During fiscal deficits and recessions, when the pressure on the economy is profound, governments face budget shortfalls. The negative impact of a recession can also be amplified when a country, like Zimbabwe, faces overvalued exchange rates that mask the extent of underlying price pressures. Furthermore, a recently elected government has created substantial public expectations of change, and demand for greater transparency and accountability.
A healthy mix of innovation, continuous engagement, and effective implementation can bring about sustained transformation in public procurement. A more effective and transparent procurement system frees up public money for achieving more and better development outcomes and improving the delivery of public services.
Without effective public scrutiny, the risk of money being lost to corruption and misappropriation is vast. Citizens, rightly so, are demanding more transparency around the process for awarding government contracts. And, at the end of the day, corruption hurts the poor the most by reducing access to essential services such as health and education.
India - which spends an estimated 20% of GDP on public procurement - has been struggling with the challenges of decentralized procurement of commonly used items for quite a long time.
Why digitize public procurement?
Many countries have an opportunity to digitally transform public procurement systems to achieve enhanced efficiency, accountability, transparency, and participation of small and medium enterprises (SMEs). Digitally transforming public procurement would also accelerate national development objectives, such as enhancing public service delivery, developing human capital and the private sector, and gender empowerment.
The challenge with procuring a high volume of low-value goods is keeping the transaction costs down while still delivering the value-for-money trifecta: low cost, at the required quality, and on time. Alibaba, Amazon, eBay and many other online platforms do this for sellers by setting up a “honey pot” market place that attracts buyers and then largely automates the rest of the procurement, delivery and feedback processes. An e-marketplace can help make the agricultural sector more efficient in Pakistan.
Photo: Bannafarsai_Stock | Shutterstock
A few years ago, I participated in a meeting to discuss best practices in Public-Private Partnership (PPP) regulation. There was no shortage of examples. In fact, PPP practitioners were eager to share their experiences from countries around the world, but we did not have a systematic way to make all that information accessible to policy makers. Moreover, at the time, I kept thinking that there were many more good examples beyond those we were sharing at the meeting.
The lack of systematic data on the quality of PPP regulation was a serious issue. What we needed was a comprehensive, systematic way to go beyond individual examples. How could we collect available information, organize it in a rigorous and systematic way, and make it all accessible to policy makers?
Photo: Jakob Montrasio | Flickr Creative Commons
Getting to commercial close on a Public-Private Partnership (PPP) transaction is a major milestone. But the deal is far from done. Getting from commercial close to financial close involves satisfying a long list of PPP contract Conditions Precedent, the terms, and conditions of lenders, among other requirements. The process is tricky and involves a lot of heavy lifting, particularly in emerging markets where the market for PPPs and supporting institutional structures may not yet be robust. None of this is news.
Yet CPCS has experienced this firsthand as transaction advisors advising governments on PPP deals in developing economies.
The responsibilities have radically changed from that of an administrative service function to a proactive and strategic one. Unfortunately, in most jurisdictions the procurement function is still not considered a specific profession and consequently, building procurement professional expertise to meet development challenges remains an unfinished agenda.
Vietnam spends an estimated US$25 billion in goods and services each year. Recognizing that an efficient public procurement system is essential to delivering quality public services in a timely manner, the Government has set a mandate to professionalize the public procurement function.