Managing Public Sector Procurement In A Developing Country At The Time Of Economic Crisis

1. Importance of Procurement in Country development

While most developing countries complain of lack of adequate resources to meet the need of the country, but the support received from donors tend to be either under utilize or wasted as result not taken into consideration the Value for Money in the procurement processes.

Governments in developing countries seeks funding from donors to help finance projects or programs, they are required to sign Bilateral or Multi lateral agreements promising to follow procurement guidelines which are always stipulated in the agreement. In the case of funding from the World Bank, which is not a donor but provide loans and grants for development assistance, the World Bank is a United Nation organization that is responsible for promoting economic and social development, such as infrastructure projects, bridges, dams and power generating plants, the bank however, is funding health and education as they expand their focus to human development.
2. Wind of Change in Funding
There is greater surge for Multi lateral agreement in funding development projects in the developing countries as more donor agencies favor Pool funding. In this case various donor countries join the World Bank in financing large programs or projects. Most governments are now developing a multi-year programs which means resource are supposed to be better organized and longer period of planning can be expected from the Government. The advantage of this is removing duplication of funding from different donors for same project and also the ease of using one single procedure to manage all donor funded procurement. Countries with multi-donor funded program tends to have better monitoring and reporting as single report is generated at any point in time. There is however, a problem when it comes to United States Government as their congress do not allow co-mingle of their funding.
1. Inefficiencies in Public Procurement
As a UN organization all members have a say in the policies and directions of the Bank activities and so I find it odd when Government Ministers and public servant blame the World Bank for their inefficiencies in procurement processes. The often cry of the procurement practitioners and their bosses is that the World Bank procedures are cumbersome and difficult to manage. The said policies and guidelines are developed by Bank staff and approved by individual members of the Bank. The funding condition for any program or project starts with the Project Appraisal Document which is referred as PAD, this document identifies proposed objectives, imminent risks, alternative scenarios, and a likely timetable for the project approval process and contain all steps in bring a project to fruition starting with Identification, preparation, appraisal, approval, Implementation and Evaluation. The Government and its stakeholders work with advice from the bank in coming out this PAD. This is followed with Development Credit Agreement which is the DCA. Two other document developed during this phase include The Project Information Document which contains useful public resources for tailoring bidding documents to the proposed project, and the publicly available Integrated Safeguards Data Sheet identifies key issues related to the Bank's safeguard policies for environmental and social issues. One will have taught that since the greater percentage of the fund will be used in Procurement of goods, works and services, a greater emphasis will be placed on having a procurement manager who understand the requirements and will be in a position to give direction on uses of the fund. Is this the case? Know, Public Sector procurement rather is like a rich man who purchases an expensive vehicle but not willing to get a qualified driver to drive it. In the end project target are not met and the benefit the people becomes an unmet needs.

4. Dwindling Flows of Donor Support
According to World Bank report there was a sharp global contraction which affected both advanced and developing countries. Global industrial production declined by 20 percent in the fourth quarter of 2008, as high income and developing country activity plunged by 23 and 15 percent, respectively. Particularly hard hit have been countries in Eastern Europe and Central Asia and producers of capital goods. Global GDP declined in 2009 year for the first time since World War II, with growth at least 5 percentage points below potential. World trade also declined. The effect is what we are witnessing today with averagely moderate economies such as Italy and Spain who uses to be part of the Donor community is now looking for bail out to safe their economy from collapsing. So what is the implication for Africa and the rest of the developing countries? The World Bank estimates that “developing countries face a financing gap of $270-$700 billion depending on the severity of the economic and financial crisis and the strength and timing of policy responses. Even at the lower end of this range, existing resources of international financial institutions would appear inadequate to meet financing needs in the years to follow: Should a more pessimistic outcome occur, unmet financing needs will be enormous”. The Italian alone have debt burden of nearly 800 billion Euros at roughly 120 percent of G.D.P— is more than that of Greece, Ireland and Portugal combined. Ghana’s External debt stood at $6.759 billion. With our current population estimated to be 24 million every person now have debt of $281.63 which is 7.2 of GDP.


5. Judicious Use of Scarce Resources
Recently, there have been calls by government functionaries for the judicious use of resources as reports of Public Account Committee of the parliament have reveal that procurement guidelines have been thrown into the dustbin and MDAs are flouting the rules for public procurement. The reason for these short comings are simple, there is lack of procurement capacity for the implementation of the decentralize agencies at the lower level of governance. If central Government agencies are flouting the rules what should one expect from the lower level where capacity can be use as justifications? Monitoring of Procurement and financial administration is highly contentious as Audit services are not leaving up to its responsibilities. One way to improve the situation is to build capacity of the Procurement Managers. There is also the need to recognize the importance of having a qualified procurement officer that stand to argue his case in front of high level officers so that he can be the gate keeper for maintaining sanity in public procurement. This will go a long way to reduce the incidence of wastages in public expenditure.



Joseph Ampomah Adu
BSc. Insurance, Mcips, PmP, MBA, Dip. MIS
Deputy Country Director-Technical
SPS - Bangladesh
Management Sciences for Health (MSH)
Dhaka, BANGLADESH