Public Procurement Reform and Governance in Africa

S.N. Nyeck, S.N. Nyeck, S. N. Nyeck

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN:
  9781137521361
• eBook ISBN:
  9781137521378
• Topic: Politics & International Relations
• Subtopic: Development Economics
• Index: Politics & International Relations

This book presents an interdisciplinary exploration of the governance of public procurement reform in Africa. Through a bottom-up approach to case studies and comparative analyses, scholars, practitioners, and social activists write about the organizational mechanisms and implementation gaps in public procurement governance in light of the general premises of national reform. Reforming the ways in which government purchases works, goods, and services from the private sector is one of the most sweeping policy reform undertaken in Africa in the past decade. Despite the transnational scope of policy change, very little is known about the mechanisms of public procurement governance at the subnational level. The argument in this volume is that policy reforms that mitigate contractual hazards along the three-dimensional "law-politics-business matrix" are more likely to bring about meaningful institutional transformation and broader social accountability. Key to substantive transformation ofpublic procurement is the revitalization and professionalization of the public sector to meet the opportunities and challenges of development by contract.

© The Editor(s) (if applicable) and The Author(s) 2016

S.N. Nyeck (ed.)Public Procurement Reform and Governance in AfricaContemporary African Political Economy10.1057/978-1-137-52137-8_1

Begin Abstract

1. Introduction

S. N. Nyeck¹

(1)

Clarkson University, Potsdam, NY, USA

End Abstract

What are the micro-institutions that drive public procurement reform in Africa and what can we learn about their organizational consequences on the state’s ability to deliver public goods and services? This book is grounded in the debate about the role of governance and institutions in development from the perspective of New Institutional Economics (NIE). It focuses on the mechanisms of government outsourcing and policy implementation dynamics at the national, regional, and municipal levels in selected countries in Africa. Public procurement is a fancy way of saying that (1) the government is no longer producing what it needs to carry out its core functions and (2) that it often resorts to buying essential goods and services from private suppliers such as corporations and profit and not-for-profit organizations. What government or state-owned entities purchase ranges from simple paper clips to complex items such as electricity, railroads and dams, gas, water and sanitation, security, arms, information technologies, medicines, research and development, real estate, concessional rights to certain extractive industries, prison management, emergency food relief during droughts and/or civil unrests, construction or management of sport stadiums, convention centers and airports, national debt management, intelligence services, and so on. Thus, government procurement is closely tied to expenditures for public consumption or for capital formation.

Another way of putting it is that collective and public goods that the citizens may enjoy are output of various kinds of public–private contractual arrangements that may have positive or negative effect on the economy, politics, society, or the environment over time. The phenomenon of government procuring goods and services from the private sector has received wider attention under various labels such as privatization, government outsourcing, public contracting, public–private partnerships, new public management, and so on. Generally speaking, scholarly and policy discussions remain concerned with defining, measuring, and understanding what is at stake legally, politically, economically, and socially when private means are used to meet public ends.¹

Public procurement brings to our attention the fact that the role of government and its financial structure are shifting and changing toward accommodating more private interests and capabilities for the production and management of public goods and services. With the globalization of finance, concerns about the stakes in public procurement cut across the domestic–international and developed–developing countries divides. Controversial debates over public spending and national debt, democracy and corruption, bureaucratic transformation and private coercion, industrialization and competitiveness, contractual coercion and global labor markets, the future of sovereignty, and private military contracting are headline news in both the developing and developed countries. Thus, controversy surrounding these debates suggests that at least some models and values promoted in the public procurement of goods and services from the private sector are being contested and revisited around the world.

Public procurement reform, like any other model of public goods provision, is couched in theoretical and ideological assumptions that may or may not work in the developing countries. For instance, emerging scholarship on public procurement at the international level is mainly driven by legal considerations that emphasize the importance of formal institutions. Indeed, changes in domestic laws and constitutions have been one of the ways in which African countries responded to the emergence of an international discourse over public procurement reform in the late 1990s. This book recognizes that formal rules and institutions may foster and sustain reform in the ways that developing countries procure goods and services from the private sector. It also, however, acknowledges the symbiotic relations between formal institutions, society, culture, and politics as important variables that add to our understanding of what works and what does not yet in public procurement. These additional variables also include the importance of international norms and expectations in influencing the direction of change in public procurement practices in the developing countries. As the contributors to this book show, formal expectations may at times help or hinder effective implementation of procurement reform. Hence, limitations and challenges to implementing public procurement reform presented in this book are not unidirectional, but encompass appreciation as well as critique of international legal expectations that guide the debates today.

