GOVERNMENT OF LESOTHO CHARTER FOR SMALL AND MEDIUM SIZED ENTERPRISES

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1 GOVERNMENT OF LESOTHO CHARTER FOR SMALL AND MEDIUM SIZED ENTERPRISES November 2006

2 Forward The vast majority of all businesses in Lesotho are small and medium sized enterprises (SMEs). The Government of Lesotho has long recognised and appreciates the key role such organisations play in the continued development of the Lesotho economy. The continuing health of our economy, our communities and our environment will depend on the health and growth of SMEs. The aim of this Charter and that of the Government is to nurture SMEs and further their role in fostering economic, environmental and social benefits across the Kingdom. Definition SMEs - Grace Despite government being able to offer business opportunities to SMEs, it is aware that many are apprehensive about engaging with government bodies, due to both real and perceived barriers; not least past performance on the payment of invoices. This Charter clearly sets out our commitment to changing the manner in which your Government does business and also seeks the support of all individuals, in whatever organisations, in helping to create a fair and open environment in which we can do business together and jointly help our country. The process of procurement reform is being led by the Ministry of Finance and Development Planning working closely with representatives of the Basotho business community. Both are anxious to see former barriers to future business lowered, and preferably removed, and to dispel any myths surrounding doing business with the public sector in Lesotho. This Charter has been developed jointly by the Ministry of Finance and Development Planning and business representatives and forms part of a programme of actions to deliver a fair, consistently effective and transparent approach to procurement in Lesotho while addressing issues of particular concern to SMEs. In requiring the public sector in Lesotho to implement this Charter, Government is also sending out a clear and vibrant signal that all our organisations, be they governmental or private, have an important role to play in creating a strong and sustainable future for our country. The challenge to us all is to grasp this opportunity without delay so that we can build a better future for our people. 1

3 It is not anticipated that this task is simple, or can be achieved overnight, but changes in public sector procurement and the methods it employs can optimise employment opportunities; this is another step forward we would all wish to make. All will agree with your Government that things of real value are rarely achieved without effort. Government itself is now prepared to exert this effort and calls on Basotho businesses irrespective of size to similarly join in. Signed Minister of Finance and Development Planning 2

4 Introduction 1. The public sector in Lesotho is complex and diverse with many contracting authorities and buyers in Maseru and the Districts. It is carried out by those organisations such as Ministries and Districts whose budget is allocated from government funds. Some of these also receive funding from Lesotho s donor partners. The organisations suppliers are most likely to come into contact with are: Central Ministries this covers the larger Ministries such as Education, Health and Social Welfare, and Works and Transport, and the smaller ones such as Employment and Labour & Gender, and Youth, Sports and Recreation. District Councils. Government-owned enterprises. 2. Much of the public money spent on procurement is exported to other countries, particularly to the Republic of South Africa. Each Maloti not spent in the Kingdom exports jobs. Each Maloti that goes to local businesses builds up the employment prospects of our own nationals and contributes to our country s economy. Acting within the principles of this Charter will assist us do this. 3. Business support organisations in Lesotho, such as the Chambers of Commerce, and the Ministry of Trade, Industry, Cooperatives and Marketing are in place to help meet the needs of individual businesses when trading with government. The improved procedures and processes being introduced as part of the reform of public procurement will assist Basotho SMEs to win more business. If you require more information please visit the webpage of the newly established Procurement Policy and Advice Division (PPAD) within the Ministry of Finance and Development Planning (xxxxxxxxx). 4. Procurement IS changing and it is vitally important that SMEs and the public sector fully understand each others processes, expectations and limitations. This Charter aims to set a minimum level of good practice for public bodies and the private sector. 3

5 Government s commitments to SMEs We welcome the opportunity to do business with SMEs and will:- Become familiar with SMEs in our country and the services they provide. Take steps to find out what the barriers are to us doing business with appropriate SMEs, and seek to remove or lower them. We welcome the fact that public buying is no longer an adversarial process. Not assume that larger suppliers always offer better value for money. Openly publish guidance, including on-line documents, and brief SMEs on our requirements, the opportunities we have available, who to contact, and how to tender for our business. Make it easier for SMEs to talk to us. Ensure our procurement and other internal systems create a level playing field for SMEs. Look for best overall outcomes from our procurement activity (not just lowest prices) using broad based and published value for money selection criteria to make purchasing decision. Ensure genuine and fair competition that does not discriminate against SMEs. Set ourselves a target to pay invoices within 30 days from receipt of a valid and correct invoice. Set ourselves a target to query incorrectly submitted invoices with suppliers within 2 days or receipt. More widely advertise our tendering opportunities and contracts won. Actively encourage our large suppliers to provide positive and actual opportunities for SMEs to be their sub-contractors and to deliver elements of appropriate contracts for them. Welcome tenders and offers from small businesses that are joint tenders, collaborative tenders or consortia tenders Comply with all applicable law, domestic and international, and in particular in relation to the principles of nil discrimination, and apply these rules to all tenderers in a fair, open and transparent manner. 4

