Public Procurement, Corruption and the Crisis of Governance in Africa 3030638561, 9783030638566

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Public Procurement, Corruption and the Crisis of Governance in Africa Edited by Nirmala Dorasamy Omololu Fagbadebo

Public Procurement, Corruption and the Crisis of Governance in Africa

Nirmala Dorasamy · Omololu Fagbadebo Editors

Public Procurement, Corruption and the Crisis of Governance in Africa

Editors Nirmala Dorasamy Durban University of Technology Durban, South Africa

Omololu Fagbadebo Durban University of Technology Durban, South Africa

ISBN 978-3-030-63856-6 ISBN 978-3-030-63857-3 (eBook) https://doi.org/10.1007/978-3-030-63857-3 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Acknowledgments

Different colleagues and associates assisted in making this book project a reality. We acknowledge invaluable contributions of colleagues who volunteered to participate in the peer review process. We appreciate your diligence and prompt responses to our requests. We acknowledge and appreciate your constructive criticisms and suggestions. These invaluable viewpoints and perspectives contributed to the strength of the analysis presented by the authors. We also appreciate the chapter authors for their understanding and patience while the review lasted. You were not deterred by constant requests in the course of the peer review process. We appreciate. To the anonymous reviewers of the initial draft of the proposal, we cannot thank you enough for the insights you provided. Your incisive comments and progressive suggestions enabled us to strengthen our focus in the reconstruction of the initial theme and the general framework. We are grateful. To Alina Yurova, the editor of Palgrave Macmillan’s Regional Politics and Development Studies, Hemapriya Eswanth, Henry Rodgers, Sham Anand Lourthu Swamy, and other members of staff, we render our appreciation for your interest in our proposal and the acceptance of the manuscript. We appreciate the commitment of your team and other editorial and production staff who contributed to the success of this project. Thank you. To the members of our family, we appreciate your patience and consideration. Our greatest appreciation to the Almighty Creator, God, the Custodian of knowledge and wisdom, for His innumerable mercies and the gift of life. To Him alone be the glory. v

Contents

Part I Concepts and Theories 1

2

3

4

Conceptualizing Procurement, Corruption, and Governance Omololu Fagbadebo and Nirmala Dorasamy

3

An Overview of Public Procurement, Corruption, and Governance in Africa Nirmala Dorasamy

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Corruption in Procurement- Antecedents, Practices, and Challenges Soma Pillay

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Understanding Corruption in Africa from an Economic and Neopatrimonial Perspectives Nolubabalo Lulu Magam and Regis Wilson

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Part II Country Cases 5

6

Exploring the Procurement Challenges in the South African Public Sector Thokozani Ian Nzimakwe and Andile Clifford Biyela

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Weak Procurement Practices and the Challenges of Service Delivery in South Africa Koliswa Matebese-Notshulwana

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CONTENTS

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Public Procurement Governance: Toward an Anti-corruption Framework for Public Procurement in Uganda Benon C. Basheka

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9

10

11

12

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Rising Above the Tide: Review of Anti-corruption Measures in the Ghanaian Procurement Process Evans Sokro and Ruby Melody Agbola

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Public Procurement Law, Due Process, and Public Sector Corruption in Nigeria: A Review Omololu Fagbadebo and Kikelomo Aboyowa Mbada

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Public Procurement Reforms in Tanzania: Dispersion of Corruption and Governance John Samuel Kihamba

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Political Polarisation, Compromised Procurement and Poor Service Delivery in the Kingdom of Lesotho Teboho J. Lebakeng

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Public Procurement Oversight and the Scourge of Corruption in the Public Sector: A Comparative Analysis of South Africa and Kenya Msuthukazi Makiva Public Procurement Corruption and Service Delivery in Nigeria and South Africa Tunde A. Abioro Charting Pathways to Growth and Development Through Transparent Procurement Management in Africa Soma Pillay Good Governance and the Prospect of Sustainable Growth and Development in Africa Omololu Fagbadebo and Nirmala Dorasamy

Index

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287

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Notes on Contributors

Tunde A. Abioro holds a Ph.D. in Political Science. He teaches Government and Comparative Politics in the Department of Local Government and Development Studies, Obafemi Awolowo University, Nigeria. He has publications on democratization, human security, political economy of poverty and crisis, local government and public policy among others. He has attended various local and international conferences; and is well published in both local and international journals known to be highly reputable. Ruby Melody Agbola is a Senior Lecturer at the Central Business School of Central University, Ghana. She earned an M.B.A. in Management Studies from the International University, London, M.Phil. in Public Policy & Administration from the University of Tromso, Norway and a Post Graduate Diploma in Education from the University of Lancaster, UK. She is currently a final year Ph.D. candidate at the Ghana Institute of Management and Public Administration (GIMPA). She has authored several research articles in various scholarly journals on a variety of topics ranging from, entrepreneurship, strategic management and total quality management to corporate social responsibility and governance. She has presented papers at numerous international conferences across the globe including, Copenhagen, Denmark; Cairo, Egypt; Addis Ababa, Ethiopia and Rabat, Morocco. She is the current winner of the Africa Academy of Management Junior Faculty Fellowship Award and a

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Junior Research Fellow with the DeGroote School of Business, McMaster University, Canada. Benon C. Basheka is a Professor of Governance and the first Deputy Vice Chancellor and in charge of academic affairs at Kabale University. Prof. Basheka has a multidisciplinary academic background with two PhDs and two Master’s Degrees. He is an Extra-Ordinary Professor at the North West University (NWU) Business School in the Faculty of Economics and Management Sciences in South Africa. Andile Clifford Biyela is a Postdoctoral Research Fellow in the School of Management, IT and Governance at the University of KwaZuluNatal, South Africa. His research interests include local governance, local economic development and Intergovernmental relations. Nirmala Dorasamy is a Professor in the Department of Public Management and Economics at the Durban University of Technology. She lectures in the undergraduate and postgraduate programs at DUT, Public Administration Leadership and Management Academy (PALAMA), the National Department of Defense and other departmental extended programs. The focus area of her research is ethics and public sector management, with an emphasis on enhancing the effectiveness and efficiency of public service delivery underpinned by a strong sense of governance within a democratic dispensation. Her international linkages involve collaborative research with the Swinburne University of Technology, Federation University and Monash University in Australia, the American University in Cairo, MUST University in Kenya and Mendel University in Czech Republic. The focus of this international collaboration is linked to governance, leadership excellence and ethical practices. She has successfully supervised and graduated several Masters and Doctoral students, while being recognized as a local and international examiner for postgraduate research. She is an accredited evaluator for EDTP and CHE; and an editorial board member for several internationally acclaimed journals. Professor Dorasamy has developed resource material for government, and both local and international institutions of higher education. She has coauthored textbooks for senior secondary learners, books for higher education purposes and she has published in local and international journals as well as presented papers at national and international conferences. Omololu Fagbadebo holds a doctoral degree in Political Science from the University of KwaZulu-Natal, South Africa. He taught Political

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Science at the Obafemi Awolowo University, Ile-Ife, Nigeria and University of KwaZulu-Natal, South Africa. He also taught Public Management at the Durban University of Technology, South Africa. He is a Research Fellow at the Faculty of Management Sciences, Durban University of Technology. He was a recipient of the Study of the United States Institute (SUSI) on American Politics and Political Thought Fellowship at the University of Massachusetts, Amherst, in June/July 2010. He has published academic papers in journals and books. He has presented papers at conferences and workshops. He is a member of editorial board of reputable journals. His area of specialization includes comparative politics, legislative studies, governance, development studies and African politics. John Samuel Kihamba is a Professor at the Dar es Salaam University College of Education, University of Dar es Salaam, Tanzania. Teboho J. Lebakeng, Ph.D. is research associate at the University of Limpopo, South Africa. He obtained his B.A. from the American University in Cairo, Egypt; M.A. from the University of Dar es Salaam, Tanzania, both in Sociology and M.Sc. from Springfield College, Massachusetts, USA. He has published extensively on higher education transformation, and student politics. His recent articles include: The legislature and the challenges of re-imagining South Africa. Strategic Review for Southern Africa (2020 with Dr. Matebese-Notshulwana K.M); Authentic interlocutor in the quest for justice and truth In: Lauer, H and Yitah, H (eds.), The Tenacity of Truthfulness: Philosophical Essays in Honour of Mogobe Bernard Ramose (2019) and “Robert Mangaliso Sobukwe: Acknowledging the Legacy of a Pan-Africanist Hero”. Africology: Journal of Pan African Studies (2018). Nolubabalo Lulu Magam is a Political Science and International relations Lecturer at the University of KwaZulu-Natal, South Africa. Her research interests include security, peace and conflict transformation and Para-diplomacy. Msuthukazi Makiva is an academic and a senior lecturer at the School of Government, University of the Western Cape, South Africa. Makiva completed her Ph.D. degree in Public Administration from the University of the Western Cape. Her research focus is on public policy analysis, monitoring and evaluation, legislative oversight and accountability. Makiva has participated in research projects, some of which interrogate curriculum content of Public Administration. She supervises a number of

