Nigeria to save N12 billion yearly from new procurement pricing guidelines

Minister of Finance, Kemi Adeosun
Minister of Finance, Kemi Adeosun

The Nigerian government hopes to save at least N12 billion annually from the services of the newly-established Efficiency Unit (E-Unit) of the Federal Ministry of Finance.

The head of the unit, Patience Oniha, said in her maiden media briefing in Abuja on Tuesday that the expected savings would be realised if pricing for goods and services by the ministries, departments and agencies, MDAs were standardised.

“We intend to use government’s large purchasing power to negotiate favourable terms from suppliers, while streamlining the procurement process to make it more wholesale rather than fragmented.

“There is potential opportunity to save up to N12 billion annually if goods and services are standardised and demands of MDAs are aggregated to negotiate fair discounts from suppliers,” Mrs. Oniha said.

She explained that government would introduce price guidelines and shared services policy among MDAs to increase transparency in the procurement process, while the work processes and practices would be reviewed to identify and eliminate areas of wastage, excess capacity and duplications.

In the short to medium term, Mrs. Oniha said government would cut huge losses recorded in the past if the demand by MDAs were properly aggregated to allow for fair-discount negotiations from suppliers of goods and services.

At the inauguration of the E-Unit, Minister of Finance, Kemi Adeosun, said guidelines and standards would be set to benchmark government expenditure for efficiency and reduction in costs and overheads.

“The Efficiency Unit would benchmark government expenditures by comparing with similar expenditures in the private sector and see how they have been able to negotiate their prices and costs efficiently,” the Minister said.

However, Mrs. Oniha, who spoke extensively on the role of the E-Unit in the face of dwindling revenue, said over the years there were concerns over the disproportionate share of overheads (cost of running the government) in the annual budget.

She said the government had introduced reforms to reduce public sector costs, pointing out that there was the growing need to rationalise the number of public institutions and positions in line with the commitment to promote efficiency in government spending and achieve savings.

The key mandate of the unit, Mrs. Oniha explained, included efforts to eliminate waste and duplications in government’s work processes and activities as well as generate savings for government from the procurement process.

“Government needs to use its resources more judiciously in “lean and fat” times. Government needs to invest more in infrastructure. Spend more on Capital, rather than recurrent services,” she said.

Besides, he said the E-unit has the responsibility to review the public procurement process and compare with best practices from other jurisdictions and large private sector, to ensure that more was done with less, while creating value for money.

Apart from savings for government from procurement, elimination of wastages, excess capacity and duplications, the head of the E-Unit said such savings would be channelled to priority projects, to improve infrastructure, encourage domestic production and attract fresh investors.

“The E-Unit is not going to be buying the supplies of the MDAs or create one warehouse where all the ordered items would be kept and distributed,” Mrs Oniha explained. “Our mandate is to negotiate with suppliers to get fair bargains for government, which consumes huge quantities of the goods, rather than buying in fragmented quantities.”

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