6 Government s commitment to sustainable development We are totally committed to sustainable development and will:- Consider issues of sustainability (in all its forms) in all aspects of procurement and advertise these to all through the Contracts Bulletin and on the webpage of PPAD. Apply sustainable procurement and development criteria in determining value for money, including assessing the impact of economic, social and environmental factors. Encourage SMEs to embrace sustainable development and assist them in this task wherever possible. Government s commitment to fair, free and non-corrupt procurement We are reforming and modernising our procurement processes to ensure that they are transparent, free from corruption and fair for all SMEs. To achieve this, we will:- Ensure, over time, that skilled and professionally qualified personnel manage the procurement process. Keep our tendering process as simple as possible to minimise cost and to make it easier for companies to tender. Cut down on the administration needed to tender, simplify our documents, provide clear specifications that identify all our requirements, and use plain and simple language. Move towards a consistent Lesotho-wide approach to contract documentation. Apply whole life or through life costs, and not just the initial cost of the product or service when considering value for money. 5

7 Explain our procurement processes to SMEs and how they need to comply with Lesotho and international law. Give SMEs sufficient notice of procurement plans (1 to 3 years ahead). Give SMEs sufficient notice about changes in our processes to allow time for them to adapt. Move towards a consistent Lesotho-wide approach to registering suppliers on a government Approved Suppliers List. Consider risks in contracting fairly ensuring large businesses are not offered a premium position simply through a large turnover figure. Implement a Basotho private sector empowerment scheme to ensure that national businesses are given an element of preference in the tendering process. Package large contracts into separate elements of make use of lots (if appropriate) to ensure that SMEs are not excluded from tendering. Consider contract banding to potentially allow small firms to know if they have a realistic chance and opportunity to tender, and to increase their opportunities to tender. Give SMEs suppliers an opportunity to discuss the procurement in order to understand Lesotho government requirements and assess their ability to satisfy the contract / contract lot. Decide what our financial qualification for tendering requirements are in the light of the particular purchase and consider the effect on small Lesotho companies on each occasion, having accounted for the issue of risk in a fair and reasonable manner. Not to ask for more than two years accounts, and to accept alternative information from newer businesses. Use outcome specifications and consider alternative products or services SMEs may wish to offer. Offer feedback to successful and unsuccessful tenderers, to help SMEs improve. Treat all SMEs fairly. 6

8 Government s commitment to continuous improvement To make sure our Lesotho Government process continues to improve, we will:- Adopt good practice procurement guidance and standard tender templates developed by PPAD. Ask SMEs to help us, by providing feedback on our processes and procedures, and suggest new, better and more innovative solutions. Publish and implement a continuous improvement procedure. Publish and implement a complaints and appeals procedure. The Code is not intended to have legal effect although it is consistent with the Public Procurement Regulations 2006 and procurement policy guidelines as set out in the Lesotho Procurement Manual. 7

9 SME s commitment to Government In order to help us help you do business with the government, you will be prepared to:- Register on the Approved Supplier List as a potential supplier to the Lesotho government. This applies to any sized business even if the intention is to bid for work only on low value contracts and purchases. Provide further information we may need to understand your business. Take advantage of the opportunities we offer for you to meet with us. Ensure that you know what is required of you to meet government requirements, and if you do not know, to seek advice. Be realistic in assessing your own capabilities to deliver what Government is offering. Take up new methodologies as the Lesotho Government becomes capable of using them e.g. electronic trading and payment by Credit Card. Band together to form effective tendering consortia and a self supporting supply chain within the Lesotho economy as appropriate. Ensure all activities are conducted in an honest and responsible way notifying the PPAD of any suspected corruption or misdeeds in procurement administration. Continuously improve your company s contribution to match the desired improvement in procurement by the Government and the improving national economy. Treat your own suppliers fairly and pay them within the Government target of 30 days. You will have a reputation for, and will want to provide Government with a high quality competitive service by:- Continuously updating personnel skills and your business capability, seeking assistance from Business Support Agencies in the Kingdom, if appropriate 8

10 Considering collaborating with other suppliers, if this makes your service to Government more competitive or reduces risk. Accept it is better to partner within Lesotho than with others outside the country for the benefit of the whole community within Lesotho. 9

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