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post graduate students across the Public Administration discipline. She has presented papers in conferences and has published in high impact accredited Public Administration journals. Koliswa Matebese-Notshulwana, Ph.D. is a qualified teacher by profession, author and motivational speaker. She obtained her doctorate from the University of Pretoria; M.Phil. from the Nelson Mandela Metropolitan University (NMMU) and B.A. from University of Port Elizabeth (UPE). Her research interests are in the areas of governance, legislative oversight, development and gender-based violence. Her recent publications include: The legislature and the challenges of Re-Imagining South Africa. Strategic Review for Southern Africa (with Dr. Lebakeng, T. J. 2020); Constraints and prospects for legislative oversight in emerging African democracies: The case of South Africa. In: Fagbadebo O. and Ruffin F. (eds.) Perspectives on the Legislature and the Prospects of Accountability in Nigeria and South Africa. Springer Nature (with Dr. Lebakeng, T. J. 2019) and Prospects and challenges for radical economic transformation. Commonwealth Youth and Development Journal. (2017). Kikelomo Aboyowa Mbada is a lecturer in the Department of Political Science, Obafemi Awolowo University, Ile-Ife, Nigeria. Her research interests are in health policy, political economy and development studies. Dr. Mbada’s Ph.D. research investigated the political economy bases of disparities in maternal health policy at the subnational level in Nigeria. She is a fellow of the Consortium for Advanced Research Training in Africa (CARTA) and has benefitted from the Partnership for African Social and Governance Research (PASGR) grants. Thokozani Ian Nzimakwe holds a doctoral degree in Public Administration and Management and is currently a Professor in the School of Management, IT and Governance at the University of KwaZuluNatal, South Africa. He was employed in the public service for 14 years before joining academia. His research interests are in the areas of local governance, public sector accountability, public finance, ICT and public sector reforms. He has published widely in scholarly journals, contributed various book chapters, and has attended and delivered papers at both national and international conferences. Soma Pillay offers teaching across undergraduate and postgraduate programs in the subject areas of organizational behavior, HRM, IHRM, management and organizations and international management. Prior to

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joining academia, Soma spent many years in the public service. Her qualifications are cross-disciplinary and include public sector governance. Soma is an active researcher within Federation Business School (Federation University Australia). Her teaching interests contribute and complement her research into issues associated with cross cultural studies, ethics and public sector governance. Soma serves on Editorial Boards of well-ranked journals and is an active reviewer. Evans Sokro is a Senior Lecturer at the Central Business School and Head of the Department of Human Resource Management. He holds a Ph.D. in Human Resource Management from Federation University Australia and an M.Phil. in Human Resource Management from the University of Ghana, Legon. He is also a fellow of the Institute of Human Resource Management Practitioners, Ghana. His research interests include expatriation in sub-Saharan Africa, organizational culture and values, high work performance systems and human resource information systems. He has published in peer review journals and has presented papers at several conferences across the globe. Regis Wilson is a Doctoral degree student in Political Science at the University of KwaZulu-Natal, South Africa.

List of Figures

Fig. 7.1 Fig. 8.1

Public Procurement Governance Framework Source Created by the author Framework for effective prevention of corruption in the procurement process (Source Authors’ own creation [2020])

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List of Tables

Table 7.1 Table 7.2 Table 8.1

Table 10.1 Table 10.2 Table 10.3 Table 10.4 Table 10.5 Table 12.1 Table 12.2 Table 12.3

IGG Financial Resources/Income IGG Financial Resources/Expenditure Number of procurement violations reported in the auditor general’s report/selected years between 2008–2017 by type and institution Level of procurement compliance to LGAs for two years Trend of procurement of goods and services without Tender Board approval in three years Trend of procurements made without competitive bidding in three years’ period Trend of procurement of goods and services from unapproved suppliers for the period of four years Trend of procured goods received without inspection Level of corruption and maladministration perception: SA (2015–2018) Level of corruption and maladministration perception: Kenya (2015–2018) Governance pillars of public procurement: SA and Kenya

130 131

149 194 195 196 196 197 231 233 237

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PART I

Concepts and Theories

CHAPTER 1

Conceptualizing Procurement, Corruption, and Governance Omololu Fagbadebo and Nirmala Dorasamy

Introduction Two major perspectives have dominated the discourse on the consequence of corruption in society: corruption as a sand and corruption as a grease (Aidt 2009; Kato and Sato 2015; Tanzi 2013). The “efficient grease” hypothesis of corruption, championed by Leff (1964) and Huntington (1968), contend that a measure of corrupt practices, mostly bribery, is necessary to allow productive organizations and firms avert the delay and inefficient red tape culture in the public service process. On the other hand, as a sand, it connotes the “sale of government property for private gain” (Aidt 2009) by the individuals or group of individuals saddled with the responsibility of administering the powers of the state.

O. Fagbadebo (B) · N. Dorasamy Department of Public Management and Economics, Durban University of Technology, Durban, South Africa e-mail: [email protected] N. Dorasamy e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_1

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Thus, the abuse of public power for advancing private gain constitutes impediments to service delivery. Consequently, corruption stifles development, leads to low income and breeds poverty (Andvig and Moene 1990; Blackburn et al. 2006, 2008). Corruption allows the “less productive firms with political connections to bypass regulations and win government procurement contracts, thereby, increasing inefficiency” (Mironov and Zhuravskaya 2016, p. 287). The ordinary member of the public, especially the peasants and mostly the rural dwellers, suffer greatly from this problem. Such people with no privilege to hold government positions suffer neglect in the area of provision of basic social infrastructure. Most African rural dwellers are neglected, with no adequate access to basic social amenities such as good roads, electricity, effective health care infrastructure, and other facilities capable of enhancing their wellbeing. A commentator has noted that the poor people in the rural areas in Africa have no access to proper medical care, “and the high cost of transportation and health care services in nearby urban cities are way out of their reach and many die before any help can reach them” (Onwubiko 2013). Even, such amenities in the urban centers are inadequate. African citizens reel in the pains of the struggles to survive under harsh socioeconomic realities engendered by mismanagement of public resources. The consequence of this is not limited to the socioeconomic growth and welfare of citizens. Warren (2004) has noted that corruption often jeopardizes the democratic credentials and objectives of the state. Accordingly, “corruption reduces the effective domain of public action, and thus the reach of democracy, by reducing public agencies of collective action to instruments of private benefit” (Warren 2004, p. 328). Additionally, another consequence of corruption is inefficiency in the delivery of public services, “not only in the form of a tax on public expenditures, but by shifting public activities toward those sectors in which it is possible for those engaged in corrupt exchanges to benefit” (Warren 2004, p. 328). These viewpoints dictate the problems associated with the definition, the nature and the consequence of corruption. As Vito Tanzi has noted, in likening corruption to an elephant, “it may be difficult to define, but it ought to be possible to recognize acts of corruption when they occur” (Tanzi 2013, p. 36). It has been a herculean task to have a universal definition of corruption “because there are forms of corruption that are difficult to identify and there are forms that may not be seen as corruption by exponents of particular cultures” (Tanzi 2013, p. 36). Nevertheless, a

