In Uganda, spending on public procurement is estimated to account for around 55% of the national budget. Fair and competitive procurement is therefore key to achieving value for money from the public budget, however a recent CoST Uganda study shows that levels of competition are low: 51% of projects attract fewer than three bids, with national companies less likely to compete for contracts than foreign firms.
Today private sector and government representatives from Uganda came together for a CoST webinar on addressing the issue of local, private-sector participation in procurement. CoST Uganda has been working hard in this area already, having received funding from the UK Foreign, Commonwealth and Development Office’s Business Integrity Initiative, which helps combat issues such as corruption in order to encourage trade and investment in new markets. The webinar featured speakers including Faith Mbabazi of the Public Procurement and Disposal of Public Assets Authority (PPDA), John Omeke of Uganda National Roads Authority (UNRA) and CoST’s Hamish Goldie-Scot.
Private sector engagement in Uganda: What’s the issue?
The low level of competition – especially from national companies – indicates there is work to be done to level the playing field in public procurement. Faith Mbabzi took audience members through the PPDA’s approach to increasing local participation and ownership over projects using ‘preference schemes’, which elevate the financial value of bids from contractors from Uganda. As a result, 25% of contracts in 2019/2020 awarded by UNRA went to national companies.
There are challenges to this approach though: some local companies under-value their costs in an attempt to secure contracts, which adversely impact sub-contractors further down the supply chain. Perceptions of corruption remain an impediment to private sector participation. And national companies are hindered by issues including the cost of doing business and a lack capacity to supply large-scale projects, which preferential schemes cannot solve alone.
How does CoST help?
CoST works with government bodies such as the PPDA to address these challenges faced by the private sector. As seen recently in Thailand, increased transparency on infrastructure projects can inhibit misbehaviour in procurement and strengthen bidding competition. In Thailand, this led to lower contract prices and a more efficient use of the public budget, contributing to cost savings of US $360 million. Meanwhile, CoST training ensures that both government and private sector representatives are aware of the value of timely disclosure. And, by bringing stakeholders from a range of disciplines together through events, CoST facilitates knowledge exchange – and builds trust – between the private sector and government.
Combined, these elements build private sector confidence in the procurement process, and help ensure the public budget is used as effectively, and efficiently, as possible.