THE CHALLENGES OF PROCUREMENT IN THIRD WORLD COUNTRIES:
A CASE STUDY OF UGANDA
The challenges of the procurement system in third world countries are essentially unique in some aspects from other countries with stronger economies and stronger procurement regulations. While corruption and lack of transparency are often the lament in the procurement system by the private sector, the actual issue lies in the poorly managed and organized structure and its legal framework.
The case study will focus on the importance of proper management practices and its effectiveness in its application to the present problems that third world countries are experiencing in their procurement systems.
Procurement is the process of getting possession or obtaining by particular care and effort. The professional practice of materials and service procurement had been vital to the economy of several third world countries which are underdeveloped and/or lacking in domestic resources.
Uganda, one of the third world countries involved in active procurement activities, commenced reforms as early as 1997. This was done at the request of the Ministry of Finance, Planning and Economic Development (MOFPED) in Entebbe. The government then created a twelve-man Task Force on Public Procurement Reforms on May 1998, whose report was submitted on May 1999, exposing the deeply-ingrained malpractice and corruption in the procurement system.
The said report suggested several measures to improve the flawed system, which was mostly concentrated with reorganizing the framework so as to enhance quality of service as well as to lessen the chances of corruption.
Uganda, like other Third-World countries, has its financial budget funded by donor funds to which the biggest percentage (80%) of the funds is spent on procurement during the implementation of the country’s various developmental projects.
The recognition of procurement as a critically important area in both public and private sectors has focused the attention on its effectiveness. In a growing number of companies, cost effective procurement has become a matter of survival as purchased goods and services can account for up to 80 per cent of product cost. Similarly in the public sector, there is an ever-increasing demand for effectiveness and efficiency in the procurement process.
Continually escalating competition, leading to accelerating consolidation and globalization of supply chains, makes it essential that the professional discipline of procurement continue to develop and to enhance its effectiveness and perceived status. Leading companies world-wide have recognized for some time that the issues of sourcing, purchasing, logistics and quality management are major contributors to success in the preparation and implementation of integrated corporate or organizational strategies, and it is on this background that this study is intended to be carried on in this field.
C. STATEMENT OF THE PROBLEM
Uganda’s economic stability is largely determined by the procurement system its economy had adapted. Therefore, it is imperative to understand that for a third world country like Uganda, the procurement system needs much as attention and effort for it to work progressively, thus a need for better organizational structure, management and legal framework.
The question on hand is, “What were the progressive changes in the procurement system in Uganda since the recommendation were given by the CPAR on February 1999?” Simply asked, is the present framework or system coping well with the pressures and issues in Uganda? Did the changes help in curbing the issues and problems that the procurement system posed?
The researcher hypothesizes that the fundamental problem in the procurement system is that there is a need for better structural organization which is necessary for effective management. Once this is fixed, it is consequential that the other issues, which should be considered minor and merely offshoots of the main problem, will be dealt with properly during the implementation process.
Specifically, this case study aims to address the following questions:
This study shall only deal and discuss the problems in the context of management theory and its practices; thus, some issues which may delineate from this scope may be only discussed partially.
The necessity of this case study is not only confined to its applicability to the present challenges that Uganda is facing in its procurement system, but to other countries as well who share the same experiences and problems in procurement. Most importantly, this study will be focusing on the importance of organizational soundness, correct and systematic procedures in procurement, and the indispensability of cooperation and coordination in both the public and private sectors in achieving their goals.
The application of management theories and practices to the present challenges in the procurement system in Uganda makes this study therefore essential in further developing and understanding the value of effective management and organizational framework.
F. RELATED LITERATURE
According to the CPAR, Nigeria, an Anglophone-African country like Uganda, had five major weaknesses in its existing procurement system.
The first identified problem was the lack of a modern law on public procurement and an oversight entity for guidance and monitoring purchasing bodies. Second, deficiency and faulty implementation of existing procurement regulations created opportunities for bribery and corruption. Third, the authorization of the Tender Boards, due to inflation and the lack of regular adjustments on the thresholds of the approving limits, were being eroded which resulted to abuses, the most common of which is the splitting of contracts. Fourth, there were too many tender boards which the private sector considered as merely a source of delay and non-transparency, and they seemed to have only limited mandates with power to decide contracts de facto resting with the Permanent Secretary and the Minister/Commissioner. Last, the Customs system and procedures were burdensome and often a major cause of unwarranted delays in clearing the goods, and is often a source of corruption; also, procurement is often done by staff who are essentially lacking in proper training.
The recommendations given by the CPAR stated that (1) there is a need for a procurement law based on the United Nations Commission for International Trade Law (UNCITRAL) model; (2) there is a need to establish a Public Procurement Commission (PPC) to serve as its regulatory and oversight entity on public sector procurements; (3) the Financial Regulations should be revised so as to make it more transparent; (4) the Tender Boards should be simplified and strengthen their functional authority and powers in awarding contracts; (5) there is a serious need to restructure the procurement and financial management capacity in the public sector; and (6) there should be a comprehensive review of the businesses related to export, import and transit regulations, procedures and practices.
Nigeria is suffering the almost the same plight as Uganda, though one should understand that not all solutions are applicable to similar problems from different localities. While basically they both face corruption, a weak procurement law, and substandard service quality due to lack of proper training and skills development, several aspects differ like in the case of tender boards, stability and consistency of the policies itself during implementation, and the proposed privatization of the procurement system from the government so as to be freed from political interference and corruption.
The researcher chose to conduct a case study employing the use of on-line information thru the Internet, varied journals, reports and reviews, and also include qualitative survey interviews, which may be done through e-mail, telephone or other media, with key persons to supplement the research data.
The targeted respondents of the survey interview shall be primarily government members of Uganda who are involved in the procurement system, and private sector representatives active in procurement both from international and local companies. Also, supplementary interviews may be coordinated with some members of the Task Force through e-mail.
This case study is projected to be done in one (1) year:
a) First quarter (three months) – data gathering through the Internet and other media
b) Second quarter (three months) – data gathering through interviews with key persons
c) Third quarter (three months) – data analysis
d) Last quarter (three months) – cross-checking of data and resources; finalization of paper
Merriam-Webster Dictionary, http://www.m-w.com/cgi-bin/dictionary
Public Procurement Reforms: Issues and Challenges: The Case of Uganda, Government Procurement Workshop, World Trade Organization, Dar Es Salaam, Tanzania, January 2003, http://www.wto.org accessed: 05/27/2003
Holger Bernt Hansen, Michael Twaddle, Changing Uganda: The Dilemmas of Structural Adjustment & Revolutionary Change, James Currey, London 1991
Uganda Local Government Development Program, Institute of Public Admistration, http://www.theipa.org/ accessed: 06/03/2003
S.A. Ekpenkhio, Public Procurement Reforms: The Nigerian Experience, Regional Workshop on Procurement Reforms and Transparency in Government Procurement for Anglophone African Countries, Tanzania, January 2003