Enhancing transparency in procurement crucial for SME growth

February 12, 2018
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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./FILE

, 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 2017 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 is already being felt with over USD $3,340,000 worth of business opportunities floated for the over 950 SMEs on the platform. APP simplifies the tendering process for companies, generates exposure of tender opportunities and reduces the cost and time spent acquiring suppliers.

Lymies Engineering, a female owned company based in Nairobi, Kenya has won three tenders on the platform valued at KES 6.7 million. This has enabled the firm to consider expanding and recruit more 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 last year at the 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.”

Initiatives like the African Partner Pool promote fair market access to opportunity and tackle corruption within procurement. Through these, we ensure more growth, sustainability and opportunity within African economies. Joint partnerships between businesses and governments will ensure a future where inequality gaps close and communities and businesses thrive.

By Denis Mbau, PR Consultant, Invest In Africa-Kenya

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