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general perception is to view corruption as the “absence of equal and fair treatment for all individuals on the part of public officials, unless where the laws specifically require a differentiated treatment, as for example for disabled individuals” (Tanzi 2013, p. 36). Central to the sand and grease hypotheses of corruption is the procurement process. In the public sector, the heartbeat of service delivery is the management of procurement of services and materials. Indeed, the entire activities of government revolve around sourcing for materials and services for the accomplishment of public policy (Munzhedzi 2016; Basheka et al. 2015). Procurement has to do with the process of acquiring items and services, in a more economically and efficient method and measures possible, necessary for the execution of a set of objectives (Arrowsmith 2010). Basically, in the public service, procurement entails the acquisition of relevant services and goods for the purpose of government policies for effective service delivery (Arrowsmith 2010). Since service delivery is the sole responsibility of government, internally and externally, for a wide array of public needs, procurement, therefore, is a crucial institutional process and measure for the functioning of the government. Because of its centrality to public administration, government across the globe, applies rules and regulations to promote the best ethical standards in the procurement process. When the ethical standard and rules become compromised, service delivery would be hampered while good governance would be in jeopardy as well. However, it is a common practice to target the procurement process when contemplating corruption. At the center of this malaise is the political class, seeking to leverage the power of the state to advance the socioeconomic interests of their sponsors and lackeys. In a bid to accomplish this, the procurement process becomes compromised, respect for the standardized rules would be put in abeyance, while private individuals, by virtue of their political connections, access the public treasury at the expense of service delivery. While procurement is an institutional arrangement to advance effective public service delivery, the menace of corruption permissible by the political elite compromises the responsibility of the government, thereby jeopardizing good governance. The consequence of this procurement–corruption nexus is the prevalence of governance crisis. Effective procurement management seeks to ensure the best practice, in terms of transparency in the acquisition of services and materials for the execution of public policy. Most often, this is done through a rigorous

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tender process, aimed at ensuring the choice of the economically and qualitatively best options out of the various alternatives presented by the different bidders. The assumption is that the choice would guarantee the best quality of the outputs of the projects thereby leading to effective service delivery. However, when the process is compromised through corruption, the quality of the outputs would be suspect, and the outcomes would create poor service delivery. Consequently, good governance would be in abeyance; abandoned or incomplete or poorly executed public projects would affect delivery of socioeconomic benefits to the citizens. This is a recurring problem in Africa. In Africa, the procurement–corruption nexus is a major challenge for accelerated growth and development, in spite of the abundant human and material resources. Most African states continually display capacity failures to cope with the rising crises of governance while reports of public grafts, through the compromised procurement process, indict government officials. Large scale corruption continuously undermines the capacity of the state to function effectively, as envisaged by the drafters of the requisite legislative frameworks guiding the management of public affairs (Fagbadebo 2019a). Institutional arrangements to safeguard public interests through oversight of public policy management are weak to harness their constitutional responsibilities to tame the corruption monster while the actors exploit the structural deficiencies to advance personal interest. In Africa, corruption “is a symptom as well as a cause of dysfunctions within democracies” (Warren 2004, p. 328), and induce political instability (Fagbadebo 2007). Onwubiko (2013) has noted that the large-scale theft of public funds that characterized African states for decades was responsible for the intensification of poverty and lack of development, which have “become the cancerous afflictions that have led to the untimely demise of scores of citizens.” Corrupt activities perpetrated by ruling political and bureaucratic elite have been responsible for the weak security infrastructures and its inevitable insecurity consequences, such as the rising proliferation of armed non-state actors. Such actors have attained the recognition as terrorists and armed bandits threatening the safety of the civil populace. The rot in public institutions is a direct consequence of the diversion of public funds (Onwubiko 2013). This perception is a reflection of the mood in most African states. The state capture phenomenon in South Africa, for instance, has exposed the

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entrenched nexus between procurement and corruption and its consequences on public service delivery. In the continent, the anti-corruption institutions and mechanisms have failed to achieve their intended purposes because they are often compromised and undermined by the political executive (Dza et al. 2015; Fagbadebo 2019b). The consequence of this negative collaborative policy process is the prevalence of governance crisis manifested in a spate of poor service delivery protests and violence. This is the central concern of this book.

The Context of the Book Essentially, this book interrogates and explores the procurement–corruption–the governance crisis nexus, with a view to charting a path of recovery, growth, and development within the confines of the various political environments in the African continent. Authors of the various chapters present original research papers that address both the theoretical and empirical issues, relating to procurement, corruption, and the governance crisis. They identify the institutional impediments, structural obstacles, legal frameworks, and deficiencies that inhibit the administration of best practices in procurement system in the public sector. They also proffer remedies that are necessary to take Africa out of the cycle of socioeconomic retrogression, through the culture of dues process and best practice. The book has two major parts. The first part deals with the conceptual clarifications while the second part presents analysis of the selected countries. The editors, Omololu Fagbadebo and Nirmala Dorasamy, in the introductory chapter, present the conceptual clarification on procurement, corruption, and governance, indicating how corruption in the public procurement system facilitates the crisis of governance. Authors of subsequent chapters anchor their analysis upon this platform. The central position of the chapter is that any society whose procurement system is fraught with corruption would not only slow down governance but would vacillate in a cycle of dysfunctional government process that retards growth and development. Nirmala Dorasamy embarks on a follow-up on this in Chapter 2 with a general overview of the African context of corruption–procurement–governance nexus. She identifies the importance that African states attached to public procurement, noting that the system is characterized

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by monumental corruption, which had contributed greatly to the incessant regression in the socioeconomic development of the continent. She identifies the challenges associated with poor service delivery, which are attributable to corruption in public procurement in Africa. With a survey of public procurement practices in some African countries, Dorasamy points out the need for concerted effort by the government of African states to induce mechanisms that would sanitize the procurement system with a view to ensuring that the corruption monster is tamed to allow the promotion of good governance. The major mechanism in the direction of the strengthening of the various institutions of governance in a way that would entrench the culture of checks and balances in public procurement. Weak institutional oversight arrangements and structure should be devoid of political interference while the culture of best practices in government should be encouraged. In Chapter 3, Soma Pillay, in her analysis of corruption in public procurement traces its antecedents, continuous practices, and the challenges noting that the ubiquity of corruption in African public services has become the norm rather than a vice. The central argument of this chapter is that good governance practices are shaped and constructed through organizational practices. Within most large public and private sector entities, procurement practices are organized around institutional measures and the extent of compliance with legislative controls. The alarming rate of report of the various corruption scandals in government, according to her, has created awareness on the debilitating effect of poor procurement system on the service delivery. She notes that the African continent could not afford the growing costs of corruption on the social, political, and economic sectors of the society. This becomes more worrisome because governments are major consumers of goods and services. It is, therefore, expected that public procurement presents opportunities for governance challenges. Such governance challenges may be attributed to the area of government procurement having a series of unique features and as such, stakeholders are vulnerable to corrupt practices. Antecedents such as the magnitude and volume of procurement activities, ambiguity around the market value of many of the items being purchased, the spaces for political discretion that exist within government, and interdependence among various agencies, all contribute to government procurement as a fertile ground for corruption. To this end, the author argues that governments in African states should reinvigorate the weak internal controls and monitoring practices, with a view to stimulate

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institutional measures to tame the culture of poor procurement process. This, she argues, is crucial for the institutionalization of the practice of good governance as the focus of the state through effective legislative measures such as compliance with the requisite government auditing rules and regulation to detect and correct lapses in public procurement system. Nolubabalo Lulu Magam and Regis Wilson, in Chapter 4, present a theoretical analysis of corruption in Africa, through the lenses of neopatrimonialism. Their central argument is that African states have deviated from the social contract theory, which stipulates the existence of states through a contractual agreement to promote the interests of citizens with a responsible exercise of state power. Hence, there is the prevalence of government involvement in the economic activities to the detriment of the public interest. The economic theory of corruption and the neopatrimonial perspective postulate that the involvement of the state in economic sphere creates opportunities for corruption. Citing the case of cadre deployment in South Africa, they argue that Africa’s sociopolitical milieu is redolent of neopatrimonial practices. In most cases, an adverse result of this practice is the creation of an avenue for politicians to consolidate power with state resources to buy loyalty. They contend that once there is no separation between the public and the private spheres, the consequence is the private appropriation of the public sphere and the use of public resources for political legitimation. It is also intimately related to other relationships and practices, such as clientelism, nepotism, horizontal exchange relationships, and corruption. By extension, this practice, from the economic analysis of political corruption, the transactional duty of bureaucrats, the discretionary power they possess, would create a situation where they are susceptible to the selfish maximization of public utility at the expense of the public. Thus, from the economic theory of corruption, the desire for pecuniary gains has remained the primary motivation for corruption in Africa. In a bid to avert the dare consequences of this practice, the authors recommend the separation between the public and the private sphere in government in order to pay more attention to the public interests rather than the continuous expropriation of state resources for personal benefits by the government officials. Part II of the book starts with the contribution of Thokozani Ian Nzimakwe and Andile Biyela, in Chapter 5, where they explore the challenges associated with procurement in the South African public sector. They note the primacy of public procurement in the South African public

