DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS

THE UNITED REPUBLIC OF TANZANIA

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE

2016

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE i

Tanzania economy is growing at an accelerated pace and in the next decade is expected that the country will achieve a middle income economy by 2025. Around the world, road construction industry is growing at unprecedented rate and continues to contribute immensely in the economy of many countries including Tanzania. In developing countries, road transport system is the dominant mode of freight and represents the biggest share in terms of freight and passenger traffic. It is also a fact that where road systems are properly constructed contribute to efficiency of the economy as they provide many economic and social opportunities. The Government of Tanzania commitment to this sector coupled with donor funding several road infrastructure projects in our country, huge sums of money is expended annually and therefore, my Office has to make a closer look on the industry.

These road projects are characterized by complex design and technical skills, competent human resources and managerial capabilities to execute such projects which attract high cost to implement. Conversely, our country experiences shortage of some of the pre requisite of realizing completion of the roads infrastructure. The road infrastructure sector has also attracted and contributed to a breeding ground for corruption which has sequentially provoked the failure of several road infrastructure projects. The main impacts of corruption in the sector include reduced quality of infrastructure and attendant services; limited access to social services, especially for the poor; raising operating cost; delays as well as reduced investment on infrastructure. To realize the full potential of roads construction contribution towards strong economy and the value for money in road construction is the climax of this study.

The development and implementation of anti corruption measures depends on understanding the phenomenon in a particular industry. The diagnostic survey on corruption road infrastructure was therefore conducted as a part of broader initiative of PCCB to enlighten various stakeholders on the nature and extent of corruption at various stages in the implementation of roads projects in Tanzania. The report of the survey will undoubtedly help policy and decision markers in improving business environment for roads construction industry by the development of good practice guidelines to curb corruption in the industry.

The report has successfully managed to depict the authentic picture and resurface the vulnerable areas for corruption along with the whole cycle in the implementation of roads projects and come up with practical and viable alternatives in reversing the viral trend of the vice before the situation becomes unmanageable. It is our profound belief that different stakeholders would benefits immensely based on the information from this report.

Carrying out surveys requires time, financial, human and other resources. We therefore acknowledge the tireless efforts of several institutions and individuals who have made this survey possible. We particularly express our profound gratitude to the African Development Bank for their financial support for this project. We also extend our appreciation and thanks to the consultant for this project, IT Transport in association with Design Partnership and the Engineers against Poverty who conducted the diagnostic survey. Their professionalism has led to the realization of this valuable report.

PREFACE

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTUREii

Special thanks also go to the Technical Committee Members composed of officials from TANROADS, CAG, CRB, PCCB and the MOW for dedicating their precious time and efforts for providing valuable guidelines, comments and inputs at various stages of implementation of this project. This report would not have been possible without cooperation of the office of the Speaker of the National Assembly; Regional Administrative Secretary offices in Arusha, Morogoro, Rukwa, Shinyanga, Mwanza, Ruvuma, Mbeya, Dodoma and Dar es Salaam regions; contractors, consultants and public officials who participated in the survey. Their input is highly appreciated. We look forward to your feedback after reading the report.

Valentino Mlowola Director General Prevention and Combating of Corruption Bureau (PCCB).

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE iii

PREFACE ............................................................................................................................................ i

LIST OF TABLES ................................................................................................................................ v

LIST OF FIGURES ................................................................................................................................ vi

ABBREVIATIONS ................................................................................................................................ vii

EXECUTIVE SUMMARY .................................................................................................................... viii

SECTION I: GENERAL .................................................................................................................... xv1. INTRODUCTION ........................................................................................................................ 12. SURVEY METHODOLOGY AND SAMPLE .............................................................................. 3

2.1 Methodology ................................................................................................................... 32.2 Survey Sample ............................................................................................................. 42.3 Profiles of Survey Respondents .................................................................................. 52.4 Limitations of the Survey ............................................................................................. 7

3. BACKGROUND .......................................................................................................................... 83.1 Corruption Perception .................................................................................................. 83.2 Roads Infrastructure Network and its Management ............................................... 93.3 Corruption and Mismanagement in Roads Infrastructure Projects ........................ 93.4 Recent Procurement in Major Road Infrastructure Projects ................................... 113.5 Controlling Corruption in Roads Infrastructure Projects .......................................... 15

SECTION II: SURVEY FINDINGS AND DISCUSSION ....................................................................... 184 RESPONDENTS’ UNDERSTANDING OF CORRUPTION ......................................................... 185 EXTENT AND SEVERITY OF CORRUPTION IN ROADS INFRASTRUCTURE SECTOR ......... 20

5.1 Experience of Corruption .............................................................................................. 205.2 Seriousness and Causes of Corruption ...................................................................... 215.3 Extent of Corruption ....................................................................................................... 245.4 Project Development, Budgeting and Auditing ......................................................... 315.5 Corruption Trend ........................................................................................................... 345.6 Reporting Corruption .................................................................................................... 35

6. KNOWLEDGE OF PROCUREMENT ACT AND REGULATIONS ............................................... 376.1 Public Officials ............................................................................................................... 376.2 Private Enterprises ........................................................................................................ 38

7 FIGHTING CORRUPTION IN ROADS INFRASTRUCTURE PROJECTS .................................. 407.1 Anti-corruption Measures Suggested by Respondents ............................................. 407.2 Additional Suggestions from Private Businesses ..................................................... 417.3 Additional Suggestions from Public Officials ............................................................. 42

SECTION III: CONCLUSIONS AND RECOMMENDATIONS .............................................................. 448. CONCLUSIONS AND RECOMMENDATIONS ............................................................................ 45

8.1 Conclusions ................................................................................................................... 458.2 Recommendations ......................................................................................................... 47

CONTENTS

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTUREiv

APPENDIX 1: TERMS OF REFERENCE ................................................................................... 52

APPENDIX 2: DOCUMENTS CONSULTED ................................................................................ 60

APPENDIX 3: PERCENTAGE OF RESPONDENTS ASSOCIATING CORRUPTION TO VARIOUS ACTIVITIES ............................................................ 66

APPENDIX 4A: RESPONDENTS’ RATING OF CORRUPT PRACTICES BY STAGES OF PROJECT IMPLEMENTATION .................................................. 68

APPENDIX 5: RESPONDENTS’ RATING OF EFFECTIVENESS OF MEASURES TO CURB CORRUPTION BY STAGES OF PROJECT IMPLEMENTATION ............................................................................. 80

APPENDIX 6: SOURCE DATA AS EXTRACTED FROM JISR REPORTS ................................... 82

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE v

Table 1: Survey Sample and Response Rate .................................................................................... 5

Table 2: Percentage Share of Contract Value for Contractors ....................................................... 12

Table 3: Percentage Share for Consultants (by value of works contracts they supervise) ........ 12

Table 4: Budgeted, Contract Value and Amount Spent by Financier ............................................ 13

Table 5: Contract Share by Country of Contractor ........................................................................... 13

Table 6: Unit Cost of Road Works in Tanzania ................................................................................ 14

Table 7 : Unit Cost of Roadworks Based On World Bank Study (USD X 1000) .............................. 15

Table 8: Percentage of Respondents Associating Corruption to Various Activities ................... 18

Table 9: Percentage of Respondents Rating Corrupt Activities as “Common” Or “Do Occur” By Stages of Project Implementation .................................................... 30

Table 10: Percentage of Contractors Rating Corrupt Activities as “Common” or “Do Occur” by Size of Firm and Involvement in Government Projects ........................ 31

LIST OF TABLES

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTUREvi

Figure 1: Percentage of respondents by percentage of business involving government projects ................................................................................................... 6

Figure 2: Distribution of Public Officials staff by Field Specialization .................................... 7

Figure 3: Comparison of Cost of Corruption, Overseas Aid and GDP of Tanzania ................ 8

Figure 4 : % of Respondents Who Consider Corruption a Problem ......................................... 24

Figure 5: % of Respondents Who Link Corruption to Weak Enforcement .............................. 24

Figure 6: Distribution of Respondents by Identified Reasons for Weak Enforcement of Laws .................................................................................................. 25

Figure 7: Stages of Project Cycle Prone to Corruption (Public View) ...................................... 27

Figure 8: Stages of Project Cycle Prone to Corruption (Private View) .................................... 27

Figure 9: Illegal Payments Affect Quality .................................................................................. 35

Figure 10: Type of Audit Reports from CAG ................................................................................. 36

Figure 11: Public Officials View of Value for Money .................................................................... 36

Figure 12: Trend in Corruption (Private View) ............................................................................. 37

Figure 13: Trend in Corruption (Public View) ............................................................................... 37

Figure 14: Reporting Corruption .................................................................................................. 38

LIST OF FIGURES

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE vii

ACET : Association of Consulting Engineers TanzaniaAO : Accounting OfficerAQRSB : Architects & Quantity Surveyors Registration BoardBoQ : Bills of QuantitiesCAG : Controller and Auditor GeneralCATA : Contractors Association of TanzaniaCGOs : Central Government OfficialsCoST : Construction Sector Transparency InitiativeCPI : Corruption Perception Index (compiled by TI)CRB : Contractors Registration BoardDANIDA : Danish International Development AgencyDFID : Department for International DevelopmentEOI : Expression of InterestsERB : Engineers Registration BoardGDP : Gross Domestic ProductGGCU : Good Governance Coordination UnitIET : Institution of Engineers TanzaniaJISR : Joint Infrastructure Sector ReviewLGA : Local Government AuthorityMCA-T : Millennium Challenge Account-TanzaniaMOID : Ministry of Infrastructure DevelopmentMoW : Ministry of WorksMDAs : Ministries, Departments and AgenciesNACSAP : National Anti-Corruption Strategy and Action PlanNAO : National Audit OfficeNCC : National Construction CouncilPACS : Project Anti-Corruption SystemPCCB : Prevention and Combating of Corruption BureauPE : Procuring EntitiesPMO-RALG : Prime Minister’s Office – Regional Administration and Local GovernmentPPA : Public Procurement ActPPAA : Public Procurement Appeals AuthorityPPRA : Public Procurement Regulatory AuthorityRFB : Roads Fund BoardSPSS : Statistical Package for Social SciencesTACECA : Tanzania Civil Engineering Contractors AssociationTANAPA : Tanzania National Parks AuthorityTANROADS : Tanzania National Roads AgencyTI : Transparency InternationalTZS : Tanzanian ShillingsUK : United KingdomUSD : United State of America Dollars

ABBREVIATIONS

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTUREviii

A BACKGROUND

The roads infrastructure sector in Tanzania is important in the country’s national economy. Yet, like the construction industry as a whole, it is widely perceived to be one of the more corrupt sectors. The problem of corruption is neither new nor unique to Tanzania and the government has invested substantial efforts in preventing and fighting it. To succeed in this endeavor, government organs entrusted with preventing and fighting corruption have to be knowledgeable and well informed on governance issues and state of corruption in the country. This requires a detailed assessment of the levels, nature and extent of corruption in the country to inform policy, decision-making and resource allocation.

Previous initiatives to gather information on corruption in the country include the 1996 Report of the Presidential Commission of Inquiry Against Corruption, popularly known as the Warioba Commission Report, the 2002 State of Corruption in Tanzania Report and the 2009 National Governance and Corruption Survey. However, these initiatives, whilst answering specific questions, do not provide comprehensive sector-specific analyses to inform policy reforms. This diagnostic survey addresses this shortcoming in the roads infrastructure sector

The survey has solicited information on corruption in the roads infrastructure sector and its developmental impact from public officials and private business enterprises for the purpose of establishing institution-specific determinants of corruption in the sector – a vital baseline needed for policy reform. Its findings will inform the policy dialogue on multiple issues, including:

• Fosteringpublicawarenessaboutnationalgovernanceandcorruption;• Identifyingareasorissuesforfurtherresearch;• Providinganempiricalbasisforplanning;• Providingempiricaldatafordevelopingstrategiesforcombatingcorruption;and• Providing empirical benchmark formonitoring andevaluating effectiveness of anti-

corruption programmes over time.

The scope of the survey covers the following main activities:

(i) Review of background information on corruption in the construction sector, including on-going anti-corruption activities in the sector;

(ii) Development of the survey sampling frame consisting of two different polls that were carried out simultaneously to cover public officials and private enterprises;

(iii) Design of survey instruments;(iv) Development of computer based data entry templates;(v) Field survey covering 205 public officials and 221 enterprise officials from Dar es

Salaam and eight other pre-selected regions of Tanzania mainland;

EXECUTIVE SUMMARY

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE ix

(vi) Data entry, processing, analysis and interpretation; and (vii) Stakeholder consultations.

A brief desk analysis, based on TANROADS annual submissions to the Joint Infrastructure Sector Review, of a selection of large scale road construction projects was also carried out comparing expenditure with budget and initial contract value.

B MAIN FINDINGS AND CHALLENGES

B.1 General

Based on findings of the survey, literature review and stakeholder consultations, it is evident that Tanzania has come a long way in its efforts to prevent and combat corruption. It has a comprehensive anti-corruption framework led by the Prevention and Combating of Corruption Bureau (PCCB) and supported by the Public Procurement Regulatory Authority (PPRA) and other oversight organizations along with various regulatory boards and voluntarily constituted non-governmental organizations, including active trade and professional associations. However, these efforts, thus far, have failed to prevent and combat corruption in roads infrastructure sector. Novel efforts and tougher sanctions are now called for.

The causes of corruption in the sector, which can be traced back some 20 years, are now deeply rooted in the socio-economic fabric of society and emboldened by weak enforcement of existing anti-corruption laws and public procurement regulations. This apparent social acceptability of corruption coupled with the prevailing low risk of detection and prosecution of corruption offenders has encouraged corruption to thrive.

Because of the large amounts of money involved in the implementation of roads infrastructure projects, such projects are special targets of grand corruption which is the main cause of poverty in the country. However, money lost through corruption in roads projects is not the only economic damage to the projects. Poor quality of construction, as contractors cheat on materials and ignore specifications in order to recover money lost in bribes, shortens the life of the road and hence drastically reduces its economic rate of return.

Major roads projects in this country are entrusted to, almost exclusively, a few foreign firms. This arrangement has adverse economic implications. Not only does it increase the risk of collusion among bidders but it also limits the participation of local firms. The Public Procurement Act (PPA) policy of aggregating projects instead of splitting should be reviewed to help local firms participate in major road projects and to so reduce the risk of corruption in these projects through foreign contractors’ cartel behaviour.

This will also enhance the development of local contractors, particularly those in the higher registration categories.

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTUREx

B.2 Specific Findings

More specific findings of the survey concern the respondents’ understanding and experience of corruption as well as their perceptions on its extent, severity, trends and possible mitigation measures. These findings are summarized below:

(i) Understanding of Corruption

Respondents of the survey have a broad understanding of corruption and its causes and effects in the roads infrastructure sector. However, while they overwhelmingly cited payment of a bribe to obtain a contract as corruption, they are less conversant with the more sophisticated forms of corruption such as money-laundering, embezzlement of public funds and other fraudulent practices used to perpetuate grand corruption in roads infrastructure projects

(ii) Extent and Severity of Corruption

Despite Tanzania’s elaborate anti-corruption framework, corruption in the roads infrastructure sector is serious, extensive and increasing in severity. Various procurement risks prevail in all procurement stages of road projects, negating the mistaken assumption that the greatest risk of corruption in the project cycle is at the tendering stage where bidders bribe in order to win a contract.

Respondents to the survey reported a number of common corrupt practices taking place in the various project procurement stages. They reported the most common issues symptomizing corruption during the project planning and design stage as procurement with incomplete or inadequate designs, inflated BoQs, tailored specifications, exaggerated economic benefits at feasibility stage that lead to procurement without underlying need, and signing contracts with inadequate project budgets. The most commonly occurring corrupt practices at the tendering stage are paying a bribe to win a contract, influence peddling, tender information unevenly distributed to bidders and collusion among bidders.

Survey respondents also attach considerable risks of corruption to the project execution stage. They reported that the most commonly occurring corrupt practices during this stage are paying a bribe to have false variations, bogus claims, defective work or payment certificates approved, and collusion between contractor, client’s representative and/or supervising engineer to steal project funds through fraud.

Corruption risks have increased in the roads infrastructure sector during the past 5-10 years. Private enterprises are more pessimistic about the trend of corruption in the sector than public officials, with 70% of respondents from the former stating that corruption has increased in the past five years against 26% of respondents from the latter.

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE xi

(iii) Knowledge of Procurement

Survey respondents have a limited understanding of PPA and its Regulations. This undermines fairness, transparency and accountability in the procurement of road projects and limits the rights of aggrieved parties in case of misprocurement. This therefore calls for continuous awareness raising and regular training programmes for Procuring Entities (PEs) and bidders on PPA and its Regulations.

(iv) Fighting Corruption

Survey respondents attributed the prevalence of corruption in the roads infrastructure sector to weak enforcement of anti-corruption laws and public procurement regulations, and to the fact that no action is taken when corruption is discovered. This therefore calls for stricter enforcement of anti-corruption laws and public procurement regulations, as well as severe punishment for those found guilty of breaking the law or contravening procurement regulations.

Several respondents also mentioned that there is influence peddling and pressure from above to demand a bribe. These respondents felt that such leaders benefit most from corruption and should be severely punished. Hence, bringing corrupt high-ranking individuals to justice with severe punishment is critical.

However, punishing corrupt individuals has its limitations when corruption is so widespread. The system that permits such corruption to thrive has to be addressed.

It should also be noted that corruption is a key symptom of governance failure and goes hand in hand with project mismanagement. This is evident from various reports of technical and performance audits conducted by the National Audit Office (NAO), PPRA and Roads Fund Board (RFB). These reports reveal that most locally funded road projects lack financial discipline, resulting in delayed payments to contractors, time and cost overruns. In practice it is very difficult to separate corruption from the associated project mismanagement, but the outcome is the same: poor value for money.

