Regulaton & Policy
Why Does Third-World Competent Public Procurement Matter to International Trade?

The European Commission tells us that public procurement accounts for a substantial €1000 billion per year of world trade. For national economies it can affect up to 25 percent of gross domestic product (GDP) and on average it reaches about 16 percent for EU member states. So, the public purchase of goods and services carries some serious weight – therefore its practices, accountability, transparency and integrity are always coming under the magnifying glass. Why does this matter? Because it’s an enormous resource that is not always well managed. Where central government has little or no oversight of data such as who spends what, with whom, or for how much, then the pursuit of value for money is seriously impeded.

Imagine, therefore, that procurement took up 70 percent of a nation’s government funding! The opportunity for corruption or fraudulent practices would be that much greater, more available and more tempting for unscrupulous buyers. That’s the figure we’re talking about in Sierra Leone. (It’s relative of course! Countries with poorer economies may have smaller GDPs; funding can only come from tax payers or borrowing. Where there is more poverty there is less tax paid and the country is not robust enough to be a safe bet for lenders.) Recovering from economic turmoil, and now also trying to recuperate from the Ebola crisis, like many countries across the globe its procurement procedures have been at the mercy of corrupt officials owing, in part, to lack of transparency.

It would be unfair to put this squarely at the door of lack of regulation, as the Auditor General says: “Procurement laws exist and they are good. We just need to take their implementation seriously.”

Findings from the Auditor General’s most recent report, as discussed in The Sierra Leone Telegraph, say that non-compliance of procurement procedures are a serious challenge to the country’s public financial management system. “Uncompetitive and unfair procurement processes, inadequate contract management and missing tender documentation were observed during the course of the audit. In many cases there was no evidence of fair, transparent and competitive processes being followed in awarding contracts.”

The report also revealed how billions of SLL are unaccounted for, spurring civil society groups alongside the Auditor General to call for action by the authorities, stating that deficiency in procurement management is a major issue across all ministries, departments and agencies. By way of example, the Global Fund’s Office of the Inspector General (OIG) found that “… some suppliers did not exist and indicated possible collusion by suppliers,” and that “There was also evidence of bid rigging in the procurement process with ministry staff producing false quotations and multiple vendors identified as being controlled by a single entity. The practice of submitting different quotations for the same tender from a consortium of companies owned by the same entity creates the impression of fair competition when in fact there is none.”

So what does it take to get competent public procurement and reduce corruption? Surely you need leadership, people with the right skills and integrity, strong policies and processes, checks, audits and actions taken where things aren’t done properly, and of course the resources with which to do this.

The Anti-Corruption Commission (ACC) and the Audit Service-Sierra Leone (ASSL) are joining forces. Awareness Times – Sierra Leone’s news and information site – has published an article on ACC’s and ASSL’s strategies for 2015, where, basically, they are calling for integrity.

Their mandate is to examine the public sector institutions by carrying out financial and management audits, and investigate and prosecute instances of corruption in the public sector. They highlight that loss of government resources,  due to lack of efficiency in following financial procedures, procurement procedures and improper records keeping, can be avoided if MDAs comply with not only with the recommendations of the Auditor General’s Report, but also that of the ACC and implementation of the National Anti-Corruption Strategy (NACS). Integrity management is to be made functional and effective.

The World Bank, in supporting the government to reverse its procurement process failings, is using its Public Financial Management Consolidation and Improvement Project funds to help MDAs, local councils and Regulatory Agencies to conduct their procurement activities consistently with regulations.

Last year its procurement team organised a two-day training workshop which targeted Project Coordinators, Directors, Procurement Specialists, Officers, Assistants, Consultants and Project Accountants. They covered practices from procurement implementation and risk management to contract administration and monitoring and issues post-procurement. It was a good, broad spectrum, but with only two days to learn it all in, we would more than suggest that it just would not be enough.

Striving for better procurement in the third world is a global issue – if more international trade (more open procurement) can be generated on the back of better transparency and rigid processes, surely that will mean better value-for-money is obtained. And with better pricing being sourced, increased efficient use of public resources will follow, which – many argue — could then be reinvested into other recovery programmes.