The impetus to harmonize procurement practices in the twentieth century is driven by a market-based framework that primarily views government traditional monopoly and discretion in public procurement as a barrier to free trade. In the developing and transitioning economies, procurement practices are increasingly scrutinized partly because of capital flows across the borders. Transitioning economies are those moving from either immature socialist and communist economic planning systems to a market-based liberal model. Government procurement is, according to free-trade rationale, the last domain of public monopoly that market forces need to penetrate through competition, transparency, and non-discrimination. Fundamentally, the rationale informing public procurement reform in the twenty-first century is one that first seeks to equalize the playing field between domestic and foreign bidders and suppliers; everything else is subordinated to this goal.

During the Cold War, most countries had in place public procurement systems that promoted no, or a little, international competition. At the United Nations, for instance, early findings show “government procurement was inadequate or outdated.”² This inadequacy, the United Nations Commission on International Trade (UNCITRAL) Model Law commission secretariat found, “resulted in inefficiency and ineffectiveness in the procuring process and led to uneconomic results whereby the public purchaser failed to get the ‘value for money’… many of these laws did not promote international competition and were therefore a hindrance to international trade.”³ This finding suggests that prior to reform, the procurement practices of the developing countries did not just constitute barriers to international trade; they often failed to meet national procurement objectives also.

Since 1990s, there has been a growing international consensus over public procurement reform in the developing and poor countries. The fall of the Soviet Union and the prospect of joining the European Union (EU) presented the former communist states with the incentives and opportunity to reform their public procurement systems. Concomitantly, the perceived triumph of liberalism and free-trade ideology provided governments around the world with the opportunity to attract foreign investment and other goods and services from the private sector. Within the Organization for Economic Cooperation and Development (OECD) caucus, public procurement expenditures are estimated to represent 15–20% of the national gross domestic product (GDP). Outside of this selected group of countries, research on public procurement reform is still in its infancy and has mainly been concerned with the formalities guiding the opening up of national institutions to global competition. This focus is justified by the distribution of unstable political regimes outside of the OECD group. Since market-driven public procurement reform mobilizes private resources to solve public problems, attention to rules that attract and secure private investment may help developing countries design better purchasing institutions.

Following this logic, it is not surprising that one of the first major contributions to the study of public procurement from a comparative perspective in Africa is devoted to analyzing regulatory problems.⁴ Geo Quinot and Sue Arrowsmith note that “while public procurement regulation has recently developed as a distinct field of legal academic study in other continents and is increasingly playing a key role in international legal regimes, such as that of the World Trade Organization (WTO), the level of academic engagement with this area in Africa has been negligible.”⁵ Unfortunately, disproving this observation by reference to social sciences engagement with the topic of public procurement in Africa could be likened to looking for a needle in a haystack.⁶ Leon de Mariz et al.’s⁷ recent contribution mobilizes NIE in the study of public procurement reform in Africa. They focus on the general formal institutions that govern procurement practices as well as the organizational consequences of new rules of governance.

The plurilateral Agreement on Government Procurement (1994, henceforth GPA) and the Revised Agreement (2012) of the WTO is an international legal instrument that applies to works and services of the central government as well as the municipalities of the signatory states. Although accession to the agreement is open to all WTO members, only Singapore represents Southeast Asia, and one counts 13 countries from Eastern Europe (although not all have agreed to the revised GPA). No Latin American or African country is party to the GPA. While several Latin American countries have observer status, Cameroon is the only African country in this category.⁸ Membership trends suggest important ideological and strategic gap between the WTO’s vision of free trade-driven public procurement reform and the interest of most of the developing world. Hence, legal regimes only offer a limited lens to analyze what drives public procurement reform outside of the OECD circle.