To mitigate project mismanagement and associated corruption risks appropriate training in project management is fundamental. Officials responsible for road projects management in Tanzania National Roads Agency (TANROADS) and in Local Government Authorities (LGAs) need enhanced skills to effectively administer and supervise road works contracts. In addition, continuous and effective oversight monitoring of all on-going road projects, through regular technical and anti-corruption audits is needed.

Enhancing project management capabilities of TANROADS and LGA officials, though vital, has limitations. It cannot stand alone in the fight against corruption. Evidence shows that a major cause of corruption in the roads infrastructure sector is that the risk of being detected is very low. The accountability of the roads projects procurement system would therefore

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURExii

benefit from involving, on a continuous basis, greater number of different professionals to carry out independent review and to enhance the capacity of detecting corruption in a timely manner.

(v) Reporting Corruption

Findings of the survey confirm that although there are many discrepancies in the procurement process of roads infrastructure projects, bidders rarely complain for fear of victimization and lack of awareness of the appeals handling procedures. Many bidders consider it risky for business to report corruption or to appeal, fearing to lose future business from regular clients.

(vi) Engagement of Stakeholders

The government is not alone in the fight against corruption in the roads infrastructure sector. Other initiatives in the construction industry, particularly those pioneered by the Construction Sector Transparency Initiative (CoST) and various professional and trade associations, can play an important role of proactively engaging a wider spectrum of stakeholders in the public, private and civil society organizations in the war against corruption in roads infrastructure projects. Such initiatives need to be encouraged and promoted.

(v) Overspend Against Budget and Contract Value

Several large TANROADS projects were found to have spent well in excess of original budget and contract value.

C RECOMMENDATIONS AND THE WAY FORWARD

The main message of this survey is that corruption in the roads infrastructure sector is bad for business and undermines national efforts to develop and grow the economy. Hence, the prospects for a healthy and successful roads infrastructure sector in Tanzania depend on dealing effectively with corruption. This in turn depends on the commitment and cooperation of all stakeholders in the sector – notably the government, its road sector executive agencies as well as contractors, consultants and suppliers – to take effective measures to address both the demand and supply sides of corruption.

Based on findings of the survey, this Report recommends the following actions for the way forward.

(i) Strengthen enforcement of laws governing anti-corruption and public procurement.

(ii) Bring corrupt high-ranking individuals to justice with severe punishment.

(iii) Establish a regular dialogue mechanism with the professional and sector associations to advise PCCB and PPRA on combating corruption.

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE xiii

(iv) Establish awareness raising programmes for stakeholders on various types of corruption that occur in the road sector.

(v) Provide continuous and regular training for stakeholders on PPA and its Regulations.

(vi) Strengthen project management capabilities of TANROADS and LGA officials through specialized training to enhance their skills to effectively administer and supervise road works contracts.

(vii) Ensure continuous and effective oversight monitoring of on-going road projects through regular technical and anti-corruption audits.

(viii) Promote the use of independent professionals to advise and assist TANROADS and LGAs in detecting corruption in road projects.

(ix) Package road works contracts to encourage a wider participation of local contractors and reduce risk of foreign contractors’ cartel behaviour.

(x) Enhance transparency and accountability in the procurement of roads infrastructure projects by supporting initiatives such as Construction Sector Transparency Initiative (CoST) promoted by various civil society organizations.

(xi) Provide legal protection from victimization for bidders who report or complain about malpractices in the procurement of road projects.

(xii) PPRA should liaise closely with Treasury and regularly check that contracts signed are compatible with the provisions of the national budget.

(xiii) Institute contracting out procurement of the larger roads projects to independent third party agents in terms of section 42.1(c) of PPA for all public Procuring Entities in order to mitigate corruption risks associated with deliberate mismanagement of such projects which serve the interests of unethical contracting parties.

(xiv) In addition to assessing corruption risks in the road sector through diagnostic surveys of this type at regular intervals (say every two years), PCCB should measure the level of corruption in the sector by quality of performance and outputs over a wide range of road projects that reflect the totality of activity in the sector.

(xv) (Greater budgetary discipline should be adopted by TANROADS. This can be done by a) providing realistic budget provisions in the first place, or b) ensuring, in compliance with Regulation R.75 of The Public Procurement Regulations 2013, that contracts are not signed unless budgets are sufficient to cover the annual expense of particular contracts. Ministry of Finance, PCCB and PPRA should improve oversight in this regard. Audits of contracts that show high overspends should be carried out by CAG or independent auditors.

SECTION I:

GENERAL

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE 1

1. INTRODUCTION

The roads infrastructure sector in Tanzania is important in the country’s national economy; yet, like the construction industry as a whole, it is widely perceived to be one of the more corrupt sectors. The problem of corruption is neither new nor unique to Tanzania and the government has invested substantial efforts in preventing and fighting it; it has established various oversight and regulatory organs for this purpose.

In order to succeed in this endeavour, these organs have to be knowledgeable and well informed on governance issues and state of corruption in the country. This requires a detailed assessment of the levels, nature and extent of corruption in the country to inform policy, decision-making and resource allocation.

Previous initiatives to gather information on corruption in the country include the 1996 Report of the Presidential Commission of Inquiry Against Corruption, popularly known as the Warioba Commission Report, the 2002 State of Corruption in Tanzania Report and the 2009 National Governance and Corruption Survey. However, these initiatives, while answering specific questions, do not provide comprehensive sector-specific analyses to inform policy reforms. The Prevention and Combating of Corruption Bureau (PCCB) and Public Procurement Regulatory Authority (PPRA) are keen to address this shortcoming in the roads infrastructure sector through this diagnostic survey.

The survey has solicited information on corruption in the roads infrastructure sector and its developmental impact from public officials and private business enterprises for the purpose of establishing institution-specific determinants of corruption in the roads infrastructure projects in Tanzania – a vital baseline needed for policy reform. The survey results will inform the policy dialogue on multiple issues, including:

• Fosteringpublicawarenessaboutnationalgovernanceandcorruption;• Identifyingareasorissuesforfurtherresearch;• Providinganempiricalbasisforplanning;• Providingempiricaldatafordevelopingstrategiesforcombatingcorruption;and• Providingempiricalbenchmarkformonitoringandevaluatingeffectivenessofanti-

corruption programmes over time.

The scope of work of the survey, as detailed in the Terms of Reference (Appendix 1), covers the following main activities:

(i) Review of background information on corruption in the construction sector, including on-going anti-corruption activities;

(ii) Development of the survey sampling frame;(iii) Design of survey instruments;(iv) Development of computer based data entry templates;(v) Field survey;

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS INFRASTRUCTURE2

(vi) Data entry and processing;(vii) Analysis and interpretation of data;(viii) Stakeholder consultations; and(ix) Preparation and presentation of reports prescribed in the ToR.

This Report is divided into three sections. Section I has three chapters, including this introduction. Chapter 2 following the introduction presents the survey methodology while Chapter 3 gives the background information. Findings of the survey are presented in Section II under four chapters covering respondents’ understanding of corruption, the extent and severity of corruption in roads infrastructure, respondents’ knowledge of procurement regulations and procedures, and their suggestions for combating corruption. Finally, Section III ends the Report with conclusions and recommendations.


2. SURVEY METHODOLOGY AND SAMPLE

2.1 Methodology

An eight-stage methodology has been adopted to fulfill the terms of reference of the survey. These stages are briefly described below:

(i) Review of background information on corruption in the construction sector, including on-going anti-corruption activities. This was achieved through reviewing available documentation (Appendix 2) and conducting interviews with key stakeholders involved in various initiatives for fighting corruption in the construction sector.

(ii) Develop the sampling frame: This was achieved by designing two different polls that were carried out simultaneously to cover public officials and private enterprises, as described in section 2.2 below.

(iii) Design of survey instruments: This was achieved by developing two types of questionnaires: a public officials’ questionnaire and a private enterprises questionnaire that were administered to officials in the public and private business sectors respectively. Initial drafts of these instruments were reviewed by a specially constituted Technical Committee (comprising representatives from PCCB, MoW, CAG, TANROADS and ERB) at its meeting held on 24 April 2014. The instruments were also pre-tested before they were applied in the field survey work.

(iv) Develop computer based data entry templates: This was achieved by developing data capture templates, including the field pre-coding system. The exercise was carried out well in advance of the field survey work.

(v) Field survey: Actual field survey work was carried out for 30 days from 15 May to end of June 2014. It covered Dar es Salaam and eight other regions that had been pre-selected in accordance with the sampling frame described in section 2.2 below.

(vi) Data entry and processing: This was achieved by entering collected survey information into data templates immediately after receiving the information from the field, and processing it using the Statistical Package for Social Sciences (SPSS) to produce tables as per pre-determined tabulation plan. Editing and cleaning of data was also done during this stage to minimize inconsistencies and errors.

(vii) Analysis and interpretation of data: This was achieved by analyzing processed data to determine the relationship that exist within different groups of respondents and drawing inferences and conclusions on the state, nature and characteristics of corruption in the roads infrastructure sector. In most cases the data was subjected to significant statistical tests in order to establish the validity with which such data support the conclusions.


This exercise was followed by compilation of the draft report of the survey. The report contains a detailed analysis of the survey results and what they portray about corruption in the roads infrastructure sector in terms of perceptions, extent, severity, proposed mitigation measures, etc.

(viii) Stakeholder consultation: This was achieved through individual meetings/discussions with selected key stakeholders in the donor community, government ministries, regulatory boards, professional and trade associations and through workshops with invited strategic stakeholders. Two such workshops were held in Dar es Salaam and Mwanza on 28 November and 03 December, 2014, respectively, to discuss findings of the draft report.

2.2 Survey Sample

The survey is institution-based, and it interviewed officials in public establishments (as clients, financiers, owners, custodians or regulators of the roads infrastructure) and private enterprises (as providers of business and professional services needed to procure, operate and maintain the roads infrastructure).

The scope of the survey covered Tanzania mainland. The city of Dar es Salaam and eight regions of Dodoma, Arusha, Morogoro, Ruvuma, Mbeya, Rukwa, Shinyanga and Mwanza were selected in the sample. These are the regions that have recently been very active in road construction, with the exception of Rukwa and Ruvuma that are considered to be marginalized. While all the three municipalities of Dar es Salaam were covered by the survey, in each of the eight regions only the regional municipality and one rural district council were picked. The sample allows for national estimates only.

Selection of public institutions and private firms was based on the classification of establishments by the Central Register of Establishments. For private enterprises the sample covered consultants, contractors and suppliers, while for public establishments it covered Government Ministries, Executive Agencies and Parastatal Organizations responsible for policy, management, financing, promoting and regulating business and professional activities in the construction sector. The registers of the Engineers Registration Board (ERB) and Contractors Registration Board (CRB) were used as the frame for consultants and contractors.

Altogether, the survey targeted a total of 400 respondents (i.e. 200 public officials and 200 private enterprise officials) for interviewing. As table 1 shows, high response rates were attained that exceeded targets in both surveys.


Table 1: Survey Sample and Response Rate

Type of Survey Sample(No of selected Respondents)

Result(No of

Respondents)

Response Rate (%)

Public Officials Survey

Private Enterprise Survey

200

200

205

221

102.5

110.5

Total 400 426 106.5

2.3 Profiles of Survey Respondents

In interpreting the findings of the survey, it is important to bear in mind the profiles of the survey respondents. These are briefly summarized below:

Private Enterprises

Out of 221 firms covered by the survey, 26 are consulting firms, 193 are construction firms (19 being larger contractors registered in Classes 1 & 2; 71 medium sized ones registered in Classes 3 – 5 and the remaining 103 being the smaller contractors registered under Classes 6 & 7) and two are suppliers. A majority of the firms (211) are local while ten firms are foreign.

The firms are about equally distributed between those having less than 50 percent and those having more than 50 percent of their businesses involving government road projects (Figure 1).

Figure 1: Percentage of respondents by percentage of business involving government projects


Public Officials

The 205 respondents to the public officials’ survey come from a wide spectrum of employees (22 Parliamentarians; 68 from Central Government and its Executive Agencies, and 115 from Local Government Authorities) that is representative of gender, age, education, profession and seniority

• Gender :86.3%/13.7%(male/femalesplit)

• Education :Universitydegreeholdersorequivalent : 63.9% : Postgraduate qualification : 22.4% : Secondary School : 3.4%

Profession : Engineering : 41.2%(Figure 2.2) Accountancy : 10.0% Procurement : 7.0% Administration : 4.4% Economics : 1.5% Law : 1.5% Management : 2.9% Others : 32.4%

Terms of : Permanent with pension : 84.7%employment : Contract : 8.0% : Political platform : 7.0%

Sources of income : 77.6% have other sources of income apart from their salaries [notably house rent (15.7%), private businesses (56.6%) and farming (34%].


Figure 2: Distribution of Public Officials staff by Field Specialization

2.4 Limitations of the Survey

It is important to bear in mind when interpreting the findings of this survey that, ultimately, the survey provides a reliable representation of the views and opinions of respondents. Beyond that, it cannot possibly assess the level of knowledge or honesty of each respondent, nor can it represent vital information withheld from the interviewer.

It is also important to note that the construction industry sector is, by its nature, a fragmented one, populated by a large number of small enterprises. Hence the sample size is biased towards small and medium size contractors whose business volume, in monetary value, is smaller than that of the larger contractors registered in classes 1 and 2.


3. BACKGROUND

3.1 Corruption Perception

Corruption is a global problem; there is no country that is totally free from it. Illicit financial flows, including corruption, bribery, theft and tax evasion, cost developing countries US $1.26 trillion per year, which is equivalent to the economies of Switzerland, South Africa and Belgium combined (Transparency International). This figure dwarfs both total global overseas aid and Tanzania’s GDP as illustrated in Figure 3 below. The figures also suggest that international corruption, not just domestic, is a serious threat to Tanzania and many other countries.

Figure 3: Comparison of Cost of Corruption, Overseas Aid and GDP of Tanzania

Tanzania, like most other African countries, has a relatively high level of corruption as reflected by findings of the 2009 composite survey of governance and corruption conducted by PCCB. The survey report notes that “Corruption in Tanzania is not only significant, but also persistent and serious” and that “it is a major developmental problem affecting all sectors of the national economy from service delivery to natural resources, industrial production, environmental protection, business and commerce.”

In 2013 Tanzania ranked 111th out of 177 countries worldwide in the Corruption Perception Index (CPI) score of Transparency International (TI) with a CPI score of 33, signifying that corruption is widespread in the country1. However, Tanzania is one of a few countries in Sub-Sahara Africa whose CPI score has increased (i.e. improved) steadily during the past ten years, signifying that current efforts to prevent and combat corruption in the country are yielding positive results.

1 CPI rates how corrupt the public sector is seen to be on a score of 0-100, where 100 designates total absence of corruption


It is also worth noting that TI has consistently ranked Tanzania as being less corrupt than its partner states in the East African Community except Rwanda (which ranked 49th worldwide in 2013 with a CPI score of 53).

3.2 Roads Infrastructure Network and its Management

Tanzania has a total road network of 130,400 km (JISR 2013 reports). This consists of 34,300 km of trunk and regional roads managed by the Tanzania National Roads Agency (TANROADS), a semi-autonomous government agency under the Ministry of Works, and 96,100 km of urban, district and feeder roads managed by Local Government Authorities (LGAs) under the Prime Minister’s Office for Regional Administration and Local Government (PMO-RALG). The Tanzania National Parks Authority (TANAPA) manages roads passing through the national parks and game reserves.

Annual government expenditure on roads infrastructure (for roads construction and maintenance) accounts for 13 percent of the national budget (NAO 2010). In 2007/08 financial year this expenditure amounted to TZS 800 billion. Currently, according to the Joint Infrastructure Sector Review (JISR) 2013 Reports, the 2013/14 national budget for TANROADS provides for an expenditure of TZS 1140 billion for road maintenance (TZS 315 billion) and development (TZS 825 billion) (JISR 2013). PMORALG road maintenance budget for the same year is TZS 150 billion, with unfortunately very little for development. The Roads Fund Board (RFB) through the fuel levy mostly finances Road maintenance and repair works. Road development activities and major rehabilitations are primarily financed by the central government through own or donor funding.

Investment in roads development in Tanzania has increased considerably since year 2000. The national goal is to link all regional centers by an efficient network of paved roads. In pursuit of this goal, two semi-autonomous organs were created to support TANRAOADS and LGAs in managing the additional investment. They are the Millennium Challenge Account – Tanzania (MCA-T) under the Ministry of Finance and Planning and Tanzania Strategic Cities Programme (TSCP) under PMORALG.

3.3 Corruption and Mismanagement in Roads Infrastructure Projects

According to an investigative study by the World Bank, road projects around the globe are plagued by fraud, corruption and collusion (World Bank 2010), while a TI poll ranked construction as the industry most prone to corruption. The Tanzanian roads infrastructure sector is no exception.

Because of the large sums of money that go into the roads infrastructure, the incidence of corruption and corrupt practices are both intense and widespread (TACECA 2006). They involve several professions (engineers, architects, surveyors, accountants and managers) acting simultaneously either as contractors, suppliers, consultants or as representatives of public sector clients or donor/funding agencies.


The risk of encountering corruption in construction projects is high and widespread. In a typical construction project, an overwhelming bulk of the project funds, generally higher than 90 percent, inevitably flows through the contractor as project funds certified by consultants. Therefore, to siphon project funds, the complicity of the client, contractor and that of the supervising consultant is necessary from the outset. “Accommodating” contractors and “compliant” consultants are thus in great demand for malpractices to flourish (TACECA 2008).