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sector, with an avalanche of legislative frameworks that regulate its practices. They argue that despite these statutory procedures and rules, the dearth of accountability pervades the government activities. Procurement in the South African public sector is both a strategic tool and a mechanism that enables the government to implement policies for socioeconomic development and transformation. In view of this, its practice is central to the government’s service delivery system and promotes the objective of using procurement to promote social, industrial, or environmental policies. Nevertheless, this is fraught with a series of challenges, which include irregular purchasing approaches in procurement process, nepotism in the supply chain management system, unrealistic expectations of the government managers, occasioned by unethical practices, and enormous malpractices associated with decision-making process in SCM. These challenges are facilitated by the noncompliance with the requisite statutory regulations of the legislative frameworks, which adversely affects accountability in public procurement system. To overcome these challenges, the authors recommend the need for greater information sharing among the actors assigned with the responsibility of implementing the Supply Chain Management and the utilization of technology. Aside from this, they also note the need to establish implementation structure for the Supply Chain Management system in the public sector, and in particular structures for public–private partnerships in service delivery. To accomplish this, they proffer that there should be adequate municipal employees assigned with the implementation of Supply Chain Management, and strict compliance with the requisite legislative frameworks that seek to safeguard and insulate public procurement from the corruption virus. Koliswa Matebese-Notshulwana, in Chapter 6, identifies the weak public procurement process in South Africa as the major impediments against effective service delivery in the public sector, with its debilitating consequence on good governance. Procurement, as a crucial institutional process and measure for the functioning of government, the author argues that the South African public sector is not benefiting from the purpose associated with its relevance and importance. Ineffective service delivery to the members of the public has degenerated to poor service delivery protests, which often engender a series of other governance problems. She notes that practice of public procurement in South Africa is characterized by unethical standards, as against the intendments of the requisite legislative frameworks that seek to ensure that service delivery

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is not compromised and undermined. In spite of the establishment of oversight mechanisms to monitor irregular, wasteful, and unauthorized expenditure, corruption in procurement remains a challenge. The author recommends, therefore, that constitutional institutions or entities must ensure the maintenance of appropriate procurement and provisioning system, characterized by fairness, equitability, transparency, competition, and cost-effectiveness. This is necessary to overcome the danger of its vulnerability to wasteful expenditure, fraud, and corruption because of the volume of the financial flows involved. The conclusion reached by the author is that the effect of corruption in procurement in government departments and state-owned enterprises has seriously constrained sustainable economic development, and by extension, hampered service delivery in South Africa. To this end, the author proffers that the regime of sanction and consequences for noncompliance and misuse of public resources should be strengthened as institutional deterrence against abuse of public power and responsibility. Additionally, the robust institutional safeguards against malfeasances in public procurement should be more effective in order to ensure full compliance with procurement legislation and processes. In Chapter 7, Benon Basheka presents a discourse on public procurement governance in Uganda within the frameworks of the country’s anti-corruption system. He notes the growing concern, at the global level, on the primacy of governance to safeguard human security. The author laments the poor state of public administration in African states, which has made the continent a negative appellation of an unhappy state. He argues that this unhappiness is a function of the ills in the public procurement function of most governments, which in itself is caused by both petty and grand corruption. Public procurement, which gulped an estimated 60% of the fiscal policy of African states, is reeling under the deluge of mismanagement, as it defies a series of anti-corruption measures. In Uganda, the author avers that the country has recorded a huge loss through corruption in public procurement. The estimated loss of 600 billion shillings in corruption, related to procurement, in a single financial year, left public service delivery in a quagmire. A proxy measure of the magnitude of corruption can be derived from analyzing the trend of government financing of the Inspectorate of Government (IG) which is an institution mandated to fight corruption. With relevant primary data, the author argues that rather than ameliorate the problem of corruption in public procurement, anti-corruption institutions have added more to the

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burden of mismanagement of public resources through prevailing official corruption networks in the country. The author therefore suggests the establishment of a framework to ensure public procurement governance with a view to attaining the best practice. Such framework, designed to address corruption in public procurement, should adopt a networked-based system that includes laws and policies as well as other role players in the procurement system. This should be grounded in cultural beliefs and values attitudes and practices that ensure every member of society has a shared understanding of the dangers of corruption. Additionally, public procurement laws should be embedded in the teaching of public procurement courses and in professional workshops. Procurement policies and laws should aspire to create institutions, processes, and systems that are driven by the need to meet the goals of government but also the professional standing of the public procurement profession. Such institutions, processes, and systems should be based on public service values which champion the greater common good and harmony of society. Evans Sokro and Ruby Melody Agbola in their analysis of Ghana, in Chapter 8, note that corruption has remained a major concern to good governance practices and the greatest obstacle to socioeconomic development of African economies. They note the avalanche of anti-corruption measures and mechanism to safeguard public procurement in Ghana but that the level of compliance was abysmally low and ineffective. They identify significant constraints to the creation of wealth, inclusive economic growth and development in Ghana, and state that corruption has been recognized to contribute to unequal distribution of wealth, stifle development, and often threatens the country’s democratic credentials and progress. Using primary data from the country’s Auditor General’s report of over 10 years, they discover that salient factors in the state structure has enabled or reinforced corrupt practices. In their evaluation of Ghana’s procurement law and other anti-corruption institutions, they note that the greatest impediment was the culture of noncompliance with requisite statutory legislative frameworks. This, according to them, was facilitated by the incessant political interference in public procurement process. In Ghana, political interference has infiltrated all spheres of public administration leading to grand corruptions in the various public institutions. A change in government is normally swiftly followed by dismissal, removal, or transfer of key public administrators occupying sensitive positions and the appointment of political sympathizers to those positions.

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Politicians also use allocation of resources or the lack of it as a tool for controlling or sometimes punishing government departments deemed to be uncooperative. They, therefore, recommend that the parliament should pass a law that would prevent the government from indiscriminate abrogation of legitimate procurement contracts entered into by previous governments. The parliament should also be objective in their assessment of government policy regarding the procurement of goods and services taking the public interest at heart rather than partisan interests. In addition, the Auditor General’s oversight responsibility should not stop at simply reporting and exposing procurement violations but must be empowered to recommend the prosecution of those found culpable as well as follow up on their recommendations. Omololu Fagbadebo and Kikelomo Mbada, in Chapter 9, see public procurement corruption as a part of the larger corruption regime in Nigeria. Its pervasiveness is noticeable in a number of abandoned and incomplete infrastructural facilities designed to facilitate socioeconomic aspirations of members of the public. In spite of a series of comprehensive frameworks legislated to tackle down malfeasances, safeguard public resources, and ensure effective service delivery, compliance in the sector remains rare. Corruption in Nigeria’s public sector continues to compromise effective public service delivery; the procurement process characterized by a network of unethical practices including the circumventing of procurement regulations by agencies of government, thereby violating requisite laws aimed at promoting transparency. This chapter reviewed existing legislative frameworks guiding public procurement and the level of compliance by stakeholders in the public sector. While there are sufficient provisions intended to curb sleazes in public procurement, institutional constraints coupled with abuse of power by top government officials, have weakened the potency of relevant laws. Besides, selective application of the law has institutionalized the culture of corruption in public sector procurement in Nigeria. In Chapter 10, John Samuel Kihamba presents an analysis on the constant reform in the public procurement in Tanzania, which he describes as the core focus of the government since the early 1960s. This continuous process was meant to identify and update the necessary loopholes in the existing legislative frameworks designed to insulate procurement system from corrupt practices. The Tanzanian government had noted the primacy of public procurement a vital link to economic development and poverty reduction. The centralized procurement system

