Low and middle income countries spend an average of 13% of their budgets on the procurement of goods and services, however this number can be much higher, for example almost 30% in Botswana. This is an area of great opportunity for SMEs to gain business opportunities, however in the past and still in some places today, procurement procedures can be very complex, creating obstacles to competition, and hindering a small business' ability to participate in the system. Fortunately, it is increasingly becoming a standard in governments around the world to implement an electronic system for the procurement process, known as e-procurement. E-procurement systems offer the potential for greater transparency, by providing complete information online in an official website that details the criteria, bidding and evaluation procedures, and the winning bids of a procurement. E-procurement can also increase efficiency by reducing possible collusion among bidders as well as corruption from persons inside the government that are responsible for purchasing. The result is a more open and competitive environment that creates space for SMEs to be part of the government procurement process.
There are many examples around the world of countries implementing e-procurement systems, and this webinar will explore two such examples. Nicholas Klissas, a Digital Regulatory Reform Specialist, moderates a discussion with Vasyl Zadvornyy, Chief Executive Officer of the Ukraine's e-procurement system ProZorro, and Dr. La Anh Tuan, Deputy Head of the National e-Procurement Center at the Ministry of Planning and Investment in Vietnam.
Vasyl Zadvornyy discusses the bottom up approach that was taken in his country, likening the process closer to what startups use rather than what is more commonly seen in government reform. The process began in 2014 with a group of volunteer activists from civil society, wishing to improve the government procurement process which they saw as corrupt. These volunteers formed a team to develop the minimum valuable product and to seek crowd funding, allowing them to develop the e-procurement platform which was then piloted in 2015 for small “under threshold” procurements which are not regulated by law. Leverage from the pilot helped to push the adoption of a new law on public procurement at the end of 2015, and in 2016 ProZorro became mandatory for all public procuring entities in phases: first with the central government and then later municipal governments and state owned enterprises.
Vietnam's approach was more top down. Online bidding was initially regulated in the public procurement law in 2005. Then in 2009, with support from the Korean government's Korean International Cooperation Agency, Vietnam built a pilot e-procurement system based on the Korean e-procurement system. Since 2009, the procurement system has gone though 3 stages: (1) a pilot stage for only 3 government agencies from 2009-2012; (2) expansion to all public agencies across the country in 2012-2015, along with completion of legal framework for e-procurement implementation in the country; and (3) from 2016 to the present, a roadmap has been set for the mandated adoption of e-procurement for all public agencies, while an updated and improved system is expected in 2022.
Both panelists discussed different approaches to the transfer to a government e-procurement system, however there were some similarities in overall recommendations for policy makers who are looking to implement similar reforms. These recommendations include ensuring that all relevant stakeholders are involved in the process, taking small steps along the way, and using small successes to create momentum to go further and further in a multi-phase approach.