There is both petty and grand corruption in the procurement of roads infrastructure contracts. Petty corruption exists in the smaller contracts, notably those involving minor works projects for LGAs. On the other hand, the larger contracts for works and consultancy services executed by the central government through TANROADS and MoW are special targets for grand corruption.

Graft-prone road tender awards are common and have been the subject of many local media reports. The Daily News of 2 June 2014, for instance, quotes the Permanent Secretary of the Ministry of Works as having blasted contractors for this malpractice. He is reported to have said that he “know(s) that some contractors approach regional manager(s) and promise them kick-backs if they award them tenders for construction works”. He went on to warn that “This unfair practice should end once and for all. Tenders should be awarded in a fair and transparent manner to eligible contractors. Engaging in corrupt practices creates unfair playing grounds for players in the construction industry”.

Corruption is a key symptom of governance failure and goes hand in hand with project mismanagement. A study conducted by DANIDA in 2005 to provide recommendations for improved transparency and reduced risk of corruption in regional and district level road works in Tanzania identified four areas of mismanagement: planning and procurement, transparency and accountability, financial accounting, and auditing.

In 2010 the National Audit Office (NAO) conducted an audit on 10 major roads completed in Tanzania between 2004 and 2007. The purpose of the study was to assess whether the Government has an effective system of roads works through the MOID (now MOW) and TANROADS. The Audit Report notes in its conclusion that “the road works system in Tanzania is not managed efficiently timely”. The major findings of the audit are outlined below.

1). Extension of time: roads works are not completed within the agreed time scale (with impact on the Economic Rate of Return). All of the 10 audited projects had revised completion dates during the construction phase and 7 of them during the design phase. TANROADS approved all of the extension of time requests from contractors and approved by consultants, without any independent analysis. In addition, sanctions were not properly used to address the problem.

2). Cost overruns were also significant. These were due to a number of factors including


new design and specifications, inadequate project management and variation in prices. But a huge part of the increasing costs were related to miscalculation of some kind already in the design stage. Engaged consultants are not well managed and design work is not done properly and efficiently, resulting in re-design and leading to inevitable cost overruns.

3). Quality control systems are also in need of improvement. Quality control in the design phase is clearly inadequate. In the construction phase, inspections and monitoring are not conducted as planned, documentation is not in order and the engaged consultants are given conflicting tasks without any proper follow up by TANROADS.

Similar weaknesses are reflected in PPRA’s value for money audits of 137 construction projects in financial year 2011/2012 (that also included some road projects) conducted in 2012, and in annual technical audit reports of the Road Fund Board (RFB). It is in practice very difficult to separate corruption from other governance failures – lack of capacity, negligence, mismanagement, etc – but the outcome is the same: poor value for money.

3.4 Recent Procurement in Major Road Infrastructure Projects

Based primarily on data provided in the annual joint sector review reports by TANROADS (2009/2010 to 2012/2013), a total of 27 large value road contracts with a total value of TZS 1.8 trillion (about USD 1 billion) were analyzed. The lowest contract value being TZS 20 billion (Bonga – Babati 19km) and the highest TZS 191 billion (Kagoma – Lusahunga 154 km). The unit cost per km of 10 largest projects average TZS 1,035 million.

The analysis was done over 4 financial years from 2009/2010 to 2012/2013 and disaggregated by annual budget (obtained from JISR reports) and amount spent at the end of the financial year. The oldest project started in February 2003 and the newest started in May 2011. This data is then analysed to form pivot tables presented in this section (i.e. Tables 2, 3, 4 and 5 below). The source data by contract for these pivot tables is given in Appendix 6.

Contractors and consultants for these projects were sourced from within and outside Tanzania based on best evaluated bidder. Some of the consultants work on more than one contract so there are more contractors than consultants in this analysis.

Table 2 below shows that two contractors dominate the work done with Chico/Chico-CRSG getting 31% and Sinohydro getting 17%.


Table 2: Percentage Share of Contract Value for Contractors

Contractor Sum of Value of Contracts (TShs M)

No. of Contracts % on value

Chico 366,243 5 20%Sinohydro 299,045 5 17%Chico-CRSG 191,455 1 11%CCECC 143,546 3 8%CCCC 133,767 2 7%China Geo-Engineering 122,011 3 7%STRABAG 114,557 1 6%TAKOPA/ESTIM 89,608 1 5%CHCEGC 82,842 1 5%Jiangxi 78,841 1 4%SBI 67,200 1 4%M.A. Kharafi 51,488 1 3%CICO 39,239 1 2%SIETCO 30,420 1 2%Grand Totals 1,810,262 27 101.00%

Table 3 below shows that SMEC have the major share, supervising 7 contracts amounting to 30% of the value of works.

Table 3: Percentage Share for Consultants (by value of works contracts they supervise)

Company Sum of Value (TShs M) of Works Supervised

Contracts Supervised

Share

SMEC 551,408 7 30%ICT 258,864 2 14%Crown-Tech 164,372 3 9%O’Dwyer 161,683 2 9%Raughton 109,846 2 6%Black & Vetch 109,785 3 6%Gauff JBG 89,608 1 5%SAI/TECU 64,961 1 4%COWI 64,145 1 4%Africon 51,626 1 3%TECSULT 51,488 1 3%SAI 51,346 1 3%HP Gauff 41,891 1 2%BKS 39,239 1 2%Grand Totals 1,810,262 27 100%


Table 4 below compares the contract value, amount spent and budget aggregated by donor.

Table 4: Budgeted, Contract Value and Amount Spent by Financier

Financier Total Bud-geted

Contract Value

Total Spent Contract Value to Budgeted

Spent to Budgeted

Spent to Contract Value

ADB/GoT 199,123 392,145 359,170.00 197% 180% 92%

DANIDA 125,696 109,846 58,056.00 87% 46% 53%

GoT 305,005 1,308,271 910,174.20 429% 298% 70%

Grand Totals 629,824 1,810,262 1,327,400.20 287% 211% 73%

Table 5 below shows the dominance of Chinese contracts in the industry

Table 5: Contract Share by Country of ContractorCountry Sum of Value (TShs M) No. of Contracts Share

China 1,487,409 23 82%

Germany 114,557 1 6%

Tanzania 89,608 1 5%

Swiss 67,200 1 4%

Kuwait 51,488 1 3%

Grand Totals 1,810,262 27 100%

The following observations pertaining to the implementation of these projects are pertinent to this survey.(i) Tables 2 and 3 above shows that a third of the contracts by value were executed by CHICO,

and SMEC had almost the same proportion of the consultancy work. The fact that the same bidders win contracts repeatedly provides justification to question the fairness of tenders for major road projects.

(ii) The high concentration of foreign firms implementing major roads projects (Table 5) also negates the objective of promoting local contractors. This justifies questioning how such projects are packaged. Currently PPA encourages aggregating procurement instead of splitting and this could be reviewed to help local firms. The fact that more than 80% come from the same country suggests that the market is not truly international competition.

(iii) A further problem is poor budgeting. Analysis of expenditure revealed a consistent pattern with the amount spent considerably in excess of the designated budget on the 25 out of 27 projects, financed either by ADB/GoT or by GoT. The budgeted, contract value and actual amounts spent are summarised in Table 4 by financing source. It can be seen that contracts/


projects directly funded by DANIDA exhibited more financial discipline than government funded projects. (It should be noted that GOT budgets for project requirements annually and Donors including DANIDA signs loan/grant amount for the whole project). The discrepancy between the budget and the contract value may be due to several factors. The annual budget is always a constraint and fixed by the treasury. The actual need to develop the road network far surpasses the budget ceiling affordable by the government. Thus, there is wide variation between the actual amount spent and budgeted. This can result in late payment to contractors which encourage corruption.

(v) The unit cost per km of the 10 largest projects averaged TZS 1,035 million, which is high by international standards (for generally upgrading a two lane unpaved road to paved standard). This high unit cost is similar to and confirms the 2010

MOID study that found average costs of USD 727,105/km as shown in the table below:

Table 6: Unit Cost of Road Works in Tanzania

Source: Study on Road Construction Costs Trends. MOID, Tanzania. (2010) The above unit rates are excessive. A unit cost over TZS 1,000 million per km for implementing these major road projects would only be justified if there is corresponding improvements in quality of outputs. A World Bank Study, entitled “Monitoring Road Works Contracts and Unit Costs for Enhanced Governance in Sub-Saharan Africa, Alexeeva et al, 2008”, reviewed road construction costs in 13 countries. A total of 109 contracts were examined in 22 World Bank funded road projects. There was a wide variation between countries, but average $/km costs in 2007 prices are shown below,

Revision of ROADSIP II Bankable Document WN2

16

• BENCHMARKING AGAINST NEIGHBOURING COUNTRIES We have compared the Zambian unit costs with available data from neighbouring countries.

Recent data is available from Tanzania and Malawi. <<Botswana awaited>>

TA NZANI A The National Construction Council of Tanzania together with the Contractors Registration

Board and the Engineers Registration Board carried out a Study on Road Construction Costs

Trends in Tanzania. The focus of the study was major road construction projects. The Final

Report was issued in September 2010.

Table 3a shows the unit cost per kilometre for 15 road construction projects under the ongoing

TSIP Phase one programme in Tanzania. At the time of the signing of the contracts, the costs

varied from about USD 480,000 to USD 990,000 with an average of USD 727,150 as shown in

Table 16 below

Table 16: Road Construction Costs in Tanzania’s TSIP

S/n Road section Year Length (km)

Contract amount (USD)

Unit rate (USD/km)

1 Manyoni-Isuna 2007 54 26,025,609 481,955 2 Masasi-Mangaka 2007 15 7,394,871 492,991 3 Marangu-Mkuu 2008 32 21,432,096 669,753 4 Arusha-Namanga 2008 104.2 69,884,729 670,678 5 Kigoma-Kidahwe 2008 35.7 27,814,568 779,119 6 Ndundu-Somanga 2008 60 50,268,266 837,804 7 Singida-Katesh 2009 65.1 39,712,472 610,022 8 Dareda-Babati-Minjingu 2009 84.6 65,322,841 772,137 9 Bagamoyo-Msata 2009 64 63,269,075 988,579

10 Korogwe-Handeni 2009 65 48,614,903 747,921 11 Sumbawanga-Kanazi 2009 75 60,646,615 808,621 12 Dumila-Rudewa 2009 45 32,253,538 716,745 13 Bariadi-Lamadi 2009 71 51,853,069 730,324 14 Sumbawanga-Matai-Kasanga 2009 110 102,528,153 932,074 15 Katesh-Dareda 2009 73.8 49,342,489 668,597 Average 727,105

Source: Study on Road Construction Costs Trends. MOID, Tanzania. (2010)

In 2010, three road construction projects were awarded under the Millennium Challenge Account in Tanzania. The unit cost per kilometre at the time of signing the contracts varied from about USD 770,000 to USD 1,000,000 with an average of USD 889,650 as shown in Table 17 below.


Table 7 : Unit Cost of Roadworks Based On World Bank Study (USD X 1000)

The USD 360,100 unit rate cost of construction is for 2007 prices; after adjusting for dollar inflation for period 2007-2014 it equates to USD 413,280 per kilometre cost at 2014 prices.

The above comparative costs show that the unit cost per km of the 10 largest projects in this analysis of USD 688,223 exceeds the World Bank average of USD 413,280 by 67%.

3.5 Controlling Corruption in Roads Infrastructure Projects

Tanzania has a comprehensive system of tackling corruption that is based on sound anti-corruption principles founded on the National Anti-Corruption Strategy and Action Plan (NACSAP) for Tanzania (1999). This strategy, which is currently in its second phase of implementation as NACSAP II, mainstreams anti-corruption activities of the government. Key initiatives of this strategy that have influenced the construction industry are enactment of Public Procurement Act (PPA), enforcement of the Code of Ethics and formation of PCCB.

The mandate of PCCB, which is established by the Prevention and Combating of Corruption Act (2007) as the overall oversight organization responsible for fighting corruption in the country, covers both preventive measures, such as sensitization of the public on the effects of corruption, and specific measures to detect, investigate and prosecute corruption.

PPA has established the Public Procurement Regulatory Authority (PPRA) and Public Procurement Appeals Authority (PPAA). It gives PPRA the oversight responsibility for monitoring and enforcing compliance of Procuring Entities (PEs) with public procurement regulations, which are designed to promote transparency in the tender and award process and to ensure fairness and competition in the provision of goods, works and services. In contrast to PCCB, the responsibilities of PPRA do not explicitly include preventing and combating corruption. However, many of its mandated activities inevitably serve the implicit purpose of preventing, detecting and investigating corruption in public procurement. This is achieved through advising some 350 Procuring Entities (PEs) on procurement policies, principles and practices, monitoring procurement performances, and conducting periodic procurement inspections and audits.

NASCAP also seeks to improve the professional conduct of public servants by enforcing observance of the Code of Ethics and improving institutional and organizational capacity of central and local public service institutions. In this respect, government Ministries,

Revision of ROADSIP II Bankable Document WN2

18

WOR L D BA NK STU D Y TP21 A recent World Bank Study, “Monitoring Road Works Contracts and Unit Costs for Enhanced

Governance in Sub-Saharan Africa, Alexeeva et al, 2008”, reviewed road construction costs in

13 countries. A total of 109 contracts were examined in 22 World Bank funded road projects.

There was a wide variation between countries, but average costs are shown in Table 20 below,

together with the first (Q1) and third (Q3) quartile values.

Table 20: Cost per km of a 2-lane road by type of work for inter-urban roads in 2007 prices

(US$000/km)

Works Q1 Average Q3 Re-gravel 28.9 66.3 84.0 Periodic Maintenance 78.1 133.1 183.8 Rehabilitation / Reconstruction 221.8 397.9 450.8 Upgrade to Paved 296.5 360.1 403.8

It is difficult to compare these prices with current Zambian prices because the large jump in

rates in most countries in the region occurred around and after 2007. However, allowing for,

say, a 20% increase in prices would make the averages in the above Table comparable with or

even above current prices in Zambia. The exception is rehabilitation and reconstruction of

major highways where the rise in prices in the region has been particularly steep.


Departments and Agencies (MDAs) have drawn up their own Anti-Corruption Plans and established Integrity Committees which are coordinated by the Good Governance Coordination Unit (GGCU) in the President’s Office. There is also a Good Governance, Accountability and Ethics Secretariat in the President’s Office which focuses primarily on the ethical conduct and disclosure of assets of high ranking public officials.

Professional regulations can play an important role in curbing corruption. In this respect the government regulates market participants of the construction industry through the National Construction Council Act (1979), Engineers Registration Act (1997), Architects and Quantity Surveyors Registration Act (1997) and Contractors Registration Act (1997). These legislations have established the National Construction Council (NCC), Engineers Registration Board (ERB), Architects and Quantity Surveyors Registration Board (AQSRB) and the Contractors Registration Board (CRB), respectively, as regulatory boards having the triple mandate of registering and monitoring performance of professionals and business firms operating in the construction sector, promoting development of the sector and advising government on matters relating to the development of the sector.

In addition to government efforts, a number of initiatives instigated by independent voluntarily constituted professional and trade associations can play a significant role in fighting corruption in the construction industry. Notable among these associations are the Institution of Engineers Tanzania (IET), Association of Consulting Engineers Tanzania (ACET), Tanzania Civil Engineering Contractors Association (TACECA) and Contractors Association of Tanzania (CATA). All of them have ethical codes of conduct that require their members to uphold high standards of professionalism and integrity in their work.

Other more recent initiatives that are worth noting are the Construction Sector Transparency Initiative (CoST) and Project Anti-Corruption System (PACS). CoST is an international initiative spearheaded by the UK’s Department for International Development (DFID) which focuses on increasing transparency in construction projects. It was launched in Tanzania in 2008 and is led by NCC. PACS is specifically designed by TI as integrated and comprehensive system of tracking corruption at all stages of project implementation. It is being implemented by PPRA on a trial basis.


SECTION II:

SURVEY FINDINGSAND DISCUSSION


4 RESPONDENTS’ UNDERSTANDING OF CORRUPTION

The first step towards fighting corruption is understanding it. To find out their understanding of corruption, respondents were asked to state whether each of nine listed activities relevant to road construction (Table 8) was corrupt or not.

In both surveys, “paying or demanding a bribe in return for a favour” was overwhelmingly rated to be corrupt by 100 percent and 98.2 percent of respondents to the public officials and enterprise surveys, respectively. This was closely followed, for public officials, by “designing a project to favour certain contractors” and “carrying out and concealing defective work”. For business enterprises it was followed by “paying/demanding a bribe in order to conceal and/or ignore bad laboratory results” and “carrying out and concealing defective work”.

Table 8: Percentage of Respondents Associating Corruption to Various Activities

No Activity Percentage of RespondentsPublic Officials EnterprisesAll CGOs LGAs All Consul-

tantsContrac-tors

1 Paying or demanding a bribe in return for a favour

100 100 100 98.2 100 98

2 Designing a project to favour certain contrac-tors

86.8 77.9 91.2 83.9 96 83

3 Agreeing with other bidders who will win the contract

73.7 67.6 76.6 71.9 81 71

4 Submitting inflated claims

67.8 58.8 72.3 73.7 85 72

5 Carrying out and con-cealing defective work

82.9 70.6 89.1 87.6 88 87

6 Paying/demanding a bribe in order to conceal and/or ignore bad labo-ratory results

N/A N/A N/A 96.8 100 96

7 Collusion between supervising engineer and contractor to steal project funds by submit-ting bogus claims

77.1 76.5 77.4 79.3 92 78

8 Stealing materials 41.5 41.2 41.6 42.4 62 409 Money Laundering 52.7 52.9 52.6 60.8 77 59


Overall, more than 71 percent of respondents to the enterprises survey and over 67 percent of respondents to the public officials survey classified all listed activities as corrupt except stealing materials and money laundering. Understandably, stealing materials may be considered as direct theft rather than corruption. However, money laundering was probably rated low by respondents to both surveys because it is not well understood.

