CHAPTER ONE
INTRODUCTION
1.1 INTRODUCTION
Governments, in either developing or developed countries, exist to ensure the happiness of the citizens and by doing this; government adds value to the quality of life of its citizens. Governments all over the world are the greatest providers of services or public goods to the society. However, this depends not only on the resources endowment of such country but on the efficient and effective utilization of such resources at its disposal to ensure that resources are deployed in the overall best interest of the people. The importance of prudence, transparency and accountability in government spending, particularly in the procurement of goods and services for development projects cannot be over-emphasized.
The country's optimism for rapid and superlative socio- economic growth and development were predicated on its substantial natural resources endowment, such as major oil and gas deposit, a variety of solid minerals, a well-developed industrial base, an extensive banking system, a large labour force, a vibrant private sector, favourable growth indices, and a competent civil service. Nigeria being the most populous country in the African continent and the eleventh in the world must have had resources which would have translated into a profitable market that would make it the envy of the international community. In the light of this revelation, Nigeria has all it takes to become the strongest economy in Africa, and one of the leading economics in the world. In spite of all these blessings, the poor performance of the Nigerian economy in many sectors of economy is very evident. The real sectors of manufacturing and agriculture are performing rather poorly. The country imports a lot of the agricultural produce that the citizens consume. The capacity utilization of industries is around 50% of installed capacity. The country’s per Capita Gross National Product which was as high as $1,218.4 in 1980, declined continuously to its lowest level of $240.0 in 1992; standing at around $250 in 1995 and at $270 in 1997. The figure is still below $300.0 as at today (Obadan and Ayodele, 1999). They also observed that the poverty levels in Nigeria in spite of poverty alleviation programmes by successive governments remain high as population continues to increase.
In the light of the above, Nigeria can best be described as a country of a paradox of being rich while the citizens are poor and deprived. The World Bank (1996) reported the state of Nigeria’s dilemma, “That Nigeria’s poor economic performance overtime is largely attributable to lack of transparency and accountability as well as widespread corruption”. The State and its public bureaucracy are largely to blame for the phenomenon. Olowu (1993) corroborated this assertion that the two institutions have turned out to be not only highly centralized and unaccountable, but they have become opaque, corrupt, self-serving and insensitive to the economic misfortunes of their respective countries in Africa. This inclement situation is also confirmed by Geilerova (2001) when he opined that the main constraint to development in African countries is not lack of resources but unwillingness of their leaders to govern well. This development has thus justified the hypothesis that abundance of resources of all types is not a sufficient condition for all round development of any country (Obadan, 2003).
Since independence of Nigeria in 1960, the country has been experiencing a high degree of mismanagement of resources particularly in the area of public procurement. There have been existing open abuses to rules and standards in the award and execution of public contracts in Nigeria. These were evident in over-invoicing, inflation of contract costs, and proliferation of white-elephant projects and diversion of public funds through all kinds of manipulation of contract system. The regulatory bodies that were set up to ensure compliance with laid down rules and regulations on procurement and award of contracts in the public sector appeared ineffective. This resulted in a high level of corruption and enormous wastage of public resources, lack of transparency, accountability, fairness and openness. The situation made foreign and even local investors lose confidence in the Nigerian economy. It must be noted that the prevailing high level of corruption was closely linked up with the public sector procurement systems, and considering that about ten percent of the gross domestic product (GDP) must pass through the procurement systems. It then became imperative that the public procurement systems must be reformed if Nigeria must achieve economic growth and developmental strides in this new millennium.
It was in the light of the above that President Olusegun Obasanjo on assumption of office, in 1999, sought for and obtained the World Bank assistance to undertake a study of the existing procurement and financial systems in Nigeria. The outcome was the proposal submitted by the World Bank to Mr. President in 1999 that was tagged the “Country Procurement Assessment Report” (CPAR) which indicated the need for reform of the procurement law based on the United Nations Commission on International Trade Law (UNCITRAL) which has proven effective in a number of countries in the developed world, even in Lithuania, Estonia and Tanzania.
The findings of the Study (CPAR), which covered institutional as well as organizational structures relating to the existing procurement regime, are (World Bank, 1999):
i. Proliferation and ineffectiveness of Tender Boards.
ii. Lack of professionalism in the execution of the procurement functions.
iii. Weaknesses in bank financed projects
iv. Excessive deposit for opening of letters of credit. v. Lack of communication strategy.
- Weaknesses in the export, import and tariff procedures.