Public procurement can stimulate IT development - UNCTAD
Frankfurt: Public procurement can play a major role in promoting
information technology (IT) sector development in developing countries,
a new joint study by UNCTAD and the German Federal Ministry for Economic
Cooperation and Development (BMZ) revealed.
The report, titled Promoting Local IT Sector Development through
Public Procurement, was released at Africa Business Week in Frankfurt,
Germany.
The study identified public procurement of IT services as having
untapped potential for stimulating domestic economic progress, and
recommends seven strategies to take advantage of this. One suggested
strategy is to ensure that "key enabling conditions" are in place,
including coordinated IT and public procurement policies, a critical
mass of public IT projects, and a good understanding of the capabilities
of the local IT services sector.
A competitive local IT sector is essential for developing countries
to reap full benefits from the world's rapid evolution in information
and communication technology (ICT), the report said.
Local progress helps sustain and expand the use of ICT in the private
and public sectors. A thriving local IT sector also contributes to
increased productivity, employment and innovation. But IT firms in
developing nations often face limits to growth due to lack of domestic
demand.
A boost in such demand can come from public procurement, the UNCTAD
and BMZ study stated.
In low-income economies, public sector procurement typically
represents a major segment of local demand for such services, fuelled in
part by the increased deployment of e-government services. However, as
stressed in the preface by BMZ's Deputy Director-General of Civil
Society, Economic Policy and the Private Sector, Christiane
Bögemann-Hagedorn, "Until now, relatively little attention has been paid
to the link between public procurement and local IT-sector development."
According to the study, the participation of local IT firms in public
tenders is often hampered by a lack of trust and awareness, by the
technical complexities of IT procurement, by inadequate procurement
frameworks and capacities, and by an absence of relevant IT standards
and interoperability frameworks.
Drawing on country reviews of Kenya, Senegal and Sri Lanka, and
citing other evidence, the study suggests government steps that can
promote local IT-sector development through public procurement.
Director of UNCTAD's Division on Technology and Logistics, Anne
Miroux said, "Leveraging public procurement for IT-sector development is
a complex challenge, but can be a powerful policy tool when successfully
applied."
The report cites the case of Sri Lanka to illustrate how the process
can take place. Sri Lanka's national ICT agency has set up a framework
of transparent and competitive tender procedures and has used a range of
strategies and tools to make it accessible to local firms.
For example, it provides targeted preferential marks to local firms,
encourages joint ventures between local and international enterprises,
and promotes technological capacity development among local firms.
The study identifies seven specific strategies for governments to
follow, to promote local IT services sectors through public procurement:
* Ensuring 'key enabling conditions are in place, including
coordinated IT and public procurement policies, a critical mass of
public IT projects, and a good understanding of the capabilities of the
local IT services sector.
* Establishing an institutional framework that allows public-sector
coordination and effective private-public dialogue that can identify
barriers to local IT-sector participation. One option is to assign a
lead agency to spearhead public procurement for local IT-sector
development.
* Setting up clear, transparent and open tender procedures. As with
any public procurement process, applying good procurement practices is
essential for ensuring successful outcomes and for easing the
participation of local small and medium-sized enterprises (SMEs).
* Providing additional points to bids from local firms, within open
and competitive public procurement processes. Targeted preferential
treatment can encourage the formation of joint ventures by local and
foreign firms and can allow local and less-experienced firms to build
the relevant skills.
* Increasing the options for smaller firms to submit bids, by
providing reductions on bid and performance guarantee requirements.
Governments may also consider using alternative quality controls in
awarding contracts that do not require bidders to have a previous track
record specifically linked to public procurement.
* Adopting best practice software design. For example, the use of the
modular design of systems and architecture allows for the tendering of
smaller projects and enables greater participation of local firms.
* Promoting awareness and capacity development among IT firms and
within relevant public authorities to help local SMEs overcome barriers
to their participation in public tenders.
According to the study, governments of countries with nascent IT
sectors should at least consider implementing the most essential
strategies. One or two carefully designed e-government projects
involving domestic SMEs can showcase their potential and help build
trust between the public and private sectors.
|