A multifaceted economic diplomacy often drives public procurement reform in Africa. The European Economic Partnership (EU-EPA) trade agreements with Africa, Caribbean and Pacific (ACP) countries,⁹ The African Growth Opportunity Act (AGOA) by the US congress in 2000,¹⁰ the MENA-OECD Network on Procurement,¹¹ the East African Public Procurement Forum (EAPF), and New Partnership for Africa’s Development (NEPAD) are examples of plurilateral, bilateral agreements, and regional efforts aimed at encouraging African countries to precommit to the rules of transparency and non-discrimination in government procurement. The UN post-2015 Millennium Development Goals Agenda increasingly places an emphasis on the role of the private sector in attaining sustainable development, a vision that is both acknowledging an ongoing trend and transforming international development framework. Additionally, individual states such as the United States Agency for International Development (USAID) and the UK Department for International Development Association (IDA), just to name a few, increasingly rely on contractors to deliver goods and services to Africa. These examples, moreover, suggest that politics is as important as economics and law in understanding how the forces behind market-based reform operate and transform the public sector in general and the provision of goods and services in Africa.

Scholars, policymakers, and analysts¹² have debated issues related to foreign aid and perverse incentives fuelling corruption in Africa. Yet, the United Nations Office on Drugs and Crime (UNODC) estimates that loss related to public procurement is on average higher, and in some cases more than double, economic loss related to foreign aid in Mauritius, Nigeria, Cameroon, Burundi, Ethiopia, and Ghana.¹³ According to the World Bank, public procurement is a major source of extortion and corruption. As Ware et al. write, “the susceptibility of public procurement to corruption is further exacerbated by the relatively high degree of discretion that public officials, and parliamentarians typically have over procurement programs in comparison with other areas of public expenditures.”¹⁴ According to The World Bank Enterprise Surveys, contractors were expected to spend between 4 and 10% of a contract value on gifts to public officials to secure a government award between 2006 and 2013 in sub-Saharan Africa. The larger receivers of gifts were Angola (9% in 2000), Mauritania (8% in 2006), Guinea (7% in 2006), and Cameroon (6% in 2009). These numbers suggest that much of what is lost in the public procurement occurs during the negotiation stages and the contractual outputs though “legal” in form, may not always tell the real story of their cost to society.

Thus, despite their varying reputation and position on the scale of development progress, African countries share common problems related to the ways in which governments conduct business with the private sector. These similarities and differences are even more interesting to note considering the fact that the above-mentioned states have recently embarked on a series of legal reforms to modernize their national public procurement systems. How do we account for similar challenges in public procurement reform despite differences in overall economic and even political performance of African states? To begin to answer this question, the book evaluates public procurement reforms that have taken place in Africa since the late 1990s. The focus is on implementation gaps and what causes them; how procurement reform policies are implemented and how well they meet national economic and social goals in Nigeria, South Africa, Botswana, Kenya, and Uganda.

The book is part of an emerging and growing literature on public procurement or government outsourcing in Africa.¹⁵ At the international level, however, the debate and the literature are mostly driven by legal scholarship.¹⁶ This legal interest is also seen in the creation of the African Public Procurement Law Journal to organize intellectual priorities on reform and governance on the continent. This contribution complements others because its approach is both multidisciplinary and interdisciplinary. Lawyers, social scientists, procurement practitioners, civil society organizations, and activists contribute to this volume. Thus, the book emphasizes the interconnectedness of the legal, political, and business concerns in public procurement practices in Africa. This interconnectedness is termed the “law-politics-business matrix.” The policy implications of the significance of this three-dimension matrix are what different contributions explore.

The premise of the contribution is that policy reforms that mitigate contractual hazards along this three-dimension matrix are more likely to bring about meaningful institutional transformation and broader social accountability. The book assesses the general premises of national reforms in light of implementation outcomes locally and takes a bottom-up approach to study the mechanisms of public procurement governance in Africa. While previous books have emphasized one aspect of public procurement reform (i.e., regulation), this contribution will ...

Table of contents

• Cover
• Frontmatter
• 1. Introduction
• 1. Procurement and Governance: Historical Precedents and Theoretical Reflections
• 2. Public Procurement and Institutional Transformation
• 3. Public Procurement and Social Accountability
• Backmatter