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of the 1960s and the 1970s was tied to the prevailing governing system promoted by President Julius Nyerere, as almost all goods and services were procured and supplied by government agencies. These agencies include medical stores, Veterinary stores, Maji store, government press printers, and others. These government stores were expected to procure and deliver quality goods and services to ministries, departments, and agencies and prevent extravagance. Nevertheless, this system was fraught with a series of deficiencies, which eventually expose the practice to corruption and financial misappropriations. In addition, accountability on the part of office holders was nearly non-existed, while this also led to laxity in enforcing discipline at work, erosion of public service ethics, corruption, abuse, and misuse of and procurement of poor quality goods and services by the central government stores. Consequently, there was an acute deterioration of public services in quality and quantity and, generally dismal performance at all levels of government. Thus, public procurement institutions became more of liabilities than an asset to the general public. Consequent to this, government sought for a decentralized procurement system as a mechanism to address the problems undermining efficient public procurement in public institutions, associated with the centralized system. One among the driving forces to public procurement reform initiative was the urgent need for strengthening institutions involved in public procurement and addressing critical shortage of human resources with technical capacities. Therefore, public procurement reforms among others aimed at improving institutional and governance frameworks by establishing new structures, decentralizing procurement process to make it more efficient and transparent in line with requisites and basic procurement guidelines and best practices. However, despite these reform initiatives, which have enhanced procurement governance in Tanzania, there are still a number of challenges which undermine efficient and effective public procurement in almost all institutions. These include the existence of rampant corruption and weak integrity on part of the procurement leadership, poor enforcement of public monitoring and evaluation mechanisms, inadequate skill in contract management and weak enforcement mechanisms for the signed contract at both central and local government levels, misuse of authority, and procurement of poor quality goods at exorbitant prices. The author recommends persistency in the reform system in a bid to correct the observed defects in the existing frameworks.

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In Chapter 11, Teboho J. Lebakeng discusses how political polarization has compromised procurement and, in turn, the problem of corruption in public procurement has negatively affected service delivery in the Kingdom of Lesotho. Essentially, the process of public procurement involves administration of large volumes of money and this predisposes it for potential corruption. The literature points to a wide variety of underlying reasons driving corruption in general and procurement corruption in particular in the Lesotho, including the country’s socioeconomic, political, and administrative conditions. The notes that Lesotho’s economy is based on the export of water to South Africa, textiles manufacturing, agriculture, and, to a small degree, precious minerals. The author advances the argument that the country cannot afford and sustain the levels of corruption in the procurement process without compromising the ability of the state to provide services to the population. This is more so because public service in the Kingdom of Lesotho is generally considered to lack the resources or capacity to deliver services in an efficient and timely manner. This descriptive and analytical chapter, which is based on desktop research, concludes that existing legal framework around public procurement is not necessarily insufficient but is bypassed or undermined and, therefore, cannot ensure transparency and accountability. Informed by this state, the recommendation arrived at is that there is dire need for legal reforms and administrative considerations to strengthen Lesotho’s procurement process. In Chapter 12, Msuthukazi Makiva, examines the robustness of public procurement oversight and a scourge of corruption in the South African and Kenyan public sector. This qualitative comparative study discovered that both South Africa and Kenya do conform to international laws and standards in designing prescribed institutional structures to govern public procurement system and process. However, the two countries are faced with the challenge of weak internal control system. This presents deliberate loopholes to galvanize unethical practices in the procurement process. Limited public access to information pertaining to procurement contracts between the public and the private sector engenders this deficient phenomenon. Thus, the internal statutes designed by these countries embody a specific clause that bars practical transparency, rendering state coffers to the hands of the corrupt. The author recommends the need for concurrent ex ante and ex post oversight of public procurements with a view to eliminate the common corrupt practices that have stifled effective public service delivery in the two countries.

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In Chapter 13, Tunde A. Abioro compares public procurement corruption in Nigeria and South Africa Public procurement corruption can be categorized either into administrative or state captured. However, transparency, competition, and integrity were identified as the hallmarks of a good procurement system. Unfortunately, monopoly of power, impunity, wide discretion, lack of transparency, and weak accountability overtime have characterized government agencies and transactions mostly in developing countries and this has created an avenue for service failure in those countries. The study examined procurement laws, impact and corruption perception index in Nigeria and South Africa as it affects governance and service delivery. Notably, corruption can occur along the entire procurement cycle from needs assessment through to finalization of either a contract or even disposal of assets. Of note, national governments and other agencies fund large infrastructure projects throughout the developing world running into billions of dollars annually and organizations such as the World Bank, African Development Bank Group, the Asian Development Bank, the European Bank for Reconstruction and Development as well as Inter-American Development Bank adopt “cross-debarment” as a deterrent. Using secondary data and descriptive method of analysis, the study discovers that corruption remains a major albatross in procurement and service delivery in the countries. Although there may not be a one-size-fits-all-approach to rescue the situation, the author recommends the adoption of e-procurement process, where the procurement processes are red flagged, for close monitoring and infractions subjected to administrative law remedy. Soma Pillay in Chapter 14, notes that efficient government procurement system is significant in cases where public procurement accounts for a large portion of economic activity. She notes that while in major OECD countries, government procurement ranges from 12 to 14% of the gross domestic product, it is substantially larger in Africa. Hence, the need to ensure transparency in the procurement procedure as an essential determinant of good governance practice and efficiency. In this chapter a review is offered of best practices in public procurement. The chapter also examines transformational procurement, which refers to a type of organizational change management focusing on strategies to enable major and long-term improvements to procurement processes, activities, and relationships. As the public sector is becoming focused on procurement transformation, it is timely to strengthen the strategic value of the procurement function and highlight its vital role in increasing efficiency

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and maximizing the value of money spent. The chapter reviews the most common procurement transformation challenges agencies have been tackling with public procurement professionals across the African continent and a shared perspective on how to overcome them. The introduction of transparent practices is insufficient to ensure competitive public procurement therefore in order to enjoy maximum benefits from the reform toward transformational and transparent procurement, African countries must simultaneously combat conspiratorial practices of firms in the public procurement tendering system. This chapter also helps us understand the reasons for agencies’ reluctance toward introducing transformational procurement in government purchasing. In Chapter 15, Omololu Fagbadebo and Nirmala Dorasamy, conclude with a review of the crisis of governance in Africa, noting the preponderance of weak public institutions as a catalyst for the pervasive underemployment in the continent. Personalization of state power coupled with ravaging poverty and unemployment have bolstered regression in the development of the African states. The editors take note of the high rate of corruption and the dangers of constant Illicit Financial Flow (IFF) as albatross in Africa. In most African states, institutional failures endanger accountability. The chapter notes the importance of virile civil society, as in other developed democracies, to assert vertical accountability in the face of the failure of horizontal accountability. It concludes that African citizens should brace up for sustained public challenge against poor governance and demand accountability with a view to inducing inclusive development and growth.

Conclusion Africa is a blessed continent with abundant human and natural resources. Nevertheless, these resources have been unable to enhance the considerable quality of lives of citizens. Rather than explore their talents and potential in their respective countries, most productive African citizens have migrated to the more developed economies (Economic Development in Africa Report 2018; The Economist, March 2020). Even though there are reports that migration is beneficial to Africa, nevertheless, it makes the continent’s economies dependent on developed economies of the West. African countries are consumers of foreign products processed from their exported raw materials. While they realize resources from such export activities, the political and bureaucratic leaders of government

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often mismanage the proceeds, thereby promoting the cycle of resource curse. African emigration across the Atlantic is a function of inclement domestic socioeconomic deficiencies rather than voluntary explorative expeditions. Reports abound on the nature of degrading living conditions of African citizens forced into irregular migration. Such citizens left their countries out of frustration occasioned by consequential outcomes of the crises of governance. Thus, it is necessary for African governments to reassess approach to public procurement with a view to eliminating associated unethical practices and instill the culture of effective public service delivery for the benefits of citizens.

