This article is written by Marcos Ozorio de Almedia, Procurement Reform Specialist and Financial Analyst with SERPRO, The public IT company subordinated to the Ministry of Economy of Brazil.

Although public procurement reform is attracting more attention, it’s still relatively low on the list of priorities for almost all governments.

Usually public sector finance (PFM) reforms focus on increasing revenues and, on the spending side, decreasing the cost of the public sector workforce. In other words, we raise taxes and try to do more with fewer public servants.

But, if you consider that the implementation of public policy is usually dependent on procuring goods, works and services, there really isn’t a good reason for this blind spot: procurement reform should be higher on the PFM agenda.

Besides, according to OECD research the public sector is the biggest single purchaser of works, goods and services, and usually accounts for between 10% and 30% of any nation’s internal market. This purchasing clout may also, when wisely used, support the development agenda.

But, unfortunately, due to a lack of attention and stringent controls, public procurement is in many places widely perceived as an opportunity for embezzlement on the part of corrupt government officials. This is even more true in developing nations such as Mozambique, where I’ve led a reform process, but no country, even the most developed, are immune to the malaise and effects brought about by the misuse of public procurement.

The first generation of reform

The public procurement reform in Mozambique began in earnest the mid-2000s. Till 2005, the Government’s procurement was totally centralised, which generated several problems.

For instance, having a centralised tender process saddled the Government with the added cost of distribution in a country that’s 345 almost 50% larger than France. On the supply side, local government suppliers from the North and Central regions had to travel to Maputo, the capital, to bid for contracts, which greatly reduced competition and even favoured international firms (especially those based in next door South Africa), due to the vast internal distances and the high cost of domestic transport.

Looking back at the last three years after the end of the second reform project, we’ve unfortunately seen a clear erosion of the gains that the reforms delivered, due to lack of financial resources and will

Of course, all the classical pressures for the Government to reform procurement were also present, i.e., a crackdown on corruption, calls for more transparency, and donor pressure due to the high amount of direct budget support from developed countries.

The first generation of reforms was undertaken, with the support of the World Bank, between 2003 and 2007. The focus was to overhaul legal and organisational frameworks and kickstart the capacity building of a new workforce, which was to be employed in a decentralised procurement system. At the end of 2005, after almost two years of internal discussions with the main parties interested in the reforms (suppliers, private sector and the donors), a new public procurement regulation, adherent to international best practices, was enacted.

Together with the regulation, the organisation of the procurement system was decentralised through the establishment of procurement units (UGEAs) in all ministries, provincial governments and organisations that had procurement budgets. The reform was concluded with basic training for most of the new staff employed to do the procurement in the UGEAs. Due to the decentralised nature of the new system, a supervision unit (UFSA), to oversee and implement improvements, was also created.

Stalling progress

The success of this phase of the reform was mainly due to the interest of the donors, who were funding the reform process and the interest of the Minister of Planning and Finance, Luísa Dias Diogo, who took ownership of the reform process, which initially had been started by the Ministry of Administration.

At the end of the project, which I had the honour to lead, the quality of results were again attested by new World Bank studies, which proposed only some minor tweaks to the legislation that resulted in a revised public procurement regulation being enacted in 2010. From 2008 on, the administration of the reform was left to be executed by the Government, through the Ministry of Finance (UFSA).

High level support and funding, including specifically for the maintenance of the post project gains are necessary ingredients for the sustainable success of the initiative

In 2013 the government was again facing problems due to lack of progress in overseeing and improving the procurement system and, faced with mounting pressure from donors, who were worried that their budget support was being misused, agreed to execute a new phase of reforms, from 2014 to 2018.

This time it was funded by the British Government, through UK AID. The reform process focused on five key pillars, to ensure that public procurement provides more efficient public spending and that public institutions at the national and provincial levels run transparent and open procurement competitions. These five pillars were:

  • strengthened UFSA's performance through the provision of high quality strategic support;

  • UFSA's strategies and operations be informed by evidence on procurement;

  • creating an effective monitoring and compliance framework to support UFSA's oversight function;

  • generate enhanced capability of UGEAs to undertake more effective, efficient and transparent procurement, and;

  • improve public access to public procurement information.

The strategy this time for the project (which I led again), was to place the experts together with UFSA’s management and staff during the four years of implementation, to enhance ownership of the deliverables. At the end, the project managed to deliver 87% of the output set out as targets and was also considered a success by UK AID, having also met the achieved the value for money targets.

No easy road

Looking back at the last three years after the end of the second reform project, we’ve unfortunately seen a clear erosion of the gains that the reforms delivered, due to lack of financial resources and will.

The main cause of this has been that the Government is facing a dire financial situation, caused by the donors pulling out their budget support in 2016, after the scandal of an immense undeclared debt came to light, placing Mozambique high up in the list of most indebted countries in Africa.

The main lessons learnt from the two phases of the reform are that these types of reforms achieve good results in low level income countries. High level support and funding, including specifically for the maintenance of the post project gains are necessary ingredients for the sustainable success of the initiative. Last, but not least, seeing as it was one of the drawbacks of the project, the reform process needs to widen its scope and create a perception among civil society about the need for transparency, efficiency and effectiveness in public procurement, to maintain pressure on the government to continually improve the system. — Marcos Ozorio de Almedia

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