From these findings, the respondents understanding of corruption is consistent with the broad definition of corruption as the abuse of entrusted power for personal gain. This broad definition encompasses abuses linking public and private sectors such as bribery, extortion, influence peddling and fraud. It also encompasses PPA’s definition that distinguishes between corrupt and fraudulent practices in public procurement.

According to PPA a corrupt practice in public procurement means “the offering, giving, receiving, or soliciting of anything of value to influence the action of a public officer in the procurement process or contract execution”. A fraudulent practice, in contrast, is defined as “mis-presentation of facts in order to influence a procurement process or the execution of a contract to the detriment of the Government”.

Some of the variations in the rating of activities between private businesses and public officials may be due to these definitions of corruption. For example, the relatively small number of public officials recognizing “submitting inflated claims” as a corrupt act may be because it is regarded as fraud: while “agreeing with other bidders who will win the contract” is often regarded as collusion rather than corruption.

Table 8 shows that the difference in the rating of corrupt activities between respondents of both surveys is not significant, except in the case of money laundering. However, while there is a negligible difference in the case of paying or demanding a bribe in return for favour, there is a noticeable variation for some activities as rated by type of firms between consultants and contractors on one hand and by public officials between the central and local government officials on the other hand. In general, consultants seem to have a better understanding of corruption than contractors, and so do LGA officials when compared with their counterparts in the central government and its agencies, herein designated as CGOs.

When we compare between contractors who have 50% or less of their projects involved in government road projects and those with more than 50%, there is little variation between them in their rating of activities (refer to Appendix 3). Comparing the classes of contractors there is little variation in the rating of activities between medium sized contractors of classes 3, 4 and 5 and the small size contractors of class 6 and 7. However the larger contractors of class 1 and 2, despite coming out strongly against “paying/demanding a bribe in order to conceal and/or ignore bad laboratory results”, seem to be more accommodative for 50% of the activities.

When we compare between urban and rural LGAs, the latter have a slightly higher rating for most activities, signifying that they have a somewhat better understanding of corruption than the former.


5 EXTENT AND SEVERITY OF CORRUPTION IN ROADS INFRASTRUCTURE SECTOR

The level of effort needed to fight corruption depends on knowledge of its extent and severity. The survey sought to find out the experience of respondents on corruption as well as their views on causes of corruption, its seriousness and trends. The findings reflect that corruption in the roads infrastructure sector is not only serious but also widespread and increasing in severity. It affects all stages of roads project implementation and its causes are deeply rooted within the socio-economic fabric of society and emboldened by weak enforcement of existing laws.

The findings also reflect that public officials are more optimistic about future trends than private enterprises. Public officials also seem to be more guarded in their responses; which is understandable since being on the demand side of corruption, they would tend to be cautious. Private enterprises, on the other hand, appear more open in their responses. This is probably due to the fact that, being on the supply side of corruption and subjects of regulations, they consider themselves victims of corruption.

5.1 Experience of Corruption

In response to a qualitative question as to what type of corrupt practices the survey respondents had encountered in their work in the roads sector, many contractors (131) mentioned some experience of corruption. Fifty one said they have never encountered it, although some added that they knew it was there and one mentioned that he was clever to escape the persuasive acts of corruption solicitors. By far the most common experience (mentioned more than 80 times) was demanding/offering a bribe, with 10 percent of the contract price as the standard mentioned by many. In more than 50 percent of cases the bribe was to obtain a contract. Some of the comments below illustrate the nature of the problem.

• “What is happening now, especially in local government, you don’t get a contract unless you pay what they demand.

• “Especiallyinlocalgovernment,Idon’twintendersbecauseIdon’tgivewhattheyask.

• “Itisannoyingtohavemissedthecontractasothershavebribedtogetit.

• “Sometimesyoudon’tgetthecontractevenifyouhavepaid10%.”

Some contractors also mentioned connections and favouritism as alternatives to bribery to win a contract, while companies that are not qualified or lack capital may use other contractors to get work.

Bribery does not stop at the tender stage; it continues into construction. A significant number of contractors (16) said they bribed to receive payment (which was deliberately


withheld in order to secure a bribe). Some supervising engineers extort bribes from contractors to have legitimate claims and payment approved. Bribes are also often demanded so that work can be accepted.

All three groups in the public sector (LGAs, Officials of the Central Government and its Executive Agencies, and Parliamentarians) agreed that corrupt practices do occur at the tender stage (40 responses in total), with bribery or connections to win a tender. Collusion or pressure to give work to unqualified contractors was mentioned by four public officials working in LGAs and one Member of Parliament.

However, almost as many respondents (27 responses) across the three groups said that corrupt practices also occur during the construction (execution) stage of a project. Most detail was provided by Members of Parliament who noted working below standard and hiding or approving defective work (8 responses).

There were fewer responses from LGAs about corrupt practices during construction, with only two (2) mentions of poor quality work, two (2) of approving defective work, one mention of poor supervision and one of approving inflated claims. One response from an Executive Agency was an explanation of how to approve defective works: “To approve defective work is done in 2 ways: the ward representative is silenced and the supervising engineer given money”. Others said that they were not sure as they were not members of the Tender Board.

Other stages that were mentioned as prone to corruption were planning and estimating (2 responses from Parliamentarians and one from LGAs), while three respondents from an Executive Agency were concerned about corruption in the operation of the weighbridges. Other single responses from Parliamentarians were the need to pay a bribe to get payment, over-estimation of cost to benefit clients and contractors, restricting contractors to buy in a certain shop and clients representatives, contractors and supervising engineers colluding to steal project funds.

5.2 Seriousness and Causes of Corruption

When asked whether corruption in roads infrastructure is a serious problem, an overwhelming majority of respondents to both surveys (94.5 percent) responded in the affirmative (Figure 4). When asked further whether this corruption is linked to weak enforcement of laws and regulations, 75.1 percent of business enterprises and 74.6 percent of public officials agreed (Figure 5). About a quarter of respondents to both surveys disagreed probably because they know of other factors that drive corruption.


Figure 4 : % of Respondents Who Consider Corruption a Problem

Figure 5: % of Respondents Who Link Corruption to Weak Enforcement

Respondents to the survey identified unprofessionalism as the leading reason for weak enforcement of laws and regulations, as cited by 60.7 percent of business enterprises and 37.3 percent of public officials (Figure 6). This was followed, for business enterprises, by lack of qualified staff (according to 28.2% of respondents) and pressure from supervisors (17.2%), and for public officials by lack of qualified staff (according to 36.6% of respondents) and limited resources/funds (13.1%). It is puzzling to note, however, that 18.3 percent of respondents to the public officials survey said that they are not aware of the relevant laws and regulations.


Figure 6: Distribution of Respondents by Identified Reasons for Weak Enforcement of Laws

In response to a qualitative question as to what is driving corruption in the roads sector the most common response from private businesses (mentioned by 80 respondents) could be summed up as “greed”: the desire to have more wealth, to get rich quick, not being satisfied with what you have or just financial stability. But a significant number (54) also recognized the problem of “need”: low salaries, poverty, hunger and the poor state of the economy. Many others (50) put the blame on the personal weakness of individuals with terms like selfishness, indiscipline, moral erosion and lack of patriotism.

Public officials attribute corruption to these same three factors. Parliamentarians expressed similar views with slightly more mentioning personality failures. Members of Parliament also mentioned the lack of transparency (4) as well as failure to enforce the law and punish those found guilty (5) and the weakness of the PCCB (3). Failure to punish those found guilty was also mentioned by a small number of public officials from LGAs. A variety of minority responses provide other useful insights, notably some problems noted at the leadership level with comments such as:

• “Badleadershipinfluenceswrongdoing,• “Leadersarenotsupervisingbecausetheyaretheoneswhobenefitfromcorruption.• “Pressure from superiors to demand bribes: when supervisors demand bribes,

those working under them will do the same.”

A particularly interesting response from all groups of public officials was that corrupt acts are driven by ‘habit’, which suggests that the problem is deeply engrained.


5.3 Extent of Corruption

Roads infrastructure projects have several implementation stages, from planning and design through tendering to execution (construction) and completion. In response to a question as to which of these stages in the project implementation cycle is most prone to corruption, one third of respondents from both surveys indicated all stages (Figures 5.4 and 5.5). The largest number of private enterprises (36.4%), consider the tendering stage to be the most corrupt as do 30.7 percent of public officials.

When we compare between urban and rural LGAs, 28.9 percent of the former and 35.6 percent of the latter assert that corruption is most prone at the tendering stage, while 22.7 percent of urban LGAs and 31.1 percent of rural LGAs cited all stages of the project as being prone to corruption.

It is clear that these responses negate the mistaken assumption that the greatest corruption risk in the project cycle is at the tendering stage. Corruption actually takes place at all stages of the project implementation cycle. What is important is what the bribe is paid for. Payments for favours at different stages of the project cycle will have different impacts. Charles Kenny (2006) shows that the forms of corruption that are most harmful for development outcomes are (i) corruption during planning, design and budgeting stage and (ii) corruption involving substandard construction which shortens the life of projects and hence drastically reduces the Economic Rate of Return (ERR).

This conclusion is supported by the responses to the qualitative question “what corrupt acts do you think are the most serious”. The largest number of public officials consider corruption during the construction stage as the most serious (67 responses) followed by all stages (44 responses). Responses from TANROADS officials were particularly interesting with twice as many responses consider it as occurring during construction as compared to during the tender stage. While private enterprises, understandably, still regard corruption at tender stage as the most serious (82 responses) this was closely followed by corruption during construction (57 responses) with the same number maintaining that corruption is equally serious at all stages.


Figure 7: Stages of Project Cycle Prone to Corruption (Public View)

Figure 8: Stages of Project Cycle Prone to Corruption (Private View)

Survey respondents were also asked to indicate how common each of the 28 corrupt actions listed in Appendix 4 occur during the different stages of the road project implementation cycle. Listed in the Appendix are six actions associated with corruption during project planning and design stage, twelve during tendering, seven during project execution, and three during project completion stage. Detailed responses are given in Appendix 4 and summarized below:


(i) Project planning and design stage

This stage, procedurally, is driven by public officials.

All six corrupt actions listed under the project planning and design stage are rated as “common” or “do occur” by 53.9 – 67.7 percent of private enterprises and, at a subdued level, by 33.7 – 49.3 percent of public officials. The four corrupt actions cited as very common by business enterprises are the same as those cited by public officials. They are:

• “Exaggerating economic benefits or deliberately depressing cost estimates to geta project approved” cited by 29.1 percent of enterprises and 11.2 percent of public officials;

• “Designslantedtofavourcertaincontractors”,cited by 28.1 percent of enterprises and 10.8 percent of public officials;

• “Billsofquantitiesinflatedtoprovideacushionforcorrupttransactions”,cited by 28.1 percent of enterprises and 12.6 percent of public officials; and

• “Incompletedesignstomakeroomforlaterchanges”cited by 22.1 percent of enterprises and 9.3 percent of public officials.

Overall, a significantly higher proportion of business enterprises (63%) cite the corrupt activities listed under the project planning and design stage as “common” or “do occur” than do respondents to the public officials survey (42%). When we compare between consultants and contractors, a higher percentage of consultants (74%) say that these activities are “common” or “do occur” than contractors (61%). A slightly higher percentage of contractors having 50% or less of their projects involving government road projects say the activities are very common or do occur compared to those with above 50% of their projects involving government road projects. No clear pattern of differences emerges between the various classes of contractors (Appendix 4B).

When we consider public officials, 42.6 percent of LGA officials say that the activities are “common” or “do occur” as compared to 35.1 percent of their counterparts in the Central Government and its Agencies (see Table 5.1).

A significant proportion of private enterprises, ranging from 23 to 46.1 percent reported to have “never seen” such corrupt actions. This “never seen” response was also reported by a much higher proportion of respondents (42.6 to 79.4 percent) in the public officials survey.

(ii) Tendering Stage

This stage is controlled by public officials in Tanzania, in contrast to advanced economies where it is entrusted to consultants.


The twelve corrupt actions listed under tendering stage are rated by between 33.2 and 84.3 percent of enterprises and by between 27.9 and 51.2 percent of public officials as “common” or “do occur”. According to respondents to the private enterprises survey, the most corrupt activities during the tender stage, also rated as “common” or “do occur” by public officials, are:

• Advertisingtendersforashorterperiodthanspecifiedinthelawinfavourofparticularbidders (cited by 59.9% of respondents);

• Advertisingtenders throughnewspaperswith lesswidercirculationorothermeanscontrary to the requirements of PPA (58.1%)

• Usingconnectionstowinagovernmentcontract(citedby83.4%ofrespondents);

• Demanding/payingabribeforacontractaward(82.5%);

• Awardingacontracttoacompanyinwhichapublicofficialfromtheawardingagencyhas an interest (77.8%);

• Demanding/payingabribetoobtainconfidentialinformationortobeincludedontheshort-list of pre-qualified contractors (71.4%); and

• Tendering contracts for projects inwhich there are insufficient funds in the budget(70.5%).

The four most corrupt activities cited by public officials as “common” or “do occur” during this stage are the same as those cited by private enterprises. They are:

• Usingconnectionstowinagovernmentcontract(citedby41.2%ofrespondents)• Bidderscolludingtoagreewhichoneofthemwillwinthecontract(49.8%);

• Demanding/payingabribetoobtainconfidentialinformationortobeincludedontheshort-list of prequalified contractors (45.9%); and

• Demanding/payingabribeforacontractaward(40.5%)

“Pressure from superiors to demand a bribe to award a contract” and “Awarding a contract to a company in which a public official from the awarding agency has an interest” were also rated by public officials as corrupt activities that are “common” or “do occur” by 27.9 and 42.0 percent of respondents, respectively.

As in the planning and design stage, a higher proportion of business enterprises (63%) cited the corrupt activities listed under the tendering stage as “common” or “do occur” than public officials (40%). Also, a higher proportion of consultants (73%) cited those activities as


“common” or “do occur” than contractors (62%), as did LGA officials (43%) when compared with their counterparts in the Central Government and its Agencies (33%). However there is no significant difference between the views of the different categories of contractors by involvement in government road projects or by size of contractors (see Appendix 4B).

As in the planning and design stage, a higher proportion of public officials gave a “never seen” response to the corrupt actions listed under the tendering stage than private enterprises.

(iii) Project Execution Stage

This stage is ostensibly controlled by the consultant (appointed by the respective Procuring Entity).

Between 14.3 and 34.6 percent of respondents to the enterprise survey cited the seven corrupt actions listed under the project execution stage as “very common”, while between 39.2 and 45.6 percent said they “do occur”. Over 50 percent of business enterprises cited all seven corrupt actions as “common” or “do occur”, notably:

• Demanding/payingabribetoapprovedefectivework(citedby78.4%ofrespondents);

• Demanding/payingabribetofalsifylaboratorytestresults(71.4%);

• Supervisingengineers extort bribes fromcontractors to have legitimate claimsandpayments approved (69.2%); and

• Client’sfinancemanagersextortbribesfromcontractorsand/orconsultantstoexpeditepayment of IPCs and/or fee notes (68.2%)

In contrast to private enterprises a much smaller proportion of between 7.3 and 17.1 percent of public officials cited the seven corrupt actions listed under the construction stage as very common, while between 28.8 and 38.6 percent said these actions do occur. The only corrupt activity cited by over 50 percent of public officials as “common” or “does occur” is “Demanding/paying a bribe to approve defective work”.

Overall, a higher proportion of business enterprises (64%) rate the corrupt activities listed under the project execution stage as “common” or “do occur” than public officials (41%). Also, in contrast to the planning, design and tendering stages, a higher proportion of contractors (63%) rate these activities as “common” or “do occur” than consultants (48%). This is understandable since the contractors are the main victims of these corrupt activities which are often perpetrated and/or sanctioned by complicit project supervising consultants.

A higher proportion of LGA officials (43%) also cited the corrupt activities listed under the project execution stage as “common” or “do occur” when compared with officials from the Central Government and its Agencies (39%).


When we consider the contractors, those with 50% or less of their projects involving government projects have a higher percentage saying that the corrupt activities are very common or do occur compared to those with more than 50% of their projects involving government roads. Medium sized contractors have a higher percentage saying the activities are very common or do occur compared to large and small size contractors.

(iv) Project Completion Stage

The three corrupt actions listed under the project completion stage were cited by between 14.3 and 17.1 percent of private enterprises as very common; while between 35.5 and 41.9 percent said they do occur. Over 50 percent of respondents to the private enterprise survey cited all three corrupt actions as common or do occur, namely:

• Auditreportsaredeliveredlateandnoactionistakenonfundsunaccountedfor;• Arbitratorsorjudgesbeingbribedtogivefavourableopinionsorverdicts;and• Expertsandwitnessesbeingbribedinordertogivefalseevidenceindisputeproceedings.

The only question that required public officials to respond to under the project completion stage concerned audit reports. Over two thirds of respondents gave a “never seen” response to audit reports delivered late, while about ten percent said this action is “common” and 23 percent said it “does occur”. Public officials from both LGAs and Central Government and its Agencies gave similar ratings for this action.

Generally, a significantly higher proportion of consultants (78%) rate the corrupt activities listed under the project completion stage as “common” or “do occur” than contractors (54%). Percentages for contractors having 50% or less of their projects involving government roads were higher than those of contractors having above 50%. However, there was no significant difference between the various classes of contractors.

