This week, open contracting experts, innovators, and practitioners gather in Amsterdam to share learnings, challenges and ideas at the Open Contracting 2017 conference. The diverse group of attendees shared experiences and solutions from their local context, and collaborated on increasing local, regional and global momentum to make open contracting the new norm over the coming five years.
These discussions and design lab sessions touched on the opportunities and challenges in Africa. There are strong examples of open contracting in practice from Uganda, while other countries, such as Malawi, are dealing with threats and obstacles. To move progress forward, however, we need to look more closely at the landscape, develop the case for public procurement specific to African businesses and build more partnerships.
In Africa and across the world, Small Medium Enterprises (SMEs) play a key role in the economy, contributing significantly to the GDP of the countries they operate in and creating about 80 percent of all job opportunities. However, SMEs face unique challenges in participating in fair processes to win government business due to lack of transparency, capacity to supply the needed services and goods, finance to bid for opportunities and knowledge on existing business opportunities. At the same time, large multi-national companies often have trouble accessing high quality domestic suppliers to meet their operational and contracting needs.
In addition, corruption continues to be a blight across Africa inhibiting SMEs from participating in public procurement markets. According to the World Bank, USD $1 trillion is paid out in bribes in Africa while USD $2.6 trillion is lost annually through corruption. This is equivalent to more than 5 percent of the global GDP.
Partnerships between public and private sector organisations are increasingly being formed to promote transparency in trade transactions and encourage greater participation, particularly from the SMEs in procurement.
The African Partner Pool (APP), launched in April this year as an online technology platform that directly connects buyers to a pool of verified suppliers providing diverse products and services. Since its launch, the impact of partnerships for more open contracting has already being felt with over USD $3,340,000 worth of business opportunities for over 800 SMEs running through the platform, which simplifies the tendering process for companies, generates exposure of tender opportunities and reduces the cost and time spent acquiring suppliers.
Lymies Engineering, an all female owned company based in Nairobi, Kenya has won three tenders on the platform since launch, valued at KES 6.7 million enabling the firm to consider expansion and recruit increased staff. “The APP Platform has allowed us to access business opportunities from large businesses in the country, saving us time and resources and giving us access to business from companies we wouldn’t have accessed through conventional tendering processes,” said Millicent Maina, Director of Lymies Engineering.
This increased transparency has enabled more SMEs in Kenya and Ghana access to business opportunities through leveling the procurement playing field and open contracting. The embedded transparency ensures that bids are won through merit and encourages entrepreneurship as opportunities become more accessible. SMEs are able to access relevant skills to enable them to be more competitive and deliver on quality. The platform has facilitated increased compliance from SMEs on requirements to do business and trained SMEs to enable them to scale up. For partner buyers, this has made procurement processes much easier. Buyers gain direct connection and access to a pool of validated cross-sector suppliers as well as analytical tools that enable them to evaluate their procurement impact.
The potential benefits of more radical transparency within public procurement systems would also be game-changing for SMEs. It would enable greater opportunities for all economic players and provide businesses confidence for SMEs looking to participate in government markets. Public procurement that provided the same level of inbuilt assurance, systemic checks and balances and strict measures to ensure transparency, zero tolerance on corruption, due process, zero or minimal fees to participate in tender inclusion and lower tender requirements could grow the SME sector in Africa.
“Business can play a critical role by making clear to governments that more transparent markets is what they want and what they support. Business calls for governments to reform their public procurement systems to make them more transparent, fair and competitive have been growing,” said Bob Collymore, Safaricom CEO, while speaking at this year’s Concordia Summit. “In Kenya we’ve supported the creation of the African Partner Pool to create more transparent and competitive markets for African companies and SMEs. Companies can also make their own procurement much more transparent and competitive.”
We need more initiatives like the African Partner Pool that promote fair market access to opportunity and tackle corruption within procurement. Through these, we will ensure more growth, sustainability and opportunity within African economies. And we need joint leadership by business and government to ensure a future where communities and businesses thrive; a vision open contracting can help bring to life. If we see these practices and recommendations adopted, then we will ensure the future the Open Contracting 2017 conference is calling for. One where open contracting is normalised and inequality gaps are closing.