References Aidt, T. S. (2009). Corruption, Institutions, and Economic Development. Oxford Review of Economic Policy, 25(2), 271–291. Andvig, J., & Moene, K. (1990). How Corruption may Corrupt. Journal of Economic Behavior and Organization, 13(1), 63–76. Arrowsmith, S. (2010). Public Procurement: Basic Concepts a Procurement Rules, in Public Procurement Relations: An Intro. Inter University Network, Brussels. Basheka, B. C., Oluka, P. N., & Mugurusi, G. (2015). Citizen-Driven Approaches for Combating Public Procurement Corruption in Uganda’s Local Government Systems: An Empirical Survey. International Journal of Logistics Systems and Management, 21(4), 442–464. Blackburn, K., Bose, N., & Haque, E. (2006). The Incidence and Persistence of Corruption in Economic Development. Journal of Economic Dynamics and Control, 30, 2447–2467. Blackburn, K., Bose, N., & Haque, E. M. (2008). Endogenous Corruption in Economic Development (Unpublished Working Paper). Department of Economics, University of Wisconsin. Dza, M., Gapp, R., & Fisher, R. (2015). Taking the Professionalism Out of the Profession: A Study of Procurement and Africa. International Journal of Procurement Management, 8(3), 251–271. Economic Development in Africa Report. (2018). Migration for Structural Transformation. New York: United Nations Publications. Fagbadebo, O. M. (2007). Corruption, Governance and Political Instability in Nigeria. African Journal of Political Science and International Relations, 1(2), 28–37. Fagbadebo, O. M. (2019a). Corruption and the Challenge of Accountability in the Post-Colonial African States: A Discourse. Journal of African Union Studies, 8(1), 9–32.

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Fagbadebo, O. M. (2019b). Corruption, Governance and Political Instability in Nigeria: A Dysfunctional Conundrum. In A. G. Mag & K. N. Bhatt (Eds.), Current Research in Education and Social Studies (Vol. 1, pp. 55–68). West Bengal, India: Book Publisher International. https://doi.org/10.9734/bpi/ cress/v1. Huntington, S. (1968). Political Order in Changing Societies. London and New Haven: Yale University Press Kato, A., & Sato, T. (2015). Greasing the Wheels? The Effect of Corruption in Regulated Manufacturing Sectors of India. Canadian Journal of Development Studies, 36(4), 459–483. Leff, N. H. (1964, November). Economic Development Through Bureaucratic Corruption. American Behavioral Scientist, 8(3), 8–14. Mironov, M., & Zhuravskaya, E. (2016). Corruption in Procurement and the Political Cycle in Tunneling: Evidence from Financial Transactions Data. American Economic Journal: Economic Policy, 8(2), 287–321. Munzhedzi, P. H. (2016). South African Public Sector Procurement and Corruption: Inseparable Twins? Journal of Transport and Supply Chain Management, 10(1), Art. #197, 8 pp. https://doi.org/10.4102/jtscm.v10i1.197. Onwubiko, E. (2013, February 2). Corruption as Terrorism. The Nigerian Voice. Available at: https://www.thenigerianvoice.com/news/107025/corruptionas-terrorism.html. Tanzi, V. (2013). Corruption and the Economy. FILOZOFIJA I DRUŠTVO, XXIV (1), 33–59. The Economist. (2020, March). Migration Is Helping Africa in Many Ways. Available at: https://www.economist.com/special-report/2020/03/26/mig ration-is-helping-africa-in-many-ways. Warren, M. (2004). What Does Corruption Mean in a Democracy? American Journal of Political Science, 48, 328–343.

CHAPTER 2

An Overview of Public Procurement, Corruption, and Governance in Africa Nirmala Dorasamy

Introduction One of the factors hindering growth and development in Africa is corruption. For instance, Pring and Vrushi (2019) have attributed the regression in the sociopolitical and economic development of the continent to corruption, with its consequential effects on growth, good governance, and development, especially the well-being of the citizens and their communities. Corruption undermines future growth and the prospect of prosperity, as citizens are denied the chances of sustainable futuristic plans. While corruption continues to increase by leaps and bounds, governments’ anti-corruption measures and drives have been slow. Impunity by government officials has been spotted as one of the major setbacks in fighting corruption in the continent. With a preponderant of vested

N. Dorasamy (B) Department of Public Management and Economics, Durban University of Technology, Durban, South Africa e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_2

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interest in the government, public activities are hampered by deliberate demands that circumvent best practices. Writers and donor agencies have noted that “corrupt behaviour is a pervasive human failing” common to every society, but the victims of its consequential effects are mostly the “poor people in developing countries” (cf. ADB 2014, p. 1). In other words, corruption is a harmful virus in the developing countries (Munzhedzi 2016). In general, corruption in poor countries is perpetrated by, and maintained through, a culture of silence, while more often than not, being extended by secretive cults, as well as political and/or criminal repression. This cultural opacity [or, lack of transparency], is upheld through ignorance, and by national “secret acts” that protect official corruption. Citizens have not been educated and empowered into questioning sudden and unexplained wealth, or ostentatious living. Since there is no real freedom of information (and, the law may not entirely protect informants), investigative journalism remains undeveloped. (cf. ADB 2014, p. 1)

Public sector corruption is injurious to the economy. Indeed, its pervasiveness has weakened government capacity for effective service delivery, thereby engendering a cycle of governance crisis. And one of the government activities that is vulnerable to corruption in procurement. In the public sector, procurement is one of the government activities that is vulnerable to corrupt practices. This is because procurement involves a large volume of financial and material transactions. With a high stake of vested interest vis a vis public service delivery, the close interactions among the various stakeholders are prone to manipulations. The high risk corruption associated with public procurement in the developing countries is heightened by weak regulations and legal enforcement (Auriol et al. 2016). Public procurement involves the purchase of goods and services by different entities in government agencies, such as the state-owned enterprises, for the purpose of executing their projected responsibilities (Ambe and Badenhorst-Weiss 2012; Kramer 2016). Thus, across the globe, procurement has remained a central activity that defines the success of government policies in meeting the targeted objectives. However, the preponderance of lack of transparency, weak accountability, and the lack of integrity in the government of most African countries have made public procurement an avenue for failed public policies through corruption. The

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high profitability attached to the large procurement of goods and services in the public sector provides opportunities for government officials to be corrupt (Toeba 2018). The manifestation of this public procurement corruption includes misallocation of resources to unnecessary projects, poor and low quality infrastructural facilities, rigging of tenders with collusion with the public officials and the bidders, irregular tender process, and inflated prices of goods and services (Ambe and Badenhorst-Weiss 2012; Munzhedzi 2016). The consequences of these malaise often manifest in poor service delivery. This chapter presents an overview of the challenges associated with poor service delivery associated with corruption in public procurement in Africa. Aside from this introduction, the chapter has four other sections. The second section presents a survey of public procurement practices in some African countries, while the third section discusses the cases of corruption in public procurement practices in these countries. Section four interrogates poor service delivery as a derivative of public procurement corruption while section five concludes.

A Survey of Public Procurement Challenge in African Countries African countries are not suffering from the dearth of good legislative frameworks to tame the corruption monster in their procurement management system. Rather, the continent is deluged by the inability of the stakeholders to adhere to the requisite procurement process and procedures designed to ensure effective public service delivery. While there are strong laws, transparency in their implementation is weak. The political will of the political actors to ensure compliance is rare as procurement process has remained largely a network of nepotism and political patronages. In Lesotho, out of the cases of corruption handled by the Directorate on Corruption and Economic Offences (DCEO), 99% were related to public procurement (Toeba 2018). There is the lack of consideration for local contexts in the country’s anti-corruption legislative frameworks, hence the slow pace of success in ridding the system of corrupt practices. Toeba (2018) has attributed this problem to the neoliberal approach adopted to combat corruption, especially in public procurement. Aside from the Constitution, Lesotho has other anti-corruption

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legislations. These include Constitution of Lesotho of 1993, Criminal Procedure and Evidence Act of 1981, Penal Code of 2010, Prevention of Corruption and Economic Offences Act of 1999, Prevention of Corruption and Economic Offences (Amendment) Act of 2006, Public Procurement Regulations of 2007, Money Laundering and Proceeds of Crime Act 2008, and the Public Finance Management Act of 2011. However, the legal regime in public procurement corruption is very weak, thereby jeopardizing the anti-corruption campaign activities. Thus, the anti-corruption stance of the government was just a smoke screen to impress international donor agencies and institutions of its performance and abhorrence of malfeasances in government activities. The sociopolitical environment of the country presents a stumbling block in the enforcement of the necessary regulations (Toeba 2018). Public procurement in South Africa is an important aspect of the activities of the government in service delivery; hence the preponderance of legislative frameworks to ensure governance in procurement activities. Nevertheless, dealing with public procurement corruption has remained one of the most challenging tasks confronting the government. The socioeconomic imbalance pre-1994 in South Africa was in favor of the minority whites, in terms of access to government procurement activities. Thus, part of the earliest task of the post-apartheid regime was the enactment of a series of legislative frameworks that would bridge the gap and assist the previously disadvantaged black citizens in the economic activities of the government (Makiva et al. 2019; Munzhedzi 2016). For instance, the series of legislative frameworks to address the marginalization of the Historically Disadvantaged South Africans (HDSAs) are meant to ensure that black South Africans participate more in different economic activities. Most of these legislative regulations have been unable to achieve the envisaged transformation because of abuse of the processes (Makiva et al. 2019). Lack of accountability, undue political interference, and nepotism have undermined the governance structures aimed at ensuring effective public service delivery (Munzhedzi 2016). Kramer (2016) has also noted that the procurement system in South Africa, in spite of the series of regulatory legislative frameworks, is fraught with systemic weaknesses that could only be rectified through a proper reform that would incorporate the use of Information Technology (ICT) Communication platforms. Thus, constant breaches and noncompliance with the necessary policy and legislative frameworks have made public procurement a fertile ground for the capture of the South African state.