(v) Analysis of Responses by Groups of Respondents

Table 9 below summarizes the respondents’ overall rating of corrupt activities that are “common” or “do occur” at various road project implementation stages:


Table 9: Percentage of Respondents Rating Corrupt Activities as “Common” Or “Do Occur” By Stages of Project Implementation

Respondents Percentage of Respondents

Planning & Design Tendering Execution CompletionPublic OfficialsAll 41.7 40.4 40.7 32.7CGOs 35.1 32.6 38.8 27.9LGAs 42.6 47.9 43.4 39.5Private EnterprisesAll 62.8 63.3 63.5 54.5Consultants 73.8 72.8 47.6 78.3Contractors 61.3 62.1 62.8 53.8

The Table shows that

• Project planning, design, tendering and execution stages are rated as about equallycorrupt by both public officials and private enterprises. However, public officials gave a much lower occurrence rating of these activities than private enterprises.

• When we consider public officials, LGAs rate tendering as the project stage that is most prone to corruption, while Central Government officials rate project execution stage as the most corrupt. LGA officials also gave a much higher occurrence rating of the corrupt activities than their Central Government counterparts.

• When we consider private enterprises, consultants rate the project completion stage as the most corrupt, while contractors (like central government officials) rate project execution as the stage most prone to corruption. Consultants gave a relatively low occurrence rating of corrupt activities in project execution stage compared with other project stages.

Some of the variations in the occurrence rating of corrupt activities by the various groups may be attributed to their different roles in project implementation. Public officials, as promoters and financiers of road infrastructure projects, and being on the demand side of corruption, tend to be more cautious in their responses. Private enterprises, on the other hand, being on the supply side of corruption, consider themselves as victims of corruption and tend to be more vocal and open in their responses.

Project supervising consultants, as clients’ agents, play a critical role in curbing or facilitating corruption during the project execution phase, by virtue of their professional responsibility of approving quality and workmanship of the works as well as certifying contractor’s interim and final payment certificates along with ascertainment of claims. It is not surprising therefore that their occurrence rating of corrupt activities in this stage is more guarded than in other project stages.


(vi) Analysis of Responses from Contractors by size of firm and involvement in government projects

Table 10 summarizes contractors’ occurrence rating of corrupt activities that are “common” or “do occur” by size of firm and involvement in government projects.

Table 10: Percentage of Contractors Rating Corrupt Activities as “Common” or “Do Occur” by Size of Firm and Involvement in Government Projects

Contractors Percentage of Respondents

Planning& Design

Tendering Execution Completion

All 61.3 62.1 62.8 53.8

% GovtInvolvement

0 - 50% 69.3 65.3 74.1 64.3

Above 50% 59.0 57.3 56.6 44.3

Size ofFirm

Classes 1& 2 53.7 60.6 55.3 52.3

Classes 3.4,5 60.7 65.9 67.8 51.0

Classes 6 & 7 63.5 60.8 61.0 52.3

Generally, Contractors with more than half of their projects from the government gave a significantly lower occurrence rating of these corrupt activities than those with less than 50% involvement in government projects. The latter also rate the planning and design stage as the most corrupt, while the former consider the project execution stage as the most corrupt.

Regarding the size of firms, the larger contractors registered in classes 1 and 2 generally gave a slightly lower rating of corrupt activities that are “common” or “do occur” during project implementation than medium size contractors registered in Classes 3, 4 and 5 and small contractors registered in classes 6 and 7. The same consider the project tendering stage as the most corrupt, while medium size contractors rate the execution stage as the most corrupt and small contractors consider the planning and design stage as the most corrupt.

5.4 Project Development, Budgeting and Auditing

Public institutions are obliged by law to adhere to PPA and its regulations when procuring road works contracts and projects. The objective is to enhance transparency, fairness and economy while minimizing corruption risks. The survey sought to establish whether decisions made by PEs during the project development process are consistent with this objective, by asking respondents to indicate whether during the past five years some stated specific criteria influenced their institutions’ decisions to procure roadworks projects.


Responses to this question were quite favourable, indicating that project development by PEs took place in an environment with low corruption risks in which decisions made in the procurement process were:

• Donetransparently(accordingto82%ofrespondents)

• Publicandopentotheknowledgeandsuggestionsfromtheusers(accordingto81%of respondents)

• Subjectedtoregularinternalaudits(92%ofrespondents)andregularexternalauditsby professionals (92% of respondents), and

• Basedoncompetitionandtechnicalcriteria(85%ofrespondents)

Generally central government officials gave more favourable responses than their LGA counterparts. It is also significant to note that about a quarter of LGA officials agree with the statements that procurement decisions are “Influenced by illegal payments”, “based on political ties, affiliations or pressure” and “based on influential connections within the institution”. On the other hand, an overwhelming majority of respondents (94.6%) agree that making illegal payments negatively affects the quality of work (Figure 9).

Figure 9: Illegal Payments Affect Quality


When asked whether their institutions ever signed contracts with insufficient budgets for the planned projects, about 38 percent of respondents reported it has happened while 62 percent said it has never occurred. About 21 percent also acknowledged misuse of institutional budgets, through fraud, irregularities and other public service abuses, while 79 percent of them said that such practices never occurred.

Concerning audit reports issued by CAG, most respondents (64%) reported that their institutions received unqualified reports (Figure 10). Most respondents (74%) also reported that contracts awarded by their institutions attain value for money objectives (Figure 11). In this respect, however, there is a noticeable variation between central government and LGA officials, with 82.4 percent of the former claiming that contracts awarded by their institutions attain value for money against 69.3 percent of the latter.

Figure 10: Type of Audit Reports from CAG


Figure 11: Public Officials View of Value for Money

5.5 Corruption Trend

Looking at the trend of corruption in the country, respondents were aske to compare the level of corruption during the last five years with that of 10 to 20 years ago. The majority of business enterprises (70% overall, 88% consultants and 68% contractors) said corruption had increased, while 14.7 percent said it had declined (Figure 12). On the other hand, a much smaller proportion of public officials (26.3 percent) said that corruption had increased while 40 percent said it had declined (Figure 13).


Figure 12: Trend in Corruption (Private View)

Figure 13: Trend in Corruption (Public View)

5.6 Reporting Corruption

Asked about reporting corrupt activities to authorities, respondents to the enterprise survey said that in the last five financial years only 15.7 percent of them (23% in the case of consultants and 15% for contractors) had considered reporting cases of corruption but did not. In the list of reasons for not reporting, 44.1 percent of respondents (76% in the case consultants and 39% for contractors) stated that it was useless to report because culprits would not be prosecuted (Figure 14). “Fear of victimization” was also reported as one of the reasons for not reporting (by 20.6% of respondents) which ties with “Would not get protection” (also cited by 20.6% of respondents).


Figure 14: Reporting Corruption

When asked how often their institutions receive complaints from bidders/contractors during tendering, seven percent of respondents to the public officials’ survey reported that such complaints are frequent, while 31.7 percent said they are rare and 46.8 percent said they have never been raised. During project implementation, about five percent of respondents reported that complaints from bidders are frequent, while 29.8 percent said they are rare and 51.2 percent said that such complaints have never been raised.


6. KNOWLEDGE OF PROCUREMENT ACT AND REGULATIONS

Procurement of roads infrastructure projects and contracts is governed by PPA and its regulations. The objective is to ensure a fair, competitive, transparent, non-discriminatory and value for money procurement in the public sector, that is free from corruption. For the law and its regulations to be effective both PEs and suppliers of works, goods and services in the roads infrastructure sector need to be fully aware of them. The survey sought to establish the respondents’ degree of awareness of the Act and its Regulations by asking them several questions. Their responses are summarized below:

6.1 Public Officials

Among respondents to the public officials survey, 59.3 percent were involved in procurement of roads infrastructure projects and contracts, including 29.5 percent as members of tender boards.

When asked how their institutions procure works, goods and services, the respondents reported that:

(i) The most preferred channels used to invite bids are the Government Gazette (cited by 73% of respondents), local newspaper media (40.7%) and PPRA Journal (30.9%).

(ii) The same channels were also cited as the most preferred ones for inviting Expressions of Interest (EOI) by 68.6, 38.7 and 28.9 percent of respondents, respectively.

(iii) All procurement adheres strictly to PPA and its Regulations (cited by 76.6% of respondents). A small proportion said that cases of non-compliance with PPA and its Regulations are rare (cited by 7.3 of respondents) or frequent (3.4%).

(iv) Third party procurement services are never used (according to 66% of respondents), or rarely used (8%). A small proportion of respondents (13.7%) said such services are frequently used.

(v) Procurement standards and practices are fair, competitive, non-discriminatory and enhance value for money (according to 96.2% of respondents).

The above responses portray a very favourable self appraisal by public officials. However, these responses should be taken with caution; all cases of non-compliance with PPA regulations, even if cited by a few respondents, should not be ignored.

In response to questions regarding the authority of the Accounting Officer (AO) and his/her interactions with the tender board, 57 percent of respondents acknowledge that AO appoints members of the tender board, implying that the board works under his/her


authority. Respondents also indicated that other major functions of AO include approving procurement opportunities (30.1% of respondents), signing procurement contracts (25.7%), communicating decisions on tender awards (21.9%), and handling complaints raised by bidders (13.1%). A majority of respondents (77%) also said that when AO disagrees with a tender board decision to award a contract, he/she should return the decision to the board for review.

When asked whether bidders use indirect means to win contracts 34 percent of respondents said yes adding that indirect means most preferred by contractors are offering a bribe, using connections/favouritism, and collusion with the chair of the tender board.

Respondents were also asked questions on procedures guiding tender opening, negotiation and award to which they gave diverse responses that indicate they have limited understanding of PPA, as highlighted below:

• Asignificant proportion of respondents “disagree” or “do not know” that the technical score should be read out before the financial score” (34%), and that the name of the chair of the tender board should not be kept secret (38.5%)

• About42percentofrespondents“donotknow”thatwhenatenderboarddecisiontoaward a contract is accepted by AO, this decision must be communicated to PPRA within 14 days from the date of the award.

• Asignificantproportionofrespondentsthinkthatanytermsformingthecontractcanbe altered during tender negotiation.

6.2 Private Enterprises

Respondents were initially asked how they came to know that bids for tenders were being invited. The majority (73.7%) indicated that it was through widely circulated national newspapers. The second popular channel of information was the Government Gazette (cited by 59% of respondents).

Respondents were then asked questions concerning contract award procedures, to which they gave varied replies. In response to a question as to what action they think an Accounting Officer who disagrees with a tender board decision to award a contract should take, the majority (59%) said he/she should return the decision to the board for review, while 34% felt he/she should refer the decision to PPRA for advice.

PPA Regulations require the Accounting Officer to notify PPRA of the tender board’s decision to award a tender within a specified period of time (14 days) from the date the tender is awarded. When asked about the required notification period, there was an even division where 30.3 percent of respondents said 14 days and 31.7 percent said they did not know. Obviously, many respondents do not seem to know the correct answer to this question.


Upon tender award, sometimes the parties to the contract have to meet for negotiations to iron out some grey areas of the contract. When respondents were asked to indicate what these grey areas are, the majority (68%) said the negotiations are for “Agreeing on the timing of the contract”, while a significant proportion (21%) said they are for “Altering anything in the contract”.

Other questions sought to establish respondents’ perception on the effectiveness of PPRA and the tendering process as a whole. Responses to these questions reveal that

• ApplyingPPARegulationsdoesnotnecessarilyresultinfair,competitive,transparent,non-discriminatory and value for money procurement, according to 52 percent of respondents. Only 47 percent of respondents said that it does.

• PPAhas had a positive impact (according to 68% of respondents) and 55 percentof respondents are aware of the “standard conditions of contract”. A majority of those aware of the standards (82%) said that the standards are adequate for efficient performance of the road sector.

• Amajorityofrespondents(54%)didnotknowthatPPAhasbeenrevised.

• PPRAacts immediately againstPPA violations lodgedby tenderers (according to54% of respondents). However, PPAA was rated less favourably. Only 47 percent of respondents felt that PPAA takes immediate action on appeals lodged against PPRA.

• PPA should be retained [according to an overwhelmingmajority of respondents(97%)], but some 65 percent of respondents felt that it needed improvement.

When asked whether bidders ever practiced indirect means to win tenders, majority of respondents (67%) said yes, reinforcing a similar observation made by respondents of the public officials survey. However, a majority of respondents (78%) also said that they accept results of evaluation when they lose a tender, while almost all of them (93%) conceded that they had never complained to PPRA or PCCB even if they felt that dubious methods were used in awarding a tender.

Looking at the business trend over the last five years, 45 percent of respondents said that they had less contracts now than in previous years, while 23 percent said they had more. The remaining 28 percent of respondents were at the same level of business. On the other hand, the tendering system for road projects had improved (according to 50% of respondents). Only 30 percent of respondents felt that the system had worsened while 20 percent thought it had remained the same.


7 FIGHTING CORRUPTION IN ROADS INFRASTRUCTURE PROJECTS

Finding effective measures of eradicating corruption in the roads infrastructure sector is the ultimate aim of studying corruption in the sector. To effectively control corruption in the sector and in the construction industry in general requires an organization system that ensures:

• Efficientoversight;• Highintegrityofpublicofficialsresponsibleforthedevelopmentandmanagementof

the roads infrastructure sector; • High integrity of contractors, consultants and suppliers bidding for contracts and

projects in the construction industry;• Fairnessandtransparencyintheprocurementofroadprojectsandcontracts;• Efficientsystemofmonitoringandevaluatingtheimplementationofprojectsinthe

roads infrastructure sector; and• Efficientappealsmechanismforaggrievedparties.

The cornerstones of such a system are integrity, high standards of professionalism, transparency and accountability.

7.1 Anti-corruption Measures Suggested by Respondents

The survey sought to establish the respondents’ views on how effective suggested packages of actions are in curbing corruption at different project implementation stages. These actions and their rating by respondents are given in Appendix 5 and summarized below.

Project Selection and Design

The package of anti-corruption measures for project selection and design stage proposes instituting independent review and/or checks of project feasibility studies, and screening designs to ensure they are complete before tender. It also suggests that adequate funds be made available in the budget. The majority of public officials (81%) rated availability of funds as the most effective action followed by independent screening of designs (52%). The same actions were rated in the same order of preference as most effective by 83 and 71 percent of business enterprises, respectively.

Tendering Stage

The package of anti-corruption measures for the tendering stage proposes five actions that include training of procurement officials, appointment of independent monitors, enforcing penalties stipulated in PPA and outsourcing procurement to third parties. The majority of public officials (73%) cited training of public servants in public procurement as the most effective action, closely followed by imposing stiff penalties to PEs that fail to


follow procurement regulations (cited by 70% of respondents) and appointing independent monitors to observe and report on fairness of tender processes (cited by 69% of respondents). Most business enterprises (74%) rated “Empowering PPRA to impose stiff penalties” on PEs that flout procurement regulations as the most effective action, followed by training procurement officials (65%). In this context, consultants rated these actions very highly at 92 and 77 percent, respectively.

Project Execution Stage

At the project execution stage, proposed key anti-corruption measures include appointment of Dispute Adjudication Boards (DABs), instituting anti-corruption monitoring and maintaining performance records of contractors and consultants. Public officials rated keeping performance records of contractors and consultants and using them as pre-qualification criteria in future project as the most effective action (cited by 59% of respondents). Business enterprises, on the other hand, recommended to “Pay contractors on time” as the most effective action (according to 89% of respondents), followed by “introducing anti-corruption audits on major projects” (78%).

Project Completion Stage

Proposed anti-corruption measures to be taken at the project completion stage covered release of project audit reports to Parliament and the general public and strengthening the oversight role of Parliament. These two measures were respectively rated by 54 and 52 percent of respondents to the public officials survey as very effective. The same two actions were respectively rated as very effective by 48 and 46 percent of respondents to the private enterprise survey.

7.2 Additional Suggestions from Private Businesses

Respondents to the business survey were also asked a qualitative question that gave them the freedom to express in their own words the actions they think should be taken to reduce the level of corruption in the country. The responses are summarized below.

Education about corruption and its effects was suggested by 27 respondents, with several stressing that this should start at school. Special attention should be paid to educating the leaders, contractors and supervisors.

A similar number called for improving and enforcing the law and severe punishment for those found guilty of demanding or paying a bribe (26). The kinds of punishment suggested included public exposure, blacklisting or cancelling contractors’ registration. Several suggested that contractors who have done poor quality work should also be punished by blacklisting. There were also calls to investigate leaders and stop politicians from benefitting.


To bring this about, PCCB should be strengthened (9). It should be a free organization accountable to Parliament, with full authority to arrest and charge. In the words of one respondent:

“Corruption cannot end because PCCB are not given the complete work of investigation, summoning and imposing penalties; we have not heard of anyone jailed for corrupt activities, especially major corruption.”

To address the widespread concerns over bribery and favouritism at tender stage suggestions included to rotate staff and appoint members to the Tender Board from different regions (10), to appoint independent monitors to observe and report on the fairness of the tender process (5) and to improve transparency (9). While on the supply side, there should be standard qualifications for contractors (6), contracts should only be given to qualified and experienced contractors and Government should only register contractors who are professional and have qualifications (3). Typical comments include:

• “Letthemnotlookonlyforlowestbidderbutconsideralsothequalityofthecontractor• “Company experience should not be used in prequalification but staff experience

should be considered.”

Government should also investigate who owns companies, the practice of public officials holding construction companies and why some contractors are awarded many contracts (8). One contractor suggested competition is the problem - there should be more projects so it is easier for get work.

