from the Board. However the World Bank determined as inadequate the procurement procedures under which the GHA operates, so a Procurement Procedures Manual was prepared specially for use by all agencies implementing the Highway Sector Investment Project. 12. Ghana Supply Commission Law, 1990 PNDC 245: the Ghana Supply Commission (GSC) has now been converted into Ghana Supply Company (GSC) under

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the Companies Code. This conversion was completed recently and the GSC was issued with a certificate of incorporation. The GSC continues to perform substantially the same functions to some MDAs who are not aware of the conversion, so they continue to see the GSC as the sole agent for the procurement of Government goods. GSC had very detailed procurement procedures that it followed for public procurement. 13. Architectural and Engineering Services Corporation (1973 NRCD 193): the corporation was established to provide Government departments with architectural and engineering services on a mandatory basis. This law has ceased to exist as AESC converted into a company under the Companies Code, but some MDAs and DAs are unaware of it and continue to abide by it. 14. Ghana National Procurement Agency (GNPA) Decree (SMMCD 55); the GNPA was set up as a profit oriented corporation to purchase in bulk and distribute “designated commodities” notwithstanding the provisions of any enactment empowering any other authority or body to perform similar function in relation to such commodity. All profits made by it were to be paid into the Consolidate Fund. With market liberalization and by virtue of GNPA conversion into a company, GNPA no longer enjoys that monopoly. The law has now ceased to have effect. The Non-Core Laws 15. Insurance Law (PNDC 227): all Insurance Companies in Ghana are established under this law. The law also established the Insurance Commission for supervision and control of the insurance business. The Insurance companies provide contractors with bid and performance securities (in the form of bonds) in addition to general insurance to cover risks under contracts. They rarely provide credit to contractors and suppliers. The law requiring Government agencies or statutory corporation in which Government owns more than 50% of the proprietary interest to insure with the State Insurance Corporation is no longer tenable due to market liberalization. 16. Companies Code: the Code requires that each company set out its capacity to undertake its functions under an object clause in the Regulations of the company. The objects of the company determines whether those who act on behalf of this “artificial person” are acting intra or ultra vires the power of the company. Public officials are required to ensure that companies dealing with Government procurement have the capacity to enter into contract with the Government. The contractual liabilities to be suffered by the Government in the event of a company lacking capacity and which fails to perform are enormous. The law requires that a Director of a company shall not without the consent of the company place himself in a position in which his/her duty to the company conflicts or may conflict with his personal interests or his duties to other persons. In particular, a Director shall not use his office for own advantage or be interested directly or indirectly otherwise than merely as a shareholder / debenture holder in any business which competes with that of the Company. 17. Bank of Ghana Law (PNDC 291): The relevance of this law to procurement lies in the BOG’s central role as the Government bank, which administers public funds. The

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efficiency of BOG is crucial to Government meeting its payment obligations to suppliers and contractors in a timely manner. 18. Criminal code: The most significant provision is on corruption. The Act provides for corrupt practices as offences; anti-corruption is one of the cardinal goals of any Public Procurement Law or process. 19. Limitations Decree (NRCD 54): the scope of this law include several issues such as procurement contracts; in particular Section 30 of the law applies to both proceedings by the state and private individuals. 20. Concessions Act 1962 [ACT 124]: this law is relevant to procurement planning where acquisition of land is concerned. Acquisition of land relates to procurement of works in that once the prior authorization of the Minister is sought and obtained one can enter into any concession relating to stool lands for any purpose so directed. Under section 2(b) the Minister may authorize any person to use for any purpose any road made on any land specified in such concession and may enter and inspect such land for any purpose which the Minister may think appropriate. 21. Customs and Excise (duties and other taxes) Act 1995 Act 502: This law affects procurement by institutions exempted from the payment of import duties. Tax and duty exemptions lead to some unnecessary gain in some instances because the exemptions granted have not led to reduction in cost of procurement contracts. In some instances the Government has to make a policy decision, for example, whether exemption granted to a state power corporation would be extended to an independent power producer. Getting exemption is often a lengthy process, which adds to procurement costs and lead-time.