How can procurement systems in developing countries be improved? Can they contribute to development outcomes? This paper, by the Organisation for Economic Co-operation and Development (OECD) and the World Bank, argues that strengthening procurement capacity in developing countries is critical to improving social and economic well-being and a necessary feature of poverty reduction programmes. It provides practical guidance on mainstreaming procurement, capacity development, benchmarking, and monitoring and evaluation.
Public procurement systems are at the centre of the public spending, and a core function of public financial management. How goods, works and services are purchased determines whether budgets are effectively translated into services. The performance of procurement systems can also affect the impact of foreign aid. Better procurement can bring efficiency gains that would significantly contribute to the achievement of the Millennium Development Goals (MDGs).
Procurement systems in many developing countries are weak. Active and determined collaboration among the international community is needed to face the complicated challenge of strengthening procurement capacities. The importance of good procurement has not hitherto been understood and high-level support for reforms has been weak.
- Programmes to develop procurement capacity have been donor driven and failed to make sustainable improvements.
- There has been a lack of agreement among developing countries and among donors over what constitutes a “good” procurement system. This has hindered progress.
- In the past, donor support for capacity development was often piecemeal and focused only on low-level functions.
Procurement is more than a process – it’s part of the governance and public financial management system of a country and needs to be viewed in this broader context. Developing countries and donors need to mobilise the necessary political and financial support to achieve sustainable improvements. This means:
- Integrating procurement into overall development strategies and prioritising the strengthening of procurement systems.
- Raising awareness of the value of procurement to strategic aid management and its centrality to the aid effectiveness agenda.
- Opening international competition for contracts to maximise the benefits of strengthened procurement.
- Maintaining a network of professionals to disseminate knowledge in support of the procurement agenda.
- Promoting donor harmonisation and alignment around strengthened partner country procurement systems.