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Zimbabwe has requisite procedures and guidelines that control its procurement management systems. These legislative frameworks are designed to ensure effective public service delivery by eliminating corrupt practices (Chigudu 2014). The major legislative frameworks that deal with procurement in Zimbabwe are the Constitution of Zimbabwe (Amendment No: 20 of 2013), the Procurement Act (2 of 1999), the Procurement Regulations (2002), the Procurement (Amendment) Regulations, 2003 No. 2 and the Urban Councils Act of 1995 (revised 1996). However, the Administrative Justice Act (AJA) and the Competition Act (CA) are the two major regulators of the procurement systems in the country. While the AJA provides for the procedural measures and processes, the CA was designed to ensure competitive procurement system. Government departments have their internal regulatory measures and procedures to guide procurement processes. Nevertheless, these internal measures are not independent of the requisite legislative frameworks provided by the Zimbabwean national parliament. In other words, every internal procurement management procedures and measures of government departments are expected to conform to the requisite Acts of parliament. The AJA mandates all government departments to act within the ambit of the law in procurement processes, with a high sense of reasonability and fairness. In this regard, government departments are expected to justify their requests for tender awards with tenable reasons. Aside from this, they have to ensure compliance with all procurement regulations and procedures. The mandatory identifiable components of procurement process in Zimbabwe include “pre-qualification, anti-fraud/corruption declarations, qualification criteria, eligibility, bid preparation, bid submission, notification, adjudication and award criteria” (Chigudu 2014, p. 23). For any company or organization to be qualified to tender for any job in Zimbabwe, it must have registered with the State Procurement Board of Zimbabwe (SPB). In addition, such corporate body must disclose its compliance with the Zimbabwe Revenue Authority (ZIMRA) regulation of obligatory remittance of company tax. The anti-fraud/corruption declarations are meant to commit corporations to the sanctity of integrity in procurement process. Such corporate or individual “bidders undertake not to flout the procurement procedures like dangling inducements to members of the procurement committee” (Chigudu 2014, p. 23).

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It also means an agreement to be apportioned commensurable punishment should there be any infractions on the legislative frameworks or any fraudulent practices during the procurement process. The Zimbabwean procurement Act mandates the SPB to conduct procurement on behalf of government department and entities that seek to procure goods and services, provided such procurement falls within the regulated prescribed class of services. The SPB also supervises the procurement proceedings of all government departments and entities. Nevertheless, the practical implementation of these procedures and guidelines “tend to provide opportunities for abuse and malpractice for some procurement officials” (Chigudu 2014, p. 21). First, there is a very weak oversight of the activities of the SPB in terms of enforcement of the requisite legislative frameworks designed to tame procurement corruption. The lack of political will, characterized by vested interests, has weakened the potency of the laws. Besides this, the administrators of the legal frameworks lack the requisite knowledge of procurement procedures and regulations to ensure compliance for its intended purposes. This has engendered nepotism and rampant corruption in the procurement process and members of the SPB often award contracts to themselves through their proxies. Egypt replaced its Tender Law of 1998 on October 3, 2018, with another legislative framework designed to regulate public procurement. Known as, “Law No. 182 of 2018 Regulating Contracts Entered by Public Entitles” or “New Public Procurement Law” or the “New Law”, the legislation is applicable to all contractual agreements between the private sector and government departments, agencies, and entities (Soliman and El-Barkouky 2020). The New Law, which took effect in April 2019, is applicable to all contractual works in construction, consultancy, artworks, public procurements, and other provisions of public services. Designed to forestall corrupt practices associates with government public works and services, the New Law prescribes different procedures for the various categories of services that the private sector has to provide for government. This is a characteristic feature of the various legislative frameworks that regulate procurement process in Egypt (Aboelazm and Afandy 2019). There are strong procurement laws and regulations in Egypt. Nevertheless, transparency in the procurement process is very weak (SIGMA 2020; Rana and Khanna 2020; GAN Integrity 2020).

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In Morocco, procurement process and regulation have drawn public attention, with demands for transparency and accountability (Lipson et al. 2014). This is understandable. Public procurement constitutes about 17% of the country’s Gross Domestic Product (GDP), including all its construction and engineering works, and it is cardinal to public service delivery. In realization of the importance of public procurements in the national economy and the well-being of citizens, the government often prioritizes constant reforms to its public contractual agreement processes and procedures with a view to improving on its service delivery responsibility. Such reforms extend to institutional framework, capacity building, and modernization of procurement tools. The country’s constitution of 2011 harped on the importance of transparency and integrity in the conduct of government activities. The Constitution made provisions for 18 articles promoting relating to transparency, ethics, integrity, and accountability in the public sector. It also provides requisite anti-corruption clauses with the introduction of a constitutional provision that guarantees the right of citizens to public information (Lipson et al. 2014). Each government ministry, department, and entity has its authority to procure public services within the limit of its authorized budgetary allocations but tender for such contracts would be publicly advertised in the tendering portal managed by the National Treasury. Thus, public procurement process and procedure in Morocco are open to the public with adequate oversight to ensure effective public service delivery. Nevertheless, despite the transparent legislative and procedural frameworks, corruption in public procurement has remained a dilemma in Morocco (GAN Integrity 2016). The public sector is characterized by nepotism, patronage, the use of connections (wasta), occasioned by inefficient bureaucracy (GAN Integrity 2016). Even though there are legal frameworks to deter and punish corruption, enforcement is very weak and selective (The Global Competitive Report 2015–2016). With an increasingly transparent regulatory system that considers bribery, influence peddling, extortion, among other vices as illegal, there are indications that its applicability is often selective in favor of highly influential individuals. Public procurement in Ethiopia accounts for 64% of its annual budget and 14% of the country’s GDP. The country’s procurement system was designed, among other things, as a capacity building measure for local producers, suppliers, contractors, and consultants with a view to enhance economic performance (Bahta 2013). This is aimed at enhancing good

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governance and to serve as a source of attraction to foreign direct investment (FDI). The “Proclamation No. 649/2009. The Ethiopian Federal Government Procurement and Property Administration Proclamation - 9 September 2009,” is the legislative framework that guides public procurement in Ethiopia. The law provides five principles aimed at ensuring effective public service delivery. These principles are: 1. ensure value for money in the use of public fund for procurement; 2. Non-discrimination among candidates on grounds of nationality or any other criteria not having to do with their qualification, except in cases of preference specifically provided for in this Proclamation; 3. transparency and fairness of the criteria on the basis of which decisions are given in public procurement as well as of decisions in each procurement; 4. accountability for decisions made and measures taken with regard to public procurement and property administration; 5. careful handling and proper use of public property (Proclamation No. 649/2009 2009). The law prescribes distinct stages of procurement process to ensure compliance with the necessary regulations and avert any form of malfeasances. Specifically, Section 33 of the law prescribes ethical rules that guide public procurement in the country. The procedural bidding and tender methods are designed to ensure compliance with the ethical rules and promote transparency. Despite these regulatory rules and procedures, corruption thrives in the Ethiopian public sector (Rahman 2018). Public procurement in the country is facing the challenge of inadequate knowledge of the procedures to seek redress during malfeasances. Inferior performance characterizes public service delivery as suppliers and service providers engage in bribery and to escape punishment for deficient services. Corrupt practices in the public sectors have hampered effective public service delivery in the country (Rahman 2018). It is evident that African countries have good legislative framework to deter corruption in procurement system. However, government leaders, political and bureaucratic, lack the necessary will to ensure the enforce of the rules with a view to ensuring the accomplishment of the objective

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of effective public service delivery. Hence, the preponderance of cases of procurement corruption in the continent.

