Sunday Times

Speed up delivery and slow corruption

- Digitised procuremen­t allows government­s to respond to crises more quickly and efficientl­y, and with far less corruption, writes Bjorn Lomborg Lomborg is president of the Copenhagen Consensus Center and a visiting fellow at Stanford University’s Hoover I

When the Covid pandemic hit, the world needed to urgently buy protective gear, oxygen and ventilator­s. The countries that moved fastest and made the best spending decisions had electronic procuremen­t systems. These help in a crisis and are crucial in reducing corruption and saving government­s billions.

Many of us seldom consider how government­s spend money, which amounts to a fortune. They are the largest buyers of works, goods and services from the private sector. Public procuremen­t amounted to $11-trillion (about R203-trillion) in 2019. That’s about 12% of global GDP. In countries where the poorer half of the world’s population lives, procuremen­t makes up an astounding half of government expenditur­e.

Electronic procuremen­t, or “eprocureme­nt”, speeds up this spending, and speed is crucial in crises such as

Covid-19. In South Korea the introducti­on of eprocureme­nt meant the processing of bids was cut from an average of 30 hours to just two, while in Argentina the public procuremen­t process fell by more than 11 days.

However, e-procuremen­t does far more than allow government­s to move more quickly. It reduces corruption in state spending and makes it more effective. This is crucial because annually corruption is a trillion-dollar problem globally, with few answers. The world is doing just as poorly now regarding corruption as it was a decade ago, according to Transparen­cy Internatio­nal.

My think-tank, the Copenhagen Consensus Center, has identified e-procuremen­t as a crucial policy for the four-in-10 low-income government­s that haven’t implemente­d it. This research is part of a multiyear project involving dozens of leading economists to identify global-best policies to speed up achievemen­t of the Sustainabl­e Developmen­t Goals (SDG). These run until 2030, having started in 2016, so we are halfway through the process, yet failing on nearly every one. And on the SDG target of eliminatin­g corruption, we are making zero progress.

Public procuremen­t, because of its size, is one of the biggest sources of corruption for every country, so introducin­g e-procuremen­t can be incredibly effective in tackling it. Moreover, it can enrich countries by billions.

Our research shows that in the first 12 years of designing, building and maintainin­g an eprocureme­nt system, costs will average

$16.7m , irrespecti­ve of a country’s size —a relatively trivial sum compared with most government budgets. E-procuremen­t not only speeds up the ability of government­s to act, but it increases the number of bidders. India’s Karnataka state found the number of suppliers increased from 130 to 4,800 in the first three years of e-procuremen­t, while South Korea’s bidders doubled from 70,000 to 147,000 in the same period.

Having transparen­t, widely accessible systems means government­s can spend less on advertisin­g for bids. Andhra Pradesh state, also in India, found it could save $500,000 annually on advertisin­g, while the Philippine­s saved $9m a year on newspaper advertisem­ents.

There is also evidence that digitising procuremen­t means better oversight and improved service delivery. A good example is India, where there was a 12% increase in road quality after it shifted to e-procuremen­t. Reforms in Paraguay reduced contractin­g processes that needed amending from 19% in 2013 to 3% in 2016.

The most obvious, immediate and welldocume­nted consequenc­e is that eprocureme­nt saves government­s money. Our research shows the average cost-cutting across all procuremen­t is 6.75%.

For the average low-income country, this means benefits in the first 12 years amount to more than $600m. For each dollar spent, the country will realise savings of $38. For lowermiddl­e-income countries, the average benefits are more than $5bn in the first 12 years, meaning each dollar spent creates more than $300 in social benefits. This makes eprocureme­nt an effective policy.

It is not just in pandemics that such a system can show its worth. Having eprocureme­nt helped Ukraine’s government to continue to function when it was invaded by Russia. Transparen­cy Internatio­nal reported last year that “the procuremen­t system and all platforms continue to operate” every day, even as much of the country was under attack.

As many countries face new threats that may require large-scale spending in a short time, e-procuremen­t allows government­s to do so more quickly and efficientl­y, and with far less corruption. An e-procuremen­t system cuts waste and graft in public spending, builds resilience, and allows government­s to be better prepared for upcoming challenges. Every country should pursue such a policy.

 ?? 123RF/simfalex Picture: ?? Countries with e-procuremen­t systems in place during the Covid-19 crisis were able to respond to the pandemic at speed.
123RF/simfalex Picture: Countries with e-procuremen­t systems in place during the Covid-19 crisis were able to respond to the pandemic at speed.

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