Friday, July 19, 2024
- Advertisement -
- Advertisement -

My take on the New Draft Public Procurement Regulation

This article is written in response to the news published in The Reporter newspaper on December 30, 2023, titled “Fed spurns fierce SOE objections to pending procurement regulations.”

As a concerned citizen and an individual who has served in the supply chain field of the telecom industry for over 15 years, I feel compelled to express my thoughts on the New Draft Proclamation and its consequences. It is important that someone takes responsibility for these consequences – the reason why I am voicing my opinion on the issue.

The tone of my writing clearly indicates my strong opposition to the New Draft Proclamation, which aims to place successful enterprises like Ethio telecom and Ethiopian Airlines under its watch. First and foremost, I would like to commend the House of Representatives’ Plan, Budget, and Finance Issues Standing Committee for its efforts to ensure accountability in state-owned enterprises and safeguard the interests of the general public. I believe these efforts should continue in more comprehensive ways, especially considering the upcoming complexities of an open market system and liberalized market situations.

When we address the main agenda, we can observe two distinct approaches to doing business in the telecom sector over the past decade. The first was characterized by a legally protected monopoly telecom service provider, while the second involved a liberalized market for telecom service operations.

There is one common feature shared by these two market situations (unless changed soon) regarding telecom service providers and other SOEs: they were granted operational freedom and exempted from public procurement operations. They were also allowed to establish their own policies, procedures, and other working documents in accordance with the country’s laws, regulations, and proclamations, including those of the Federal Public Procurement Agency.

These self-governing supply chain practices, coupled with strong leadership, management, and employee commitment, enabled ethio telecom to maintain its market leadership in an astonishing manner, despite market liberalization and the entry of competitors.

Many had feared that ethio telecom would lose its market dominance immediately after the arrival of the new telecom operator. However, the team at ethio telecom held their ground, strategized effectively, and achieved what many thought was merely a wish. Under the leadership of CEO Frehiwot Tamiru, the transition from monopoly to competition was successfully navigated through a bridge strategy. In doing so, the company achieved numerous groundbreaking milestones in the telecom market.

I am not here to solely discuss the success story of Ethio telecom. Instead, I am here to emphasize the factors that contributed to its success and shine a light on the perilous situation that could potentially disable ethio telecom due to the upcoming proclamation.

The success of state-owned enterprises like ethio telecom and Ethiopian Airlines stems from the operational freedom granted to them in their operations. This freedom is bestowed upon them due to their distinct business characteristics and the type of competition they face.

As mentioned earlier, ethio telecom was granted operational freedom both during the monopoly period and after market liberalization. Today is no different. The unique characteristics of ethio telecom, combined with the ongoing market liberalization, necessitate even greater operational freedom. Stripping away this operational freedom in such circumstances is extremely detrimental, and those advocating for this proclamation must bear the consequences of whatever unfolds.

Several factors make telecom operations unique. The complexity of technology, compatibility, information security (customer information), and fraud management are just a few examples.

Technology is inherently complex and possesses unique features that require specialized approaches that cannot be encapsulated within a so-called collective proclamation. In today’s rapidly advancing world, the complexity of technology demands careful evaluation and decision-making, particularly in the procurement process within the telecom sector.

The telecom industry is characterized by constant innovation and evolving standards, making it crucial for buyers to thoroughly assess the intricacies of the technology they are considering. This entails understanding technical specifications, compatibility with existing infrastructure, scalability, security features, and long-term viability.

Effective decision-making in technology procurement necessitates comprehensive research, analysis, and consideration of factors such as cost, performance, reliability, and vendor reputation. By diligently assessing the complexity of technology, organizations can make informed choices that align with their strategic goals while minimizing the risks associated with adopting new solutions.

Compatibility and long-term partnerships are fundamental pillars in the technology and telecom sector. The need for backward and forward compatibility of technological equipment and software arises from the ever-evolving nature of technology and the desire for seamless integration and interoperability.

