New Business Opportunities Through Government Tenders
Public procurement is fast becoming big business in Africa. It accounts for almost a third of the gross domestic product (GDP) in poor countries and up to 15% in developed countries.
In some countries, the share of public procurement, which is the purchase of goods, works or services by government or public institutions, is more than half of government expenditures, according the International Trade Centre, a joint agency of the World Trade Organization and the UN Conference on Trade and Development.
To encourage more private companies in Africa to participate in bidding these contracts, the United Nations Development Business (UNDB)—the official online platform for information on procurement projects and contracts financed by multilateral development banks and governments—is expanding plans to raise public awareness of its website for consultancy, contracts and export opportunities available worldwide.
To be considered for contracts offered through the UNDB platform, companies have to register as subscribers on its website where tenders from governments and financial institutions, including the World Bank and the African Development Bank, are published to a global audience.
The platform publishes more than $90 billion worth of contracts each year, giving companies around the world access to business opportunities in the international procurement market. UNDB publishes in English, French, Spanish and Portuguese and has clients in more than 180 countries.
The number of African companies subscribing to the database, however, is still very low—with the exception of companies from South Africa, Nigeria and Kenya—despite the fact that about 30% of the projects published on the platform are in Africa.
Winning a government contract can be an enormous opportunity for any business, so every step of the procurement process can be vulnerable to integrity risks where undue influence, conflicts of interest and fraud may occur. The volume of financial flows involved makes this system one of the most important places to watch for those integrity risks.
For this reason, institutions like the World Bank have come up with strict procurement requirements as a condition for development aid. Transparency in awarding tenders and contracts is crucial to ensuring efficient and accountable use of taxpayers’ money. Equally, transparency paves the way toward fair and better competition, which ultimately contributes to the best value for money for public projects.
Recognizing the need for efficiency and more accountability and integrity in the management of public resources, the World Bank has been encouraging procurement reforms since the 1990s in member countries. Internal efforts, as well as assistance from international development agencies, are focusing on professionalizing and building capacity in national procurement systems.
These efforts are consistent with the goals of good governance and prevention of corruption in the use of public funds, and they are also increasingly being linked to the Sustainable Development Goals (SDGs), because public procurement can be used as a tool for achieving and sharing prosperity.