Suggestions for curbing corruption during the construction/execution stage focused around strengthening supervision (12), in addition to improving public servants’ pay. Engineers should be experienced and supervisors must follow up on laboratory test results. Audits at each stage are important and evaluators at completion stage should be independent of project owners. Paying on time (4) and ensuring that there are adequate funds in the budget to eliminate favouritism is essential. Transparency should also be improved.

Finally, a few respondents recognised that there is no simple answer to curbing corruption:

• “Itisnoteasytochangebecausethereisinterferencebythegovernment• “ItishardbecausecorruptionhasgrownrootsandIdon’tknowwhatcanbedone.”

7.3 Additional Suggestions from Public Officials

Public officials were asked two qualitative questions: what action should be taken to (i) improve the quality of services and (ii) reduce the level of corruption in the country.

The main response to the first question was to improve the salaries and benefits of public sector officials and strengthen supervision. However, strengthening the local contacting


industry received the same number of responses (21) with calls to evaluate contractors on the basis of their capability and only appoint those who are qualified. Several respondents said that the Contractors Registration Board (CRB) should only register qualified contractors and contractors delivering low quality should have their registration taken away.

Respondents also recognise the importance of paying contractors on time (13) and of not signing a contract until there are sufficient funds in the budget (10). Comments included:

• “sourcingenoughmoneyforprojectsbeforestartingthemandprojectfundstobeavailable on time.”

To reduce the level of corruption in the country the majority of respondents view enforcing the law and punishing the guilty as the most important action. In order to bring this about PCCB should be strengthened and become:

• “anindependentorganisationnotunderanyministrybutresponsibletoparliament• “withaspecialcourttodealonlywithcorruptionandnotpassingthroughtheDPP.”

As with the previous question, a large number of respondents (41) said that they would improve public servants’ income and benefits. Not far behind, at 33 responses, was education about corruption and its effects with particular mention of contractors, public officials and tender boards.

Several respondents made comments relating to the leadership and the need to appoint people of integrity as ministers and leaders. A total of 17 individual comments included the following:

• “BadleaderstobepunishedeffectivelystartingwiththeMinister• “Removeleadersfrequentlymentionedinrelationtocorruptacts• “Buildpoliticalwilltofightagainstcorruption• “MakesurethatMinistersdotheirjobs• “PrimeMinisterandLGAworkerstocollaborateinfightingcorruption• “PoliticianstoworkhandinhandwithGovernmenttosuperviseGovernmentfunds• “Stoppoliticiansinterfering• “Publicofficials todeclare their assets/register their interestsanddisclose to the

public.”

SECTION III:

CONCLUSION ANDRECOMMENDATIONS


8. CONCLUSIONS AND RECOMMENDATIONS

The previous section of this Report has presented findings of the survey. This was preceded in Section 3 by a brief background of the survey that also included an outline of the system of tackling corruption in Tanzania. This chapter summarizes the findings and provides some recommendations for the way forward.

8.1 Conclusions

Based on findings of the survey, the following conclusions are pertinent:

(i) General

• Tanzaniahascomealongwayinitseffortstopreventandcombatcorruption.Ithasacomprehensive anti-corruption framework led by PCCB and supported by PPRA and other oversight organizations along with various regulatory boards and voluntarily constituted non-governmental organizations, including active trade and professional associations. However, these efforts, thus far, have failed to prevent and combat corruption in roads infrastructure sector.

• Thecausesof corruptionaredeeply rooted in thesocio-economic fabricof societyand emboldened by weak enforcement of existing anti-corruption laws and public procurement regulations. This apparent social acceptability of corruption coupled with the prevailing low risk of detection and prosecution of corruption offenders has encouraged corruption to thrive.

• Because of the large amounts ofmoney involved in the implementation of roadsinfrastructure projects, such projects are special targets of grand corruption that is a major cause of poverty in the country.

• Money lost through corruption in roads projects is not the only economic damageto the projects. Poor quality of construction, as contractors cheat on materials and ignore specifications in order to recover money lost in bribes, shortens the life of the road and hence drastically reduces its economic rate of return.

(ii) Respondents’ Understanding of Corruption

• Respondentsofthesurveyhaveabroadunderstandingofcorruptionanditscausesand effects in the roads infrastructure sector. This understanding encompasses bribery and other abuses linking public and private sectors such as fraud, extortion and influence peddling.

• However,therespondentsarelessconversantwiththemoresophisticatedformsofcorruption such as money-laundering, embezzlement and other fraudulent practices used to perpetuate grand corruption in roads infrastructure projects.


(iii) Extent and Severity of Corruption

• DespiteTanzania’selaborateanti-corruptionframework,corruptionintheroadsinfrastructure sector is serious, extensive and increasing in severity. Various procurement risks prevail in all procurement stages of road projects, negating the mistaken assumption that the greatest risk of corruption in the project cycle is at the tendering stage where bidders bribe in order to obtain a contract.

• Respondents to the survey reported a number of common corrupt practices taking place in the various project procurement stages. They reported the most common issues symptomizing corruption during the project planning and design stage as procurement with incomplete or inadequate designs, inflated BoQs, tailored specifications, exaggerated economic benefits at feasibility stage that lead to procurement without underlying need, and signing contracts with inadequate project budgets. The most commonly occurring corrupt practices at the tendering stage are paying a bribe to win a contract, influence peddling, tender information unevenly distributed to bidders and collusion among bidders.

• Considerablerisksofcorruption,indeedsurpassingtenderingstage,alsoexistat the project execution stage. Survey respondents reported the most commonly occurring corrupt practices as paying a bribe to have false variations, defective work or payment certificates approved, and collusion between contractor, client’s representative and/or supervising engineer to steal project funds through fraud.

• Corruption risks have increased in the roads infrastructure sector during thepast 5-10 years. Private enterprises are more pessimistic about the trend of corruption in the sector than public officials, with 70% of respondents from the former stating that corruption has increased in the past five years against 26% of respondents from the latter.

(iv) Knowledge of Procurement

Respondents have limited understanding of PPA and its regulations which undermines fairness, transparency and accountability in the procurement of road projects. This limits the rights of aggrieved parties in case of mis-procurement.

(v) Fighting Corruption• Weak enforcement of anti-corruption laws and regulations governing public

procurement reinforces corrupt and fraudulent practices in the procurement of road projects

• Lack of prosecution of culprits and lack of protection of whistle-blowersdiscourages people from reporting corruption. Survey respondents are also wary of victimization.

• Therespondentshavesuggestedawiderangeofmeasuresforcurbingcorruptionin the roads infrastructure sector, some of which are far reaching and may or may not work depending on institutional framework that is put in place.


• Existing measures of monitoring and curbing corruption during project implementation are weak and inadequate for managing corruption risks in road projects.

(vi) Engagement of Stakeholders

The government is not alone in the fight against corruption in the roads infrastructure sector. Other initiatives in the construction industry, particularly those pioneered by the Construction Sector Transparency Initiative (CoST) and various professional and trade associations, can play an important role of proactively engaging a wider spectrum of stakeholders in the public, private and civil society organizations in the war against corruption in roads infrastructure projects.

(vii) Budgetary Indiscipline

Several large scale contracts were signed by TANROADS with grossly insufficient budget provision – in clear violation of Regulation 62 of The Public Procurement (Goods, Works, Non-consultant Services and Disposal of Public Assets by Tender) Regulations 2005. Although this does not necessarily imply corruption, it is an indicator of such. Furthermore, budgetary indiscipline provides a fertile ground for corruption during payment. Since funds to pay contractors is much less than that available, who to pay becomes highly discretionary thus allowing the favouring of certain contractors for whatever reason.

8.2 Recommendations

The main recommendations for an effective way forward, based on the above conclusions, are:

(i) Strengthen enforcement of laws governing anti-corruption and public procurement.

Many respondents to the survey attributed the prevalence of corruption in the roads infrastructure sector to weak enforcement of anti-corruption laws and public procurement regulations, and to the fact that no action is taken when corruption is discovered. This therefore calls for stricter enforcement of anti-corruption laws and public procurement regulations, as well as severe punishment for those found guilty of breaking the law or contravening procurement regulations.

Several respondents also mentioned that there is influence peddling and pressure from above to demand a bribe. These respondents felt that such leaders benefit most from corruption and should be severely punished. Hence, bringing corrupt high-ranking individuals to justice with severe punishment is critical. For this to happen, it is recommended that PCCB should be strengthened. It should be an independent organization accountable to Parliament with full authority to arrest and charge.


(ii) Establish a regular dialogue mechanism with the professional and sector associations to advise PCCB and PPRA on combating corruption.

Punishing corrupt individuals has its limitations when corruption is so widespread. The system that permits such corruption to thrive has to be addressed. Corruption in the roads infrastructure sector can only be eliminated if all participants in the sector cooperate in the development and implementation of effective anti-corruption actions, addressing both the supply and demand sides of corruption.

The participants include the government, its road sector executive agencies as well as contractors, consultants and suppliers through their respective trade and professional associations. PCCB and PPRA should mobilize and assist them to establish a common ground and strategy for cooperation in fighting corruption in roads infrastructure projects through:

• Enforcingself-regulatorycodesofprofessionalconductthatdemandhighintegrityand professionalism from all persons involved in roads infrastructure projects,

• ReportingofsuspectedmalpracticetoPCCBandPPRA,

• Executingintegritypactsbycontractingpartiesofroadsinfrastructureprojects,• Enhancinginvolvementofcivilsocietyinroadsectorprojectstogiveconfidenceto

wider society on how public funds are spent, and

• GenerallyadvisingPCCBandPPRAoncorruptionissuesintheroadssector.

(iii) Establish awareness raising programmes for stakeholders on various types of corruption that occur in the road sector

While respondents to the survey overwhelmingly cited payment of a bribe to obtain a contract as corruption, a significant proportion of them are less conversant with the more sophisticated types of corruption that are common in roads infrastructure projects, such as money-laundering and embezzlement of public funds.

It is recommended that PCCB and PPRA should scale up their efforts to educate stakeholders in the roads sector on corruption in the sector and the consequences of engaging in it. This could be done through special interactive programmes involving stakeholders from both the demand and supply sides of corruption. Such programmes should clearly spell out the anti-corruption obligations of various parties involved in the implementation of roads infrastructure projects.

(iv) Provide continuous and regular training for stakeholders on PPA and its Regulations

Findings of this survey reflect that respondents have a limited understanding of PPA and its


Regulations. This undermines fairness, transparency and accountability in the procurement of road projects and limits the rights of aggrieved parties in case of misprocurement. It is therefore recommended that PPRA should establish continuous and regular training programmes for Procuring Entities and bidders on PPA and its Regulations.

(v) Strengthen project management capabilities of TANROADS and LGA officials through specialized training to enhance their skills to effectively administer and supervise road works contracts.

This training is fundamental considering the fact that corruption in roads infrastructure projects goes hand in hand with project mismanagement, as is evidenced from various NAO, PPRA and RFB’s technical audit reports. In practice, it is difficult to separate the two, but the outcome is the same: poor value for money. TANROADS and LGA officials equipped with better skills will be able to administer and supervise road works contracts properly and thereby enhance quality of outputs and value for money, the key most reliable measures of assessing corruption in roads projects.

(vi) Ensure continuous and effective oversight monitoring of on-going road projects through regular technical and anti-corruption audits

PPA provides for a three-stage audit framework in respect of any public procurement “as may be required”; procurement auditing during the tender preparation process, contract auditing in the course of executing an awarded tender, and performance auditing after completion of the contract. However, these audits, as currently conducted by PPRA, are infrequent, selective and have limited value as a tool for detecting the full extent of corruption in roads infrastructure projects. The same applies to performance audits conducted by NAO and RFB.

It is recommended, in line with Section 6 of PPA 2011, that PPRA, NAO and RFB should jointly design and institutionalize an oversight project monitoring system that is effective in tracking and managing corruption risks on a continuous basis for all on-going road projects.

(vii) Promote the use of independent professionals to advise and assist TANROADS and LGAs in detecting corruption in road projects

Enhancing project management capabilities of TANROADS and LGA officials, though vital, has limitations. It cannot stand alone in the fight against corruption. Evidence shows that a major cause of corruption in the roads infrastructure sector is that the risk of being detected is very low. The accountability of the roads projects procurement system would therefore benefit from involving a greater number of different professionals to carry out independent review and to enhance the capacity of detecting corruption. In this respect, it is recommended to:


• Increaseduediligenceintheimplementationofmajorroadsinfrastructure projects through the use of adjudicators, arbitrators, dispute adjudication boards, and independent assessors and monitors

• Increasetheuseofprivateoutsourcedentitiesforindependentevaluationoftendersand of management of contracts

• Institute contracting out of road projects procurement to independent third partyagents in terms of Section 42.1(c) of PPA, 2011, for all PEs with low procurement compliance rating.

(viii) Package road works contracts to encourage a wider participation of local contractors and reduce risk of foreign contractors’ cartel behaviour

Based on an analysis of recent procurement of major road infrastructure projects, the findings of this survey show that major roads projects in this country are implemented, almost exclusively, by a few foreign firms. This arrangement has adverse economic implications. Not only does it increase the risk of collusion among bidders but it also limits the participation of local firms. PPA policy of aggregating projects instead of splitting should be reviewed to help local firms participate in major road projects and to so reduce the risk of corruption in these projects through foreign contractors’ cartel behaviour. This will also enhance the development of local contractors, in keeping with R.4(2) (c) of PPA Regulations 2013, particularly those in the higher registration categories.

(ix) Enhance transparency and accountability in the procurement of roads infrastructure projects by supporting initiatives such as Construction Sector Transparency Initiative (CoST) promoted by various civil society organizations.

Transparency, fairness and accountability are central features of a sound procurement system. It is recommended that PCCB and PPRA should support CoST and similar initiatives pioneered by professional and trade associations in the construction sector to help achieve a transparent and accountable procurement system for road projects.

(x) Provide legal protection from victimization for bidders who report or complain about malpractices in the procurement of road projects

Findings of the survey confirm that although there are many discrepancies in the procurement process of roads infrastructure projects, bidders rarely complain for fear of victimization and lack of awareness of the appeals handling procedures. Many bidders consider it risky for business to report corruption or to appeal, fearing to lose future business from regular clients.

It is therefore recommended that PCCB and PPRA should institute legal measures to protect bidders from victimization by public officials when they report or complain about malpractices in the procurement of road projects.


(xi) PPRA should liaise closely with Treasury and regularly check that contracts signed are compatible with the provisions of the national budget

Based on our analysis of 27 large TANROADS contracts, overspend was about double that of the budget. Not only did this provide fertile ground for corruption, but damaged the reputation of the agency with Ministry of Finance and with Development Partners.

(xii) Institute contracting out of the larger roads projects to independent third party agents in terms of Section 42.1(c) of PPA for all public Procuring Entities in order to mitigate corruption risks associated with deliberate mismanagement of such projects which serve the interests of unethical contracting parties

Given the current level of mismanagement and financial indiscipline in government financed road projects, the involvement of independent professionals in the procurement process of these projects assumes an even greater importance. This will mitigate the economic loss resulting from over-priced road projects, currently estimated at USD 250 million annually. It became apparent in the course of this survey that such losses cannot be attributed to governance failure arising from lack of capacity alone; more often client officials entrusted with procurement deliberately mismanage the procuring process to serve the interests of unethical contracting parties.

To mitigate such mismanagement, it is recommended to contract out the procurement of all large infrastructure projects to competent independent professionals. This should also apply to all projects – both small and large – for PEs with low compliance ratings in their procurement functions.

(xiii) In addition to assessing corruption risks in the road sector through diagnostic surveys of this type at regular intervals (say every two years), PCCB with other oversight institutions should measure the level of corruption in the sector by quality of performance and outputs over a wide range of road projects that reflect the totality of activity in the sector.

Attaining good value-for-money is the fundamental objective of implementing any road project – or, indeed, any project.

This is achieved through good project management and corruption-free performance. Hence, assessing corruption in a road project by measuring its performance in terms of quality, economy, efficiency and effectiveness of outputs is more reliable than carrying out diagnostic surveys such as this one. If, for instance, costs and time overruns for similar types of projects are decreasing over time and quality is improving, the chances are that there is less corruption, and that there is a value-for-money outcome.

Diagnostic surveys give perceptions of individuals on corruption in the road sector; findings from such surveys cannot reveal the true scale, for example, of grand corruption in the larger road projects. Performance measuring, on the other hand, will assess actual project performance and, unlike diagnostic surveys, will be able to track individual projects and issues relating to grand corruption in such projects.

APPENDIX I:

TERMS OFREFERENCE








APPENDIX 2:

DOCUMENTS CONSULTED


1. United Republic of Tanzania, The Prevention and Combating of Corruption Act, 2007.

2. United Republic of Tanzania, The Public Procurement Act, 2011.

3. United Republic of Tanzania, The Public Procurement Act (Goods, Works, Non- Consultant Services and Disposal of Public Assets by Tender) Regulations, 2013.

4. United Republic of Tanzania, The Public Procurement Act (Selection and Employment of Consultants) Regulations, 2013.

5. United Republic of Tanzania, Report of the Presidential Commission of Inquiry on Corruption, 1996.

6. Prevention of Corruption Bureau, The State of Corruption in Tanzania Report, 2002.

7. United Republic of Tanzania, The National Anti-Corruption Strategy and Action Plan for Tanzania, 1999.

8. Prevention and Combating of Corruption Bureau. National Governance and Corruption Survey 2009 Report, Volume I.

9. United Republic of Tanzania, The Enhanced National Anti-Corruption Strategy and Action Plan (NACSAP II) 2008-2011, 2008 Construction Sector Transparency Initiative, CoST Launch Report, Tanzania 2008.