Backward compatibility ensures that newer versions of software or hardware can function with older versions, allowing users to upgrade without rendering their existing systems obsolete. This enables a smooth transition and safeguards investments made in previous technology.

On the other hand, forward compatibility ensures that older versions can still effectively operate with newer releases, avoiding fragmentation and ensuring widespread adoption. It enables users to leverage new features and innovations while maintaining compatibility with existing infrastructure. Overall, backward and forward compatibility foster user convenience, reduce costs, and promote sustainable technological advancement. These unique characteristics require their own working frameworks and operational freedom in order to thrive in the market and satisfy customers.

Information security is another unique aspect that requires operational freedom for the supply chain activities of ethio Telecom. Telecom operators have a crucial responsibility to safeguard information security and protect their customers’ data. It is imperative that they exercise caution when acquiring internal solutions and choose reputable organizations. By doing so, they can ensure that the solutions they purchase are reliable and come from trusted sources.

This approach helps maintain the integrity of sensitive information, instills customer confidence, and mitigates the risks associated with potential data breaches or unauthorized access. Prioritizing careful selection and known organizations in their procurement process is essential for telecom operators to uphold the highest standards of information security.

The other main issue in the telecom industry is fraud management. Fraud management poses a significant challenge for telecom operators as they face constant threats of fraudulent activities that can result in substantial financial losses. To effectively address this issue, it is crucial for operators to invest in robust fraud solutions. These solutions provide advanced mechanisms and technologies to identify and combat fraudulent activities within the telecom network. However, selecting the right fraud solution requires a careful assessment and meticulous engagement with top-tier service providers. By engaging with reputable providers and conducting thorough evaluations, telecom operators can ensure they acquire a fraud solution that offers comprehensive protection, thereby safeguarding their operations and minimizing potential risks.

In general, we must understand the situation ethio Telecom is in. It has a market competitor. It must have freedom, at least close to its competitors in the market. In parallel, it needs secrecy in its supply chain activities to maintain its market leadership. Maintaining secrecy in procurement activities is a crucial mechanism for ensuring competitiveness in the telecom industry. By keeping procurement details confidential, companies can protect their strategic advantage and prevent their competitors from gaining insights into their sourcing strategies, supplier relationships, and cost structures. This secrecy allows telecom companies to negotiate better deals with suppliers, secure favorable pricing, and access exclusive technologies or services.

Furthermore, by safeguarding procurement information, telecom companies can minimize the risk of collusion or unfair practices among suppliers, fostering a more transparent and competitive marketplace.

Overall, the use of secrecy in procurement activities serves as a valuable tool in promoting a level playing field and driving innovation and efficiency in the industry. We cannot achieve the benefits of secrecy in our supply chain activities if operational freedom is taken from it.

I believe the new draft proclamation will take away all the competitive advantages of ethio Telecom and level the ground for our competitors. This is when the question arises, “Is it in the best interest of the government/public or other invisible hands to include ethio telecom in the new proclamation?” Every member of the Standing Committee must ask themselves this question and reconsider the decision once again.

The Committee must also consider which organization is responsible for the telecom sector. Is it the Ministry of Finance or Investment Holding? Clear demarcation must be put in place for the sytem to operate smoothly.

To the Committee: keep up with what you are trying to do and search for new and best ways to secure the public interest in state-owned enterprises as we head towards a more open market. We must also take caution as more invisible hands with hidden agendas will emerge with the openness of the market. I hope you will reconsider your decisions on the issue and come up with new ways to secure the public and the government’s interest. But I can assure you the new draft proclamation will have adverse effects more than you thought.

(Habtom Gebreegziabher is a supply chain expert and an author of two books. The ideas presented in the article reflect the opinions of the writer. He can be reached via email [email protected])

Contributed by Habtom Gebreegziabher

- Advertisement -

Fresh Topics

Related Articles