What is Procurement?

General Qustion & Answes (AFDB) African Development

Bankings!
Procurement refers to the process of acquiring goods, works and services resulting in the
award of contracts under which payments are made in the implementation of projects, in
accordance with the governing Rules and Procedures and Guidelines of the financing agency
or agencies.
What are the Banks policies in procurement?
The Banks procurement policy is based mainly on five considerations, namely:

Need for economy and efficiency in project implementation;

Equal opportunity for all eligible suppliers and contractors from member countries to
compete in the supply of goods and works services financed by the Bank;

Encouragement of the development and participation of contractors and suppliers

from Regional Member Countries of the Institution, and

The importance of transparency, accountability, competency, and non-discrimination,

in the procurement process; and

Combating fraud and corruption in the procurement process.

Where can anyone find the procurement rules and guidelines governing the projects
financed by the AfDB?
Most of the procurement rules and guidelines for the Multilateral Development Banks
(MDBs) can be found on their respective websites.
What criterion is applied for eligibility and who is eligible to participate?
The proceeds of loan shall be used for procurement of Goods and Works from the eligible
member countries of AfDB only. Bidders from Non - member countries offering goods and
works are not eligible, even if they offer from an eligible country. All member countries of
the Bank are eligible to participate in all the procurements.
What different types or modes of procurement are commonly used in the projects
financed by AfDB? Does the Bank always prefer International Competitive Bidding
(ICB)?
The different modes of procurement, which are generally used in the projects financed by
AfDB, are: International Competitive Bidding (ICB), Limited International Competition
(LIC), National Competitive Bidding (NCB), International Shopping (ISH), National
Shopping (NSH), Force Account and Direct Purchase. Every procurement mode differs and
depends on the nature, type and complexity involved in different components of the Project.
Generally, AfDB prefers International Competitive Bidding (ICB) for the majority of its
procurements, except in cases where the amounts are small and may not attract international

competition from all Member Countries, in which case, the Bank recognizes that other modes
of procurement may be more appropriate.
What types of contracts are commonly used under Bank-financed projects?
The most common types of contracts under Bank financed projects are, Unit Price, Lump
Sum or combinations thereof. In special cases, such as closely integrated manufacturing or
works of special nature, the Bank may resort to Turnkey contracts under which, the design &
engineering, supply, installation and construction of works will be procured under one single
contract.
How long does it normally take a firm to win a Bank financed contract?
The time and cost of winning a contract can vary a great deal. Specifically, the length of time
depends on the mode of procurement. Furthermore, the likelihood that a firm will win a
contract depends also on how competitive it is in a particular borrowing member country.
What is mis-procurement?
The term mis-procurement is used cases where the Goods, Works or Consulting Services,
financed by the Bank are not procured in accordance with the Banks rules and procedures.
Under these conditions, the Bank may resort to cancellation of that portion of loan allocated
for the goods, works and services that have been mis-procured. In certain cases, the Bank
may even cancel the total loan for the project, particularly if the major component of the
project has been mis-procured, and the Borrower does not agree to re-tender in accordance
with the Banks procurement rules.
Does the Bank encourage Joint-Ventures in the procurement of Goods, Works and
Acquisition of Consultancy Services?
Yes. The Bank recognizes the formation of joint-ventures by companies in order to increase
capacity for a specific supply of goods, provision of works or services. Furthermore, in order
to encourage the development of domestic industry, suppliers and contractors in the
Borrowers country, are encouraged to participate in the procurement process. The local
suppliers or contractors can bid either independently or in joint-venture with foreign firms,
from member countries, in accordance with the conditions of the Banks Rules.
If a project is co-financed (parallel-financed or jointly-financed) with other agencies,
which Rules will apply for procurement?
Co-financing can either be parallel-financing or joint-financing. Where the Bank finances a
project on a parallel basis, (which refers to several components or contracts) with other
financiers, the Banks rules and procedures for procurement shall apply to its specific
component or contract. If the Bank finances on a joint basis (single contract) with other
financiers, other than the Borrower, usually it will require as a condition, that its rules will
apply, unless a waiver is given by the Banks Board of Directors.
How does the Bank deal with cases of fraud or corruption in procurements under
projects financed by the Bank?

The Bank expects that Staff of Borrowing Member Countries and bidders, suppliers,
contractors, consultants and concessionaires shall observe the highest standards of ethics
during the procurement process. The Bank will conduct its own investigation, if it comes to
know of any fraud or corruption cases during the procurement process. In the event that fraud
or corruption is established, the Bank will then take some or all of the following actions:

Reject a proposal for award, if the award of contract was recommended by the
Borrower;

Cancel the portion of the loan allocated for procurement of goods, works or
consultancy services during the procurement process or during the execution of the
project;

Declare the firm an ineligible supplier, either indefinitely or for a stated period of time
to be awarded a Bank financed contract.

Some MDBs publish, either monthly or quarterly, the Contract Awards Information on
Goods, Works and Consulting Services. Does AfDB also publish such information, if so
how does one access them?
Contracts awarded on Goods, Works or Consultancy Services are published in the Banks
AfDB Business Bulletins and on the Website.
Are there any guidelines or publications available for AfDB financed projects on Prequalification and Bid Evaluations?
Yes. The Bank has Standard Procurement Documents, eg for Pre-qualification and Bid
Evaluation.