The power public procurement

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BY Vince Musewe
THERE is no doubt that public procurement can make a profound impact on a nation, its economy and or industry at large.

Generally speaking, public procurement can be divided into two types, first case — the purchase of standard and already existing products like commodities and second case — technology procurement like new or developing skills and technologies.

The second category can foster public procurement as an innovation policy instrument which seeks to impact on economic development.

As the economy grows, the size of public expenditure becomes larger and procurement is one of the most important activities in governmental operation.

Therefore, public procurement can influence many areas and change the way of doing things in the nation. That is the power of public procurement.

The world national average on procurement expenditure is between 9 and 13% of GDP.

It is estimated that the world public procurement marketplace is about $9,5 trillion per annum while developing countries contribute $820 billion per annum.

You will find that in most African countries the fight for political power is a fight to control government revenues and public procurement which are at most times used to entrench ruling parties and are source of serious corruption, nepotism and favouritism.

In Zimbabwe we are not immune to this disease where we have seen massive corruption in public procurement despite the existence of institutions such as the auditor general’s office and procurement agency of Zimbabwe.

We need to correct weaknesses in public procurement systems through: comprehensive legal frameworks, effective monitoring and auditing procedures and organisations to ensure compliance with the regulations, standard terms and conditions of contracts, improved transparency and public availability of rules governing the process, and an improved capacity for developing and retaining people with professional skills in procurement. Over and above this we need to make politicians accountable on how they manage public funds.

We have experienced serious corruption from many years as a result I posit that our lack of developmental capital is man-made and is hugely negatively impacted by the rampant abuse of public funds and lack of transparency in many government and parastatal deals.

Procurement not only involves consumption expenditure but project funding both at national and local government.

When procurement is used to meet political and not developmental agenda it becomes a dangerous tool which can lead to economic regression and high debt levels as is the case of Zimbabwe.

We have borrowed billions of dollars and yet there are no tangible developmental projects which we can point to.

Political scientists, Michael Bratton and Nicolas Van de Walle,  aptly describe neo-patrimonialism.

Zimbabwe actually reflects pervasive neo-patrimonialism, a culture that is costing the country much.

These scientists contend that in neo-patrimonial regimes, the chief executive maintains authority through personal patronage, rather than through ideology or law.

As with classic patrimonialism, the right to rule is ascribed to a person rather than to an office.

In contemporary neo-patrimonialism, relationships of loyalty and dependence pervade a formal political and administrative system and leaders occupy bureaucratic offices less to perform public service than to acquire personal wealth and status.

The distinction between private and public interests is purposely blurred. The essence of neo-patrimonialism is the award by public officials of personal favours, both within the state (notably public sector jobs) and in society (for instance, licenses, contracts and projects).

In return for material reward, clients mobilise political support and refer all decisions upward as a mark of deference to patrons.

If we are to see a paradigm shift or culture change, our public procurement system should be based on the following seven globally accepted principles: value for money, economy, integrity, fit for purpose, efficiency, transparency, and fairness.

The World Bank policy on “Procurement in IPF (investment project financing) and other operational procurement matters” issued on June 28, 2016 (www.worldbank.org/procure), defines these principles as shown in the following manner;

Value for money

This means effective, efficient, and economic use of resources, which requires an evaluation of relevant costs and benefits, along with an assessment of risks, and non-price attributes and/or life cycle costs, as appropriate. Price alone may not necessarily represent value for money.

Economy

This takes into consideration factors such as sustainability, quality, and non-price attributes and/or life cycle cost as appropriate that support value for money.

It permits integrating into the Procurement Process economic, environmental, and social considerations.

Integrity

This refers to the use of funds, resources, assets, and authority according to the intended purposes and in a manner that is well informed, aligned with the public interest and aligned with broader principles of governance.

All parties involved in the procurement process must observe the highest standard of ethics and refrain from fraud and corruption.

Fit for purpose

This applies both to the intended outcomes and the procurement arrangements in determining the most appropriate approach to meet the project development objectives and outcomes, taking into account the context and the risk, value, and complexity of the procurement.

Efficiency

This requires that procurement processes be proportional to the value and risks of the underlying project activities. Procurement arrangements are generally time- sensitive and strive to avoid delays.

Transparency

This requires (i) that relevant procurement information be made publicly available to all interested parties, consistently and in a timely manner, through readily accessible and widely available sources at reasonable or no cost; (ii) appropriate reporting of procurement activities; and (iii) the use of confidentiality provisions in contracts only where justified.

Fairness

This refers to (i) equal opportunity and treatment for bidders and consultants; (ii) equitable distribution of rights and obligations between …; and (iii) credible mechanisms for addressing procurement-related complaints and providing recourse …”

If the above-mentioned principles of procurement are adhered to, contracts would be awarded impartially and on the basis of the merit of the bids.

This would help achieve the objective of a programs or projects undertaken both and national and local government levels.

We have to realise that unless we get this right we will never be able to utilise the financial resources we have for sustainable development and nobody will be accountable for our failure except ourselves.

When politics plays a central role in any country in determination of public procurement practice inclusive economic development suffers and corruption becomes the only means to access public funds. Neo-patrimonialism becomes the character of a nation.

  • Vince Musewe is an economist and you may contact him on vtmusewe@gmail.com