Spending on infrastructure in sub-Saharan Africa is projected to reach $180bn a year by 2025, according to PricewaterhouseCoopers’ (PWC) 2014 report. People need roads and railways, schools and hospitals, water, power and access to health services and medical supplies.
Spending in the public sector has been hampered by poor governance and compliance, limited awareness of risk factors and how to manage them. The reasons for this are many – lack of access to the right training and resources, poorly defined policies and minimum guidelines and supervision.
Until now, qualified procurement people working in the public sector in Africa have been unable to easily share their knowledge, challenges and solutions in a systematic and sustainable way. Change is now underway. Organizations like the Chartered Institute of Purchasing and Supply (CIPS), the World Bank and United Nations Development Program (UNDP) are taking bold steps to rectify these deficiencies.
The Corruption Challenge
“The misuse of entrusted power for private gain” is one accepted definition of corruption. Corruption in public procurement takes various forms: bribery, conflict of interest, abuse of privileged information, nepotism and accepting of hospitality.
According to the YouGov Survey conducted by CIPS in 2014, corruption adds 25% to public procurement in developing countries in addition to other ”leakage” due to fraud.
In the 2014 Transparency International (TI) list of Africa’s most corrupt and unethical countries, Somalia, Angola, Libya, Sudan and South Sudan are the most corrupt, partly due to conflicts and fragile politics. José Ugaz, Chairman of TI said:
“Countries at the bottom need to adopt radical anti-corruption measures in favour of their people. Countries at the top of the index should make sure they don’t export corrupt practices to underdeveloped countries.”
Overcoming the Obstacles
Supply contracts are generally unavailable for public scrutiny, rendering the contracting process vulnerable to corruption and mismanagement. A recent innovation is the Open Contracting Data Standard, supported by The World Bank, UNDP and USAID, which aims to enhance and promote more disclosure and better participation. This initiative, along with E-Procurement systems, greatly improves the effectiveness of the procurement process.
“Countries at the bottom need to adopt radical anti-corruption measures in favour of their people. Countries at the top of the index should make sure they don’t export corrupt practices to underdeveloped countries.”
The UNDP and CIPS have entered into a partnership with the main objective of improving accountability, corporate governance and transparency in public procurement. Speaking on behalf of UNDP, Jens Wandel said “a licencing structure will ensure the profession gains formal recognition of its status and can attract higher calibre individuals”. CIPS is the leading procurement and supply professional organization in the world with more than 100 000 members across the globe.
In the Regions
The government in South Africa has made a major move towards curbing wasteful spending, controlling corruption and making its supply chain sourcing processes more efficient. In 2013, a Chief Procurement Officer was appointed. His first big initiative was to launch an e-tender publication portal and a central supplier database, expected to save the state billions of rands. “The benefit for the private sector will be a reduction of red tape and administrative effort when doing business with government,” a spokesman for The Treasury said.
In Ghana, the government has made great strides to reform its public procurement system holistically and tackle underlying issues affecting performance such as a patchwork legal framework, a weak civil service system, and a lack of access to information. A major contribution has been made by the World Bank in its Energy Development and Access Project where the development objective is to increase the population’s access to electricity.
“There are many opportunities ahead as Africa’s economy grows. Local investment to build capacity and improve infrastructure will be critical. The long-term advantages of enhanced local development, alongside the empowerment of a generation to participate directly in their nation’s wealth of resource, are well worth pursuing.”
In Nigeria, Babs Omotowa, CEO of Nigeria LNG Ltd and CIPS President, is optimistic about the role procurement will play in the future of Africa’s development. “There are many opportunities ahead as Africa’s economy grows. Local investment to build capacity and improve infrastructure will be critical. The long-term advantages of enhanced local development, alongside the empowerment of a generation to participate directly in their nation’s wealth of resource, are well worth pursuing.”
The East African Community (EAC) is seeking to adopt one public procurement procedure across Tanzania, Burundi, Kenya, Uganda and Rwanda. In the Middle East and North Africa Region (MENA) the World Bank reports that collaboration among the governments within MENA region is the key to realizing efficient procurement and good governance.
Public Private Partnerships (PPP)s combine the skills and resources of both the public and private sectors. Governments benefit from the operational expertise of the private sector so they can focus on policy, planning and regulation. One notable on-going project is the Renewable Energy Independent Power Procurement Program (REIPPPP) in South Africa, driven by The Department of Energy (DoE). The economic benefit of the program has outweighed the costs with competitively priced and clean electricity generated for the country of more than 2000MW. Other PPP achievements have been in water supply, irrigation and education.
This article was written by ELAINE PORTEOUS
