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Cablegate: Nigeria: Government Procurement As Implemented in Lagos

VZCZCXRO3922
RR RUEHMA RUEHPA
DE RUEHOS #0003 0031315
ZNR UUUUU ZZH
R 031315Z JAN 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 9670
INFO RUEHUJA/AMEMBASSY ABUJA 9413
RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC

UNCLAS LAGOS 000003

SIPDIS

SIPDIS
SENSITIVE

STATE FOR AF/W
COMMERCE FOR KBURRESS
ENERGY FOR PERSON, GAY
TREASURY FOR DPETERS, RHALL, RABDULRAZAK
STATE PASS USTR FOR LISER, AGAMA
STATE PASS TRANSPORTATION FOR KSAMPLE
STATE PASS OPIC FOR ZHAN, MSTUCKART, JEDWARDS
STATE PASS TDA FOR EEBONG, DSHUSTER
STATE PASS EXIM FOR JRICHTER
STATE PASS USAID FOR NFREEMAN, GBERTOLIN

E.O. 12958: N/A
TAGS: ECON EFIN EINV NI

SUBJECT: NIGERIA: GOVERNMENT PROCUREMENT AS IMPLEMENTED IN LAGOS
STATE


1. (U) Summary: The Lagos state government presently has no
specified office overseeing procurement; each ministry or agency
executes its own annual budget. The Ministry of Economic Planning
and Budget acts as a "due process" office; it monitors and evaluates
contracts and projects to ensure that value for money is obtained.
Contracts worth 2 million naira (USD 15,400) or more must be
approved by the State tenders' board as well as by the governing
board of the user agency. End summary.

2. (U) The Lagos State Government began modernizing its manual paper
based expenditure control and accounting system in 2001 under the
state governance capacity building project (SGCBP) of the World
Bank, by installing and operating an Integrated Financial Management
Information System (IFMIS) designed by Oracle.

3. (U) However, the installation of the Oracle financial modules did
not fundamentally change the state's financial management system.
The state has no specified office overseeing procurement. Most line
ministries continue to own projects. Each ministry prepares its own
budget, detailing planned procurements. The annual budgets prepared
by the ministries are coordinated by the Ministry of Economic
Planning and Budget (MEPB).

4. (U) After the budget is approved, ministries can begin
procurement. The State procurement process starts with the receipt
of tenders from intending vendors by the executing agency/user
ministry, which shortlists and submits relevant documents to the
MEPB. All contracts for construction, supplies, general stores etc
that are worth 500,000 naira (USD 3,800) or more are awarded and
approved by the user ministry or agency. While all contract sums
worth 2 million naira (USD 15,400) or more must be approved by both
the governing board of the user agency and the state tenders' board.


5. (U) The MEPB, the "due process" office, has responsibility for
evaluating and monitoring progress of awarded contracts and
projects. The MEPB adopted a four-pronged approach to ensure
transparency in its project management activity. It monitors
projects through, (1) independent private monitors, (2) a project
monitoring committee consisting of Lagos State cabinet members
(chaired by the MEPB), (3) MEPB economic planning department and (4)
MEPB Central Projects Coordinating Department and the executing
agency/user ministry, which do the prepayment evaluation.

6. (U) The MEPB notifies procuring agencies about results of its
project monitoring and issues a certification for payment if
satisfied with the project execution. The independent monitors'
reports are forwarded to the Governor, to provide an unbiased
project assessment.

7. (U) Budget items that are perquisites of office, such as housing
for commissioners and civil servants, vehicle loans, pensions and
gratuities, are exempt from the procedure.

8. (SBU) Comment: Enforcement of procurement processes in Nigeria
remains lax, especially at sub-national levels. The process in most
states and ministries is usually characterized by inflated rates and
insider dealings that fuel corruption. With the current procurement
process, it is evident the Lagos State government has to do more to
ensure the desired transparency and accountability. End comment.
Blair

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