Various positive perceptions surrounding the growing role of procurement in Africa continue to abound. Yet, despite the optimism that such perceptions appear to promote, the realities of procurement practices on the continent are somewhat less inspiring.
That is, while procurement, as a sub-process of supply chain management, is generally perceived as a catalyst for industrialisation and national and regional development, short-term cost reduction and profit maximisation practices continue to stunt many opportunities for long-term developmental gains. Especially in the public sector.
In addition, confusion surrounding the role of the chief procurement officer and procurement practitioners in executive and policy decision-making corridors of government, means that procurement continues to be relegated to the realms of finance, with lawyers leading procurement discussions and negotiations. This means that instead of focusing on procurement as a means to ensure socio-economic growth and development at a strategic level, governments on the continent still tend to focus much of their attention on achieving and retaining short-term price gains.
African governments continue to stifle long-term procurement opportunities
The reality of such practices was highlighted in a recent longitudinal study conducted by PanAvest International and Partners, which examined the procurement attitudes and activities of various African government organisations. The study found that although procurement has been recognised globally for its role in local and regional wide industrialisation, African governments continue to stifle long-term procurement opportunities in favour of short-term cost improvements.
The study found that while over 55% of African government spend goes towards the purchasing and procurement of goods and services, less than 10% of that spend was directed towards ‘real’ local suppliers. Notwithstanding this lack of local spend, what emerged as most worrying was that over 80% of the government organisations participating in the study were unaware of the true origin of the goods and services that they were spending their money on. This means that instead of strategically procuring through sourcing goods and services which contribute to long-term industry and societal development, governments have been largely motivated by short-term buying practices focused on price gains. In short, 80% of the government organisations involved in the study admitted to viewing procurement as a means to reduce costs rather than a process to facilitate long-term socio-economic development in the region.
Inconsistencies between perceptions and realities of procurement in Africa
The findings of this study highlight current inconsistencies between general perceptions of the role of procurement in industrialisation and development in Africa, and the real role of procurement in government policy procedures and decision-making activities. That is, while there is an understanding of the positive influence that procurement can have, it is currently being underestimated and underutilised for long-term socio-economic development on the continent.
This could largely be a result of a significant shortage of supply chain management and procurement professionals, at both practitioner and executive levels in government. In addition to a lack of skilled professionals, those professionals that do exist within this sector are often either unsure of their expected role in procurement activities, or are deprived of any form of executive authority and are continuously reduced to occupying tactical, operational and administrative, rather than strategic functions.
So what do government departments need to do to transform current less optimistic realities into positive procurement practices at both a national and regional level?
PanAvest International and Partners, offer a fourfold approach to improving government procurement practices on the continent. To begin with, they insist that African governments need to be bold and aggressive in their approach to developing environments conducive to the creation of long-term procurement and development thinking. That is, in collaboration with the private sector, a clearly defined national and regional procurement and supply chain management policy, with associated strategy, implementation and monitoring plans needs to be developed. Secondly, they argue that governments need to commit at least $70 million of their annual tax revenues (approx. R1.1billion) toward SMME and related local supplier diversity initiatives over the next 10 years. This will help to ensure long-term ‘local’ socio-economic growth on the continent. Thirdly, they hold that the government chief procurement officer function needs to be elevated from tactical and administrative support to occupy director general or chief director level – a function conducive to influencing procurement activities at both policy and decision-making levels. Finally, since finance departments are largely focused on buying and cost-cutting, rather than procuring for long-term strategic gains, they insist that procurement oversight needs to be moved away from finance departments.
To this end, it is imperative that African governments commit to moving away from short-term thinking and move towards a long-term strategic focus on procurement and supply chain management on the continent. Since procurement is increasingly being recognised by global governments as contributing significantly towards long-term industrialisation and socio-economic development success, it is imperative that the public sector in Africa begins to not only harness the current supply chain management functions available to them, but also encourage growth and skills development in this expanding and increasingly influential area.