10. United Republic of Tanzania, National Construction Act (Revised 2008).

11. United Republic of Tanzania, Engineers Registration Act (1997).

12. United Republic of Tanzania, Architects and Quantity Surveyors Registration Act (1997).

13. United Republic of Tanzania, Contractors Registration Act (1997).

14. Transparency International. Corruption Perception Index (2005-2013).

15. National Audit Office, Performance Audit Report on Road Works: The Ministry of Infrastructure Development and Tanroads Performance in Controlling Road Construction Time, Cost and Quality, March 2010.

16. Royal Danish Embassy Dar es Salaam, A Study to provide recommendations for improved transparency and reduced risk of corruption in the regional and district level contracting of road works, November 2005.

APPENDIX 2: DOCUMENTS CONSULTED


17. V Alexeeva, G Padam and C Queroz. Monitoring Road Works Contracts and Unit Costs for Enhanced Governance in Sub-Saharan Africa. The World Bank Group, Transport Papers, 2008.

18. Tanzania Civil Engineering Contracts Association. Study on the State of Corruption in the Procurement of Construction Contracts and Proposals for Mitigation (2006).

19. Tanzania Civil Engineering Contractors Association. Monitoring Anti-Corruption in the Construction Sector, March 2008.

20. Roads Fund Board, Technical Audit Report for Financial Year 2012-2013.

21. Global Infrastructure Anti-Corruption Centre. Identifying and Avoiding Corruption in the Infrastructure Sector (2009).

22. Global Infrastructure Anti-Corruption System (PACS), 2008..

23. Daily News editorial dated 22nd October 2013 entitled “Procurement law now up for serious review”.

24. Daily News editorial dated 21st October 2014 entitled “Congrats IMF for your understanding”.

25. United Republic of Tanzania, PARLIAMENT OF TANZANIA (May, 2014). Report Of The Parliamentary Infrastructure Committee On The Budget Implementation For

The Ministry Of Infrastructure In The Financial Year 2013/2014, Including The Committee’s Views On The Estimated Revenue And Expenditure For That Ministry In The Financial Year 2014/2015 (May 2014).

26. United Republic of Tanzania, RIPOTI YA MDHIBITI NA MKAGUZI MKUU WA HESABU ZA SERKALI

Kuhusu Ukaguzi wa Mashirika ya Umma kwa Mwaka wa Fedha 2012/2013.

27. United Republic of Tanzania, RIPOTI YA MDHIBITI NA MKAGUZI MKUU WA HESABU ZA SERKALI .

Kuhusu Ukaguzi wa Taarifa za Fedha za Miradi ya Maendeleo kwa mwaka wa Fedha Ulioishia tarehe 30 Juni, 2013.


28. United Republic of Tanzania, PARLIAMENT OF TANZANIA (2011) Report of the Parliamentary Infrastructure Committee on the Budget Implementation for the

Ministry of Infrastructure in the Financial Year 2010/2011: including the Committee’s views on the estimated expenditure for the Ministry in the financial year 2011/2012.

29. United Republic of Tanzania, PARLIAMENT OF TANZANIA (May, 2014) Report of the Parliamentary Infrastructure Committee on the budget implementation for the

Ministry of Infrastructure in the financial year 2012/2013: including the committee’s views on the estimated expenditure for that ministry in the financial year 2013/2014.

30. United Republic of Tanzania, PARLIAMENT OF TANZANIA. Report of the Parliamentary Infrastructure Committee on the Budget Implementation for the

Ministry of Infrastructure in the financial year 2011/2012: including the Committee’s views on the estimated expenditure for that Ministry in the financial year 2012/2013.

31. United Republic of Tanzania, Report of the Parliamentary Infrastructure Committee on the budget implementation for the Ministry of Infrastructure in the financial year 2007/2008: including the Committee’s views on the estimated expenditure for that ministry in the financial year 2008/2009 – 2008.

32. United Republic of Tanzania, Report of the Parliamentary Infrastructure Committee on the budget implementation for the Ministry of Infrastructure in the financial year 2008/2009: including the Committee’s views on the estimated expenditure for that ministry in the financial year 2009/2010 – 2009.

33. United Republic of Tanzania, PARLIAMENT OF TANZANIA (DESEMBA 2013). PARLIAMENTARY ACCOUNTING COMMITTEE (PAC) Report of the Permanent Parliamentary Accounting Committee for the government and

parastatal organizations in the financial year ending 30 June, 2012. (Submitted in conformity with Article 120 and was presented to the Parliament in accordance

with Article 114 (15) of the Parliamentary Codes, 2007 Edition) Prepared by: Department of Parliamentary Commissions Parliament Office P.O. Box 941, DODOMA


34. United Republic of Tanzania, PARLIAMENT OF TANZANIA (17 APRILI 2012) PARLIAMENTARY ACCOUNTING COMMITTEE (PAC) Report of the Permanent Parliamentary Accounting Commission for the government during

the financial year 2009/2010 (Submitted in conformity with Article 120 and was presented to the Parliament in accordance

with Article 114 (15) of the Parliamentary Codes, Tanzania Edition) Prepared by: Department of Parliamentary Committees Parliament Office P.O. Box 941, DODOMA 17 APRILI 2012

35. United Republic of Tanzania, PARLIAMENT OF TANZANIA Parliamentary Accounting Committee (PAC) Report of the Committee’s activities for the period starting April 2008 to April 2009 Department of Parliamentary Committees Parliament Office P.O. Box 941 DODOMA

36. United Republic of Tanzania, Report of the Activities of the Parliamentary Committee on the Government Accounts for the year 2009/2010

SECTION ONE

37. United Republic of Tanzania, CONTRACTORS REGISTRATION BOARD Contractor’s Directory – 2013.

38. United Republic of Tanzania, ENGINEERS REGISTRATION BOARD and ARCHITECTS & QUANTITY SURVEYORS REGISTRATION BOARD

Directory of Professional Architects, Engineers and Quantity Surveyors in TANZANIA (2012).

39. Andrew Lawson and Lisa Rakner, Understanding patterns of Accountability in Tanzania: Final synthesis report, Oxford Policy Management, Chr. Michelsen Institute and Research on Poverty Alleviation (REPOA), Dar es Salaam, August 2005.

40. Brian Cooksey, Public goods, rents and business in Tanzania: Background paper 01, Africa Power and Politics Programme, Overseas Development Institute, London, June 2011.

41. NORAD, Joint evaluation of support to Anti-Corruption efforts: Tanzania country report 6/2011- study, Norwegian Agency for Development Cooperation Main report, Oslo, 2011.

42. Public Procurement Regulatory Authority (PPRA), Executive Summary of Value-for Money Audits of 137 Construction Contracts, Financial Year 2011/12, October 2012.


43. Susan Rose-Ackerman and Tina Soreide (Eds.) International Handbook on the economics of corruption, Volume two, Edward Elgar, May 2013.

U4 Expert answer: Overview of corruption and anti-corruption in Tanzania, U4 Anti-corruption Resource Centre, Bergen, 2014.

44. United Republic of Tanzania (URT), National Audit Office, Performance Audit Report on Road Works: The Ministry of Infrastructure Development and TANROADS’ performance in controlling road construction time, cost and quality: Report of the Controller and Auditor General of the URT, Dar es Salaam, March 2010.

45. United Republic of Tanzania (URT), National Governance and Corruption Survey, 2009 Report, Prevention and Combating of Corruption Bureau, November 2009.

46. Joint Infrastructure Sector Review annual submissions by TANROADS 2010, 2011, 2012 and 2013

47. TANROADS Annual Report 2011/2013.


APPE

NDIX

3:

PERC

ENTA

GE O

F RE

SPON

DENT

S AS

SOCI

ATIN

G CO

RRUP

TION

TO

VARI

OUS

ACTI

VITI

ES(A

) PR

IVAT

E EN

TERP

RISE

S

Pe

rcen

tage

of R

espo

nden

ts

Co

ntra

ctor

s

No

Activ

ity

All

Cons

ulta

nts

All

Perc

enta

ge o

f

Clas

s of

cont

ract

or

gove

rnm

ent

pr

ojec

ts

0

- 50

Abov

e 50

1

& 2

3, 4

& 5

6

& 7

1 Pa

ying

or d

eman

ding

a b

ribe

98

.2

100

98

97

99

89

99

99

in re

turn

for a

favo

ur

2 De

sign

ing

a pr

ojec

t to

favo

ur

83.9

96

84

88

79

68

83

88

ce

rtain

cont

ract

ors

3 Ag

reei

ng w

ith o

ther

bid

ders

71

.9

81

71

71

72

58

74

70

who

will

win

the

cont

ract

4

Sub

mitt

ing

infla

ted

clai

ms

73.7

85

73

75

73

58

73

76

5 Ca

rryin

g ou

t and

conc

ealin

g

87.6

88

87

90

85

84

84

90

de

fect

ive w

ork

6 Pa

ying/

dem

andi

ng a

brib

e in

96

.8

100

96

96

97

100

97

95

orde

r to

conc

eal a

nd/o

r ign

ore

ba

d la

bora

tory

resu

lts

7 Co

llusi

on b

etw

een

supe

rvis

ing

79.3

92

79

80

79

84

81

77

engi

neer

and

cont

ract

or to

ste

al

pr

ojec

t fun

ds b

y sub

mitt

ing

bo

gus

clai

ms

8 St

ealin

g m

ater

ials

42

.7

62

42

43

42

42

43

399

Mon

ey L

aund

erin

g 60

.8

77

59

57

64

79

60

57


APPE

NDIX

3:

PERC

ENTA

GE O

F RE

SPON

DENT

S AS

SOCI

ATIN

G CO

RRUP

TION

TO

VARI

OUS

ACTI

VITI

ES(B

) PR

IVAT

E EN

TERP

RISE

S

Pe

rcen

tage

of R

espo

nden

ts

No

Activ

ity

All

CGOs

LG

As

All

Urba

n Ru

ral

1 Pa

ying

or d

eman

ding

a b

ribe

100

100

100

100

100

in

retu

rn fo

r a fa

vour

2

Desi

gnin

g a

proj

ect t

o fa

vour

86

.8

77.9

91

.2

92.4

88

.9

certa

in co

ntra

ctor

s 3

Agre

eing

with

oth

er b

idde

rs

73.7

67

.6

76.6

77

.3

80.0

who

will

win

the

cont

ract

4

Subm

ittin

g in

flate

d cl

aim

s 67

.8

58.8

72

.3

68.2

71

.15

Carr

ying

out a

nd co

ncea

ling

de

fect

ive w

ork

82.9

70

.6

89.1

87

.9

88.9

6 Pa

ying/

dem

andi

ng a

brib

e in

orde

r to

conc

eal a

nd/o

r ign

ore

N/A

N/A

N/A

N/A

N/A

ba

d la

bora

tory

resu

lts

7 Co

llusi

on b

etw

een

supe

rvis

ing

77.1

76

.5

77.4

77

.3

80.0

engi

neer

and

cont

ract

or to

stea

l pro

ject

fund

s by

subm

ittin

g bo

gus

clai

ms

8 St

ealin

g m

ater

ials

41

.5

41.2

41

.6

37.9

51

.1

9 M

oney

Lau

nder

ing

52.7

52

.9

51.0

57

51

.1


Resp

onde

nts

Actions Private Enterprises Public Officials

Resp

onde

nts

Very

Com

mon

Very

Com

mon

Does

Occ

ur

Does

Occ

ur

Neve

r See

n

Neve

r See

n

1. Project Selection and Design Stage

1. Exaggerating economic All 29.1 38.0 32.9 All 11.2 43.4 45.4 benefits or deliberately Consultants 31 42 27 CGOs 11.8 45.6 42.6 depressing cost estimates Contractors 29 37 34 LGAs 10.9 42.3 46.7 to get a project approved 2. Awarding consultants All 14.7 40.6 43.3 All 5.9 23.0 71.1 contracts for projects which Consultants 12 54 27 CGOs 3.0 19.4 77.6 have not passed the pre- Contractors 15 39 46 LGAs 7.3 24.8 67.9 feasibility test

3. Incomplete designs to make All 22.1 45.6 32.3 All 9.3 40.0 50.7 room for later changes Consultants 31 46 23 CGOs 5.9 41.2 52.9

Contractors 21 46 34 LGAs 10.9 39.4 49.7

4. Designs slanted to favour All 28.1 39.6 32.3 All 10.8 30.2 59.0 certain contractors Consultants 42 35 23 CGOs 7.4 23.5 69.1 Contractors 26 40 33 LGAs 12.4 33.6 54.0

5. Bills of Quantities inflated to All 28.1 37.3 34.6 All 12.6 29.8 57.6 provide a cushion for corrupt Consultants 46 31 23 CGOs 7.4 25.0 67.6 transactions Contractors 26 38 36 LGAs 15.3 32.1 52.6

6. Large amounts of PC items All 18.4 35.0 46.1 All 9.3 24.4 66.3 in BoQs to allow for Consultants 27 46 23 CGOs 5.9 14.7 79.4 siphoning off project funds Contractors 17 34 49 LGAs 10.9 29.2 59.9 through dubious subcontracts

2. Tendering Stage

7. Tendering contracts for All 33.2 37.3 29.5 All 8.4 28.9 62.7 projects for which there are Consultants 42 38 19 CGOs 11.9 14.7 79.4 insufficient funds in the Contractors 32 38 30 LGAs 6.6 33.6 59.8 budget 8. Demanding/paying a bribe to All 32.7 38.7 28.1 All 15.2 30.7 54.1 obtain confidential Consultants 46 38 15 CGOs 11.9 19.4 68.7 information or to be included Contractors 31 39 30 LGAs 7.4 7.4 85.2 on the shortlist of pre- qualified contract

APPENDIX 4A: RESPONDENTS’ RATING OF CORRUPT PRACTICES BY STAGES OF PROJECT IMPLEMENTATION


9. Demanding/paying a bribe to All 15.2 29.5 55.3 All 7.3 21.0 71.7 ensure a company is Consultants 27 23 50 CGOs 8.8 25.0 66.2 eliminated from the shortlist Contractors 14 30 56 LGAs 10.3 17.6 72.1 of pre-qualified contractors

10. Physical intimidation to All 7.8 24.9 66.8 All N/A N/A N/A discourage competitors Consultants 12 23 65 CGOs N/A N/A N/A Contractors 7 25 67 LGAs N/A N/A N/A11. Demanding/paying a bribe All 49.3 33.2 16.1 All 15.1 25.4 59.5 for a contract award Consultants 77 15 4 CGOs 10.3 17.6 72.1 Contractors 45 36 18 LGAs 11.8 27.9 60.3

12. Pressure from superiors to All 29.0 35.5 35.5 All 10.3 17.6 72.1 demand a bribe to award a Consultants 46 35 19 CGOs 10.3 17.6 72.1 contract Contractors 27 36 37 LGAs 16.8 38.7 44.5

13. Bidders colluding to agree All 20.7 30.0 49.3 All 8.3 41.5 50.2 which one of them will win Consultants 38 31 31 CGOs 7.4 42.6 50.0 the contract Contractors 19 30 52 LGAs 8.8 40.9 50.3

14. Using connections to win a All 50.2 33.2 15.7 All 19.5 31.7 48.8 government contract Consultants 73 23% 4% CGOs 11.8 27.9 60.3 Contractors 47 34% 17 LGAs 23.4 33.6 43.015. Awarding a contract to a All 38.2 39.6 22.1 All 13.2 28.8 58.0 company in which a public Consultants 38 50 12 CGOs 10.3 19.1 70.6 official from the awarding Contractors 39 38 24 LGAs 14.6 33.6 51.8 agency has an interest

16. Adjustment of specification All 19.8 42.9 36.9 All N/A N/A N/A to favour a particular firm Consultants 27 38 35 CGOs N/A N/A N/A Contractors 19 43 37 LGAs N/A N/A N/A17. Advertising tenders for All 19.8 40.1 5.1 All N/A N/A N/A shorter period than specified Consultants 38 27 0 CGOs N/A N/A N/A in the law in favour of Contractors 17 42 5 LGAs N/A N/A N/A particular bidders

18. Advertising tenders through All 17.5 40.6 5.1 All N/A N/A N/A newspapers with less wider Consultants 31 38 4 CGOs N/A N/A N/A circulation or other means Contractors 16 41 5 LGAs N/A N/A N/A contrary to the requirements of PPA

Resp

onde

nts


Resp

onde

nts

Very

Com

mon

Very

Com

mon

Does

Occ

ur

Does

Occ

ur

Neve

r See

n

Neve

r See

n

APPENDIX 4A: RESPONDENTS’ RATING OF CORRUPT PRACTICES BY STAGES OF PROJECT IMPLEMENTATION (cont’d)


Resp

onde

nts


Resp

onde

nts

Very

Com

mon

Very

Com

mon

Does

Occ

ur

Does

Occ

ur

Neve

r See

n

Neve

r See

n

3. Project Execution Stage

19. Demanding/ paying a bribe All 20.3 44.2 35.0 All 8.3 28.8 62.9 to have false variations or Consultants 42 46 12 CGOs 5.9 26.5 67.6 inflated claims approved Contractors 17 44 39 LGAs 9.5 29.9 60.6

20. Demanding/ paying a bribe All 34.6 43.8 21.7 All N/A N/A N/A to approve defective work Consultants 58 38 4 CGOs N/A N/A N/A Contractors 31 44 24 LGAs N/A N/A N/A

21. Paying/ demanding a bribe All 25.8 45.6 27.6 All N/A N/A N/A in order to falsify laboratory Consultants 42 50 8 CGOs N/A N/A N/A test results Contractors 23 46 31 LGAs N/A N/A N/A

