Start-ups weigh in on ministerial order on public procurement

Players in Rwanda’s start-up ecosystem welcomed the draft ministerial order on awarding public tenders for innovation, highlighting its potential to drive innovation-driven development and reduce reliance on foreign solutions. They commended the proposal for tackling challenges like the high cost of international tenders, limited access for local companies, and rigid procurement processes. ALSO READ: Why public procurement matters The proposed order aims to enable local innovators to develop impactful solutions to national challenges while accessing government tenders more easily. The new ministerial order defines innovation as a new idea, product, process, or service transformed into a solution that creates value for citizens and the country. “In the current system of public procurement, there is little room for innovation. When a government or institution decides to procure, such as acquiring a system, they can only allocate funds for a completed product,” said Patrice Nostalgie, a software engineer. “This means that the procurement process would only allow the purchase of a fully finished system, not one that is still under development,” he added. The proposed order introduces Article 8, which mandates the use of a design contest method. Article 28 of the order highlights that the procuring entity should start on an open market consultation by engaging potential suppliers and market stakeholders through gathering information, assessing market capabilities, and define the requirements of a public procurement related to innovations tenders. ALSO READ: New public procurement policy focuses on efficiency, environmental protection Depending on the nature of the tender, the procuring entity may request the innovator to provide references to prove his or her technical experience, with the submission of the technical solution proposal and its prototype and the financial proposal or business model, or both to the procuring entity through e- procurement system. The order aims to introduce modern procurement models that favor innovations like pre-financing and design-build projects. “For tech startups, these changes open up opportunities to earn the government or public institutions as their clients for their innovative solutions without the burden of traditional contract and financing hurdles,” Nostalgie said. The software engineer believes startups will benefit from clearer bidding criteria and increased transparency, which helps level the playing field against larger competitors. “By supporting innovation-driven projects, this directive will accelerate growth for small and agile tech companies within Rwanda’s tech ecosystem,” he noted. The order allows procuring entities to adopt competitive and innovative procurement processes that ensure the acquisition of the most effective solution to a given challenge. A key element of this method is that procuring entities agree to pay for an innovative solution if it meets their requirements as outlined in the request for solutions. ALSO READ: Rwanda implements comprehensive reforms to enhance transparency, combat corruption in public procurement Selection criteria for innovators should be clearly defined to ensure transparency and fairness in the process, according to the directive. The change allows innovators to compete even if they are local companies without international project experience. Previously, for a local company to compete on a national scale, it needed proof of delivering similar systems at a large scale, often requiring partnerships with international firms to meet eligibility criteria. Nostalgie observed that the government can now invest in projects that are still in the idea stage. This is because the directive allows these projects to be divided into phases, with progress evaluated at each step. “If a phase is promising, the project moves forward. This phased approach recognizes that failure is part of innovation and ensures there is no liability for costs if a phase fails, as the risk was pre-agreed,” he explained. Angelo Gitego, the chief executive at Xanahealth (former IvuliroTech) told The New Times that awarding international tenders for government projects can be costly for the country sometimes. “For instance, the integrated electronic case management system developed for the Ministry of Justice costed over a billion Rwandan francs. Yet, there was sufficient local talent and capacity to create such a platform at a lower cost,” he said. The new order introduces a new element known as a ‘design contest,’ where specific needs are identified, and local companies are invited to compete by proposing tailored solutions. “Through this competitive process, participating firms not only develop innovative platforms but also provide more cost-effective and contextually relevant solutions,” he noted. The entrepreneur highlighted that this model underscores the potential of leveraging local talent to address national challenges while promoting homegrown innovation and reducing dependency on external solutions. ALSO READ: EAC countries urged to embrace e-procurement According to the Ministry of ICT and Innovation, the order was an implementation mandated by the procurement law adopted in 2023. As part of these efforts, Rwanda Public Procurement Authority, the Ministry of ICT and Innovation, and the Ministry of Finance and Economic Planning worked to deliver this ministerial order. Esther Kunda, Director General of Innovation and Emerging Technologies at the Ministry of ICT and Innovation, said that the order provides design contest, the method which will bring into the procurement process the capability for public institutions to tender the problem instead of cast in stone specifications that may not address the challenge. “The innovators and private sector will also be evaluated by how best their technical solutions address the challenge through prototyping. This methodology will also promote the development of a sustainable business model to ensure sustainability of the solutions provided as well as its continued growth and adjustment where necessary,” she said. Kunda said the design contest also awards other top three selected contestants and allows for continued support to the innovation and private sector ecosystem. “Pre-commercial procurement is used by the procuring entity when there is no commercially ready solution to the challenge. The proposed technical solution is evaluated based on its problem-solving abilities, technological business flow and workflow and its usability,” she noted. Under the pre-commercial procurement method, the contract has three phases; the demonstration phase, the solution development, and the testing and transitional experimentation phase. Kunda argued that the methodology will support the growth of research and development for solutions that do not have commercial viability yet.

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Start-ups weigh in on ministerial order on public procurement