22. Supervising engineers All 28.6 40.6 30.4 All 11.8 34.8 53.4 extort bribes from contractors Consultants 31 38 31 CGOs 10.3 35.3 54.4 to have legitimate claims and Contractors 28 41 31 LGAs 12.5 34.6 52.9 payments approved23. Contractors and supervising All 14.3 39.6 46.1 All 10.2 33.2 56.6 consultants collude to steal Consultants 27 42 31 CGOs 8.8 32.4 58.8 project funds through Contractors 13 39 48 LGAs 10.9 33.6 56.5 fraudulently inflated or fictitious claim

24. Client representatives, All 15.7 39.2 43.8 All 7.3 28.8 63.9 contractors and supervising Consultants 31 31 27 CGOs 10.2 35.0 54.8 engineers collude to steal Contractors 14 40 46 LGAs 8.0 30.7 61.3 project funds through fraudulently inflated or fictitious claims

25. Client’s finance managers All 25.3 42.9 30.9 All 10.2 29.8 60.0 extort bribes from CGOs 10.3 19.1 70.6 contractors and/or LGAs 10.2 35.6 54.7 consultants to expedite LGAs 9.6 38.5 51.9 payment of IPCs and/or Fee Notes 4. Project Completion Stage



Resp

onde

nts


Resp

onde

nts

Very

Com

mon

Very

Com

mon

Does

Occ

ur

Does

Occ

ur

Neve

r See

n

Neve

r See

n

26. Audit reports delivered late All 17.1 41.9 40.6 All 9.8 22.9 67.3

and no action is taken on Consultants 35 46 19 CGOs 8.8 19.1 72.1 funds unaccounted for Contractors 24 42 32 LGAs 10.7 24.8 65.0

27. Arbitrators or judges being All 16.6 35.5 47.5 All N/A N/A N/A bribed to give favourable Consultants 42 35 23 CGOs N/A N/A N/A opinions or verdicts Contractors 13 35 51 LGAs N/A N/A N/A28. Experts and witnesses being All 14.3 38.2 47.0 All N/A N/A N/A bribed in order to give false Consultants 27 50 23 CGOs N/A N/A N/A evidence in dispute Contractors 12 37 51 LGAs N/A N/A N/A proceedings



Resp

onde

nts

Actions Private Enterprises

Very

Com

mon

Does

Occ

ur

Neve

r See

n

APPENDIX 4B: CONTRACTORS’ RATING OF CORRUPT PRACTICES BY STAGES OF PROJECT IMPLEMENTATION

1. Project Selection and design Stage

1. Exaggerating economic All 29 38 30 benefits or deliberately Consultants 31 42 27 depressing cost estimates Contractors All 29 37 34 to get a project approved % of govt 0 – 50% 28 44 28 involvement Above 50% 30 32 38 Contractor’s class 1 and 2 11 53 37 3, 4 and 5 21 40 39 6 and 7 33 36 322. Awarding consultants All 15 41 43 contracts for projects Consultants 12 54 27 which have not passed Contractors All 15 39 46 the pre-feasibility test

% of govt 0 – 50% 16 47 35 involvement Above 50% 13 34 51 Contractor’s class 1 and 2 11 32 58 3, 4 and 5 11 43 43 6 and 7 16 38 473. Incomplete designs to All 22 46 32 make room for later Consultants 31 46 23 changes Contractors All 21 46 34 % of govt. 0 – 50% 26 44 30 involvement Above 50% 18 48 39 Contractor’s class 1 and 2 0 53 47 3, 4 and 5 23 47 30 6 and 7 23 45 334. Designs slanted to favour All 28 40 32 certain contractors Consultants 42 35 23 Contractors All 26 40 33 % of govt. 0 – 50% 32 43 25 involvement Above 50% 24 36 33 Contractor’s class 1 and 2 11 47 42 3, 4 and 5 24 40 36 6 and 7 32 37 32


5. Bills of Quantities inflated All 28 37 35 to provide a cushion for Consultants 46 31 23 corrupt transactions Contractors All 26 38 36 % of govt. 0 – 50% 34 40 26 involvement Above 50% 22 35 43 Contractor’s class 1 and 2 11 47 42 3, 4 and 5 27 37 36 6 and 7 28 39 34

6. Large amounts of PC items All 18 35 46 in BoQs to allow for Consultants 27 46 23 siphoning off project funds Contractors All 17 34 49 through dubious subcontracts % of govt 0 – 50% 23 39 37 involvement Above 50% 14 31 55 Contractor’s class 1 and 2 11 32 58 3, 4 and 5 14 37 49 6 and 7 19 35 477. Tendering contracts for All 33 37 30 projects for which there Consultants 42 38 19 are insufficient funds in Contractors All 32 38 30 the budget % of govt 0 – 50% 33 40 27 involvement Above 50% 34 35 32 Contractor’s class 1 and 2 37 32 32 3, 4 and 5 37 43 20 6 and 7 31 33 378. Demanding/paying a bribe All 33 39 28 to obtain confidential Consultants 46 38 15 information or to be Contractors All 31 39 30 included on the shortlist of pre-qualified contracts % of govt. 0 – 50% 21 47 32 involvement Above 50% 33 36 31 Contractor’s class 1 and 2 21 47 32 3, 4 and 5 33 44 23 6 and 7 30 37 33

Resp

onde

nts


Very

Com

mon

Does

Occ

ur

Neve

r See

n

APPENDIX 4B: CONTRACTORS’ RATING OF CORRUPT PRACTICES BY STAGES OF PROJECT IMPLEMENTATION (cont’d)


9. Demanding/paying a bribe All 15 30 55 to ensure a company is Consultants 27 23 50 eliminated from the Contractors All 14 30 56 shortlist of pre-qualified contractors % of govt. 0 – 50% 16 31 53 involvement Above 50% 14 28 58 Contractor’s class 1 and 2 5 32 63 3, 4 and 5 19 27 54 6 and 7 12 34 5410. Physical intimidation to All 8 25 67 discourage competitors Consultants 12 23 65 Contractors All 7 25 67 % of govt. 0 – 50% 9 27 63 involvement Above 50% 7 22 71 Contractor’s class 1 and 2 0 21 79 3, 4 and 5 9 29 63 6 and 7 8 23 6811. Demanding/paying a bribe All 49 33 16 for a contract award Consultants 77 15 4 Contractors All 45 36 18 % of govt. 0 – 50% 35 37 27 involvement Above 50% 22 34 44 Contractor’s class 1 and 2 37 47 16 3, 4 and 5 44 37 19 6 and 7 50 31 1812. Pressure from superiors All 29 36 36 to demand a bribe to Consultants 46 35 19 award a contract Contractors All 27 36 37 % of govt 0 – 50% 35 37 27 involvement Above 50% 22 34 44 Contractor’s class 1 and 2 11 42 47 3, 4 and 5 24 43 33 6 and 7 33 31 37

Resp

onde

nts


Very

Com

mon

Does

Occ

ur

Neve

r See

n



13. Bidders colluding to agree All 21 30 49 which one of them will win Consultants 38 31 31 the contract Contractors All 19 30 52 % of govt 0 – 50% 25 27 47 involvement Above 50% 16 33 51 Contractor’s class 1 and 2 26 37 37 3, 4 and 5 21 26 53 6 and 7 16 31 5314. Using connections to win All 50 33 16 a government contract Consultants 73 23 4 Contractors All 47 34 17 % of govt. 0 – 50% 48 39 12 involvement Above 50% 52 27 20 Contractor’s class 1 and 2 32 42 26 3, 4 and 5 50 31 19 6 and 7 52 31 1515. Awarding a contract to a All 38 40 22 company in which a public Consultants 38 50 12 official from the awarding Contractors All 39 38 24 agency has an interest % of govt. 0 – 50% 38 45 16 involvement Above 50% 38 34 28 Contractor’s class 1 and 2 42 26 32 3, 4 and 5 39 44 17 6 and 7 39 36 2616. Adjustment of specification All 20 43 37 to favour a particular firm Consultants 27 38 35 Contractors All 19 43 37 % of govt. 0 – 50% 25 44 31 involvement Above 50% 15 42 43 Contractor’s class 1 and 2 16 47 37 3, 4 and 5 24 41 33 6 and 7 17 45 39

Resp

onde

nts


Very

Com

mon

Does

Occ

ur

Neve

r See

n



17. Advertising tenders for All 20 40 5 shorter period than Consultants 38 27 0 specified in the law in Contractors All 17 42 5 favour of particular bidders % of govt 0 – 50% 25 37 5 involvement Above 50% 14 43 5 Contractor’s class 1 and 2 11 58 5 3, 4 and 5 20 41 6 6 and 7 18 38 518. Advertising tenders All 18 41 5 through newspapers with Consultants 31 38 4 less wider circulation or Contractors All 16 41 5 other means contrary to the requirements of PPA % of govt 0 – 50% 18 45 5 involvement Above 50% 17 36 5 Contractor’s class 1 and 2 11 47 5 3, 4 and 5 16 49 4 6 and 7 18 35 53. Project Execution Stage

19. Demanding/ paying a All 20 44 35 bribe to have false Consultants 42 46 12 variations or inflated Contractors All 17 44 39 claims approved % of govt. 0 – 50% 26 46 26 involvement Above 50% 14 42 44 Contractor’s class 1 and 2 0 53 47 3, 4 and 5 14 51 33 6 and 7 22 37 42

Resp

onde

nts


Very

Com

mon

Does

Occ

ur

Neve

r See

n



20. Demanding/ paying a bribe All 35 44 22 to approve defective work Consultants 58 38 4 Contractors All 31 44 24 % of govt. 0 – 50% 38 46 15 involvement Above 50% 31 41 28 Contractor’s class 1 and 2 21 58 21 3, 4 and 5 29 50 21 6 and 7 33 41 2721. Paying/ demanding a bribe All 26 46 28 in order to falsify laboratory Consultants 42 50 8 test results Contractors All 23 46 31 % of govt. 0 – 50% 28 53 19 involvement Above 50% 23 38 36 Contractor’s class 1 and 2 26 42 32 3, 4 and 5 26 54 20 6 and 7 22 40 3822. Supervising engineers All 29 41 30 extort bribes from Consultants 31 38 31 contractors to have Contractors All 28 41 31 legitimate claims and payments approved % of govt. 0 – 50% 32 41 26 involvement Above 50% 25 40 3523. Contractors and All 14 40 46 supervising consultants Consultants 27 42 31 collude to steal project Contractors All 13 39 48 funds through fraudulently inflated or fictitious claim % of govt 0 – 50% 19 45 36 involvement Above 50% 9 35 56 Contractor’s class 1 and 2 0 32 68 3, 4 and 5 10 47 43 6 and 7 17 35 49

Resp

onde

nts


Very

Com

mon

Does

Occ

ur

Neve

r See

n



24. Client representatives, All 16 39 44 contractors and Consultants 31 31 27 supervising engineers Contractors All 14 40 46 collude to steal project funds through fraudulently inflated or fictitious claims % of govt 0 – 50% 19 49 29 involvement Above 50% 12 29 59 Contractor’s class 1 and 2 0 37 63 3, 4 and 5 13 46 41 6 and 7 17 36 4725. Client’s finance managers All 25 43 31 extort bribes from Consultants 31 31 27 contractors and/or Contractors All 14 40 46 consultants to expedite payment of IPCs and/or Fee Notes % of govt. 0 – 50% 26 51 19 involvement Above 50% 22 35 43 Contractor’s class 1 and 2 5 58 32 3, 4 and 5 27 40 31 6 and 7 27 39 354. Project Completion Stage

26. Audit reports delivered All 17 42 41 late and no action is taken Consultants 35 46 19 on funds unaccounted for Contractors All 24 42 32 % of govt. 0 – 50% 19 51 29 involvement Above 50% 15 33 52 Contractor’s class 1 and 2 5 58 32 3, 4 and 5 16 43 41 6 and 7 17 42 42

Resp

onde

nts


Very

Com

mon

Does

Occ

ur

Neve

r See

n



27. Arbitrators or judges All 17 36 48 being bribed to give Consultants 42 35 23 favourable opinions or Contractors All 13 35 51 verdicts % of govt. 0 – 50% 20 40 39 involvement Above 50% 13 31 56 Contractor’s class 1 and 2 0 47 47 3, 4 and 5 11 36 53 6 and 7 14 35 5128. Experts and witnesses All 14 38 47 being bribed in order to Consultants 27 50 23 give false evidence in Contractors All 1`2 37 51 dispute proceedings % of govt 0 – 50% 15 48 35 involvement Above 50% 13 28 59 Contractor’s class 1 and 2 0 47 47 3, 4 and 5 11 36 53 6 and 7 14 35 51

Resp

onde

nts


Very

Com

mon

Does

Occ

ur

Neve

r See

n



1. Project Selection and Design Stage

1. Subject all appraisals All 42.5 33.2 23.8 All 46.3 29.3 24.4 (feasibility studies) to Consultants 54 31 15 CGOs 30.9 42.6 26.5 Independent review by MoF Contractors 40 34 25 LGAs 54.0 22.6 23.42. Independent screening to All 71.0 23.5 5.1 All 52.2 31.7 16.1 ensure designs are complete Consultants 77 8 15 CGOs 39.7 41.2 19.1 before tender Contractors 70 25 4 LGAs 58.4 27.0 14.63. Pay contractors on time All 88.5 5.5 2.3 All 80.5 15.1 4.4 Consultants 85 4 4 CGOs 77.9 17.6 4.4 Contractors 89 6 2 LGAs 81.8 13.9 4.34. Independent check (e.g. by All 82.9 12.9 3.7 All 80.5 15.1 4.4 MoF) to ensure adequate Consultants 88 8 4 CGOs 77.9 17.6 4.4 funds are available in the Contractors 83 4 3 LGAs 81.8 13.9 4.3 budget before going to tender

2. Tendering Stage

5. Improve understanding of All 64.5 24.9 10.0 All 73.2 22.9 3.9 the Public Procurement Act Consultants 77 19 4 CGOs 73.5 26.5 0.0 and Regulations among Contractors 65 26 11 LGAs 73.0 21.2 5.8 procurement officers through training

6. Appoint and train All 62.2 24.0 13.8 All 69.3 23.9 6.8 independent monitors to Consultants 65 15 19 CGOs 66.2 29.4 4.4 observe and report on the Contractors 62 25 12 LGAs 70.8 21.2 8.0 fairness of the tender process

7. Empower PPRA to impose All 74.2 17.5 7.8 All 70.1 25.0 4.9 stiff penalties on Procuring Consultants 92 8 0 CGOs 70.1 23.9 6.0 Entities that fail to follow the Contractors 71 19 9 LGAs 70.1 25.5 4.4 Regulations

8. Enforce all public officials to All 53.9 26.3 19.4 All 62.5 27.3 10.2 register their interests and Consultants 54 23 23 CGOs 57.4 32.4 10.3 disclose the register to the Contractors 54 27 18 LGAs 65.0 24.8 10.2 public

9. Outsourcing of procurement All 42.9 27.2 29.5 All 30.2 25.4 44.4 process to third party? from Consultants 42 27 31 CGOs 20.6 29.4 50.0 prequalification through to Contractors 43 28 29 LGAs 35.0 23.4 41.6 contract award

Resp

onde

nts


Resp

onde

nts

Very

Effe

ctive

Very

Effe

ctive

Not E

ffect

ive

Not E

ffect

ive

Stric

tly

effe

ctive

Stric

tly

effe

ctive

APPENDIX 5: RESPONDENTS’ RATING OF EFFECTIVENESS OF MEASURES TO CURB CORRUPTION BY STAGES OF PROJECT IMPLEMENTATION


3. Project Execution Stage

10. Introduce a Dispute All 49.8 32.7 17.1 All 45.9 35.6 18.5 Adjudication Board (DAB) Consultants 58 27 15 CGOs 47.1 36.8 16.2 on major projects Contractors 49 33 17 LGAs 45.3 35.0 19.7

11. Introduce anti-corruption All 78.3 13.8 6.5 All N/A N/A N/A monitoring on major projects Consultants 88 8 4 CGOs N/A N/A N/A Contractors 77 14 7 LGAs N/A N/A N/A12. Record performance of All 73.7 18.9 7.4 All 59.0 28.8 12.2 contractors and consultants Consultants 77 23 0 CGOs 51.5 30.9 17.6 and include as criteria in Contractors 74 17 8 LGAs 62.8 27.7 9.5 pre or post qualification

4. Project Completion Stage13. Release audit reports to All 47.9 37.3 14.7 All 53.7 37.1 9.2 parliament and to the public Consultants 58 31 12 CGOs 47.1 44.1 8.8 Contractors 47 38 15 LGAs 56.9 33.6 9.514. Strengthen the role of All 45.6 33.2 20.7 All 51.7 34.1 14.2 parliament in providing Consultants 58 19 19 CGOs 44.1 39.7 16.2 oversight of public Contractors 44 35 21 LGAs 55.5 31.4 13.1 investment particularly in roads 15. All PE to avail essential All 37.8 41.0 19.8 All N/A N/A N/A project data (from planning Consultants 54 27 15 CGOs N/A N/A N/A to commission of project) to Contractors 36 43 20 LGAs N/A N/A N/A Construction Sector Initiative (CoST)

Resp

onde

nts


Resp

onde

nts

Very

Effe

ctive

Very

Effe

ctive

Not E

ffect

ive

Not E

ffect

ive

Stric

tly

effe

ctive

Stric

tly

effe

ctive

APPENDIX 5: RESPONDENTS’ RATING OF EFFECTIVENESS OF MEASURES TO CURB CORRUPTION BY STAGES OF PROJECT IMPLEMENTATION

APPENDIX 6:

SOURCE DATA ASEXTRACTED FROM

JISR REPORTS


Documents

DIAGNOSTIC SURVEY ON THE CORRUPTION IN THE ROADS