Public Procurement Corruption in Africa From the various development indexes, the African continent is usually the epicenter of corrupt practices with its consequential impacts on governance (Fagbadebo 2019; Appolloni and Nshombo 2014). Various studies have indicated the primacy of effective anti-corruption measures as a panacea to the bourgeoning crisis of governance that pervade the continent. The central point of this corruption pandemic is the public procurement management systems. Ineffective public services, deficient supply of goods and services, and illicit financial practices have negative consequences on infrastructural facilities in most of the countries in Africa. Rent-seeking agents are at the counter of procurement process. The consequence of the above varies from poor execution of the contract to use of substandard materials and non-implementation of procurement details. Aside from this, the lack of systematic competition in the public market does have a debilitating effect on the economic incentives and the productive sector of the economy (Auriol et al. 2016). While there are a series of anti-corruption mechanisms in place, these rules and measures were mere decorations applied sparingly and selectively to promote pecuniary interest (Fagbadebo 2019). One of the problems with public procurement in developing countries is the nonadherence to the requisite laws that governed purchase of goods and services in the public sector. In addition, the appropriate anti-corruption agencies are often selective in dealing with such infractions. For instance, in the aftermath of the removal of Lesotho’s former Finance Minister, Tim Thahane, on the allegations of corruption (The Economist, 8 November 2013), he admitted that he was accused of an offense that was a usual practice, even though it was illegal (Jordan 2014). The minister was accused of awarding a contract sum of LSL18million to Civa Innovation, a company he owned, without a tender meeting. Beyond that, the company was paid LSL6million for work not done. Mosito Khethisa, who was the Principal Secretary in the Ministry of Finance at the time, who eventually pleaded guilty of corruption, hinted that there were backlogs of payment requisitions with retrospective approvals. In other words, the contracts did not pass through the usual procurement approval process. Although he agreed that there were penalties for flouting procurement

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process and procedure, such malfeasances were routine unethical practices that characterized procurement systems in the country. This revelation was an indication that the extant rules were mere decoration to fulfill the necessary administrative requirements rather than strict compliance, to rid the system of corrupt practices. With wide procedural discretion, procurement laws are susceptible to manipulation to promote the pecuniary interests of public officials. This is a general pattern of procurement corruption in most African countries.

Interrogating Public Procurement Corruption and Poor Service Delivery in Africa In the late 1990s, the African continent was perceived as an enclave of wars, famines, and entrenched poverty (Beegle et al. 2016). Few years later, this perception changed to a “rising continent” of the twenty-first century. One could, therefore, say that Africa has been experiencing positive growth. Nevertheless, this optimistic perception is fraught with the paradox of decaying growth and poverty amid wealth and abundance. In spite of growth indicators presenting hope of a rising continent, endowed with abundant natural resources of unquantifiable values and proportion, there were no substantial improvements in the well-being of the citizens. Despite this growth, a large share of the African population continues to live below the international poverty line of $1.90 a day. Africa’s poverty rate declined from 57 percent in 1990 to 43 percent in 2012, … Because of population growth, however, the number of poor people implied by these estimates increased, from 288 million in 1990 to 389 million in 2012. (Beegle et al. 2016, p. 21)

Thus, the African continent is characterized by the growing concern for the deteriorating human security. In the midst of these woes, African political leaders are known for their stupendous wealth and riches through expropriation of national resources for personal benefits (Fagbadebo 2019). This growing inequality in the continent has become a major driver for a series of violent and criminal activities, which have added to the worsening governance crisis. In 2015, out of the 28 poorest countries in the world, Africa had a portion of 27 states, with one in every three Africans living below the global poverty line (Patel 2018). While other countries were making

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progress toward poverty reduction, African states have been slow in this regard because of corruption in the public sector, thereby coping with a poverty rate of above 30%. Basically, weak public institutions have been identified as a major driver of this slow rate, because procurement of public services and goods are shrouded in corruption. States in Africa lost an estimated $150 billion annually to illicit financial flows, a phenomenon that had been responsible for creating artificial poverty (GFI 2018). This scourge is mostly perpetrated through import and export under-invoicing and over-invoicing. For instance, the Global Financial Integrity (GFI 2018) discovered that South Africa recorded an estimated loss of US$37 billion, between 2010 and 2014, as a result of export and import over-invoicing and under-invoicing. While the citizens reel under the excruciating pain and agony of poverty, their leaders frequently stashed away national resources meant for the provision of relevant infrastructural facilities for growth and development, into foreign lands (Sharife 2017). For over 40 years, African countries have been haemorrhaging more money than they receive in aid and foreign investment. 80 per cent of these illicit financial flows are siphoned through London, giving the lie to the idea that tax havens function independently. Over the last decade alone, $1 trillion of African money has been squirrelled away into secret jurisdictions, with the full knowledge of Western governments. (Sharife 2017)

Resources that are statutorily allocated for the procurement of goods and services are usually misappropriated and diverted from their intended purposes. Access to these national resources were often facilitated through the corrupt procurement system. The mass unemployment among citizens, created by misappropriation public resources through corruption, has driven them to the extreme edge of criminal activities with a view to making their living through unethical ways. This is the lot of governance in Africa, and its implications on the quality of lives of citizens.

Conclusion Procurement corruption in Africa is a monster. The common dilemma is that African countries have good legislative frameworks, with appropriate punishments and sanctions, to deter corruption but malfeasances characterize public affairs. Corruption is a normalized phenomenon while

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the various anti-corruption measures and mechanisms are additional networks to promote the reification of the self-interests of the political and bureaucratic elites in government. In South Africa, for instance, the various State-Owned Enterprises (SOEs), designed to promote good governance failed in their responsibilities and became sources of political patronage and promotion of sleaze. Consequently, the failures of governance in these SOEs “reflected in inefficiency, corruption and financial mismanagement that have harmed service delivery, increased pressure on the budget and eroded investor confidence” (OECD Economic Surveys 2020). The nonperformance of these SOEs has its roots in their exposure and vulnerability to unethical government interference, which “represents a significant risk to debt sustainability and public finances” (OECD Economic Surveys 2020). This engendered mismanagement of resources, corruption, and a series of malfeasances that are injurious to their objectives. This is not limited to South Africa. It is a characteristic of public institutions in Africa. Various development indexes have shown deficiencies in public service delivery across the African continent with consequential effects on the well-being of citizens. Developed economies and other donor agencies have devises a series of economic palliatives for the African countries in form of loans and aids to shore up their development drives. Despite these resources, developmental benefits are far from the reach of most African citizens. The crises of governance in Africa has made it a continent under the searchlight of the global community and the plights of citizens have attracted greater concerns from states and non-state actors.

References Aboelazm, K. S., & Afandy, A. (2019). Centralization and Decentralization of Public Procurement Analysis for the Role of General Authority for Governmental Services (GAGS) in Egypt. Journal of Advances in Management Research, 16(3), 262–276. African Development Bank. (2014). Comprehensive Review of the AFDB’s Procurement Policies and Procedures Summary of Literature on Fraud & Corruption in Public Procurement. Ambe, I. M., & Badenhorst-Weiss, J. A. (2012). Procurement Challenges in the South African Public Sector. Journal of Transport and Supply Chain Management, 6, 242.

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Appolloni A., & Nshombo J. M. M. (2014). Public Procurement and Corruption in Africa: A Literature Review. In F. Decarolis & M. Frey (Eds.), Public Procurement’s Place in the World. Central Issues in Contemporary Economic Theory and Policy (pp. 185–208). London: Palgrave Macmillan. https://doi. org/10.1057/9781137430649_8. Auriol, E., Straub, S., & Floche, T. (2016). Public Procurement and RentSeeking: The Case of Paraguay. World Development, 77, 395–407. https:// doi.org/10.1016/j.worlddev.2015.09.001. Bahta, T. H. (2013). The Regulatory Framework for Public Procurement in Ethiopia. In G. Quinot & S. Arrowsmith (Eds.), Public Procurement Regulation in Africa (pp. 46–76). Cambridge: Cambridge University Press. https:// doi.org/10.1017/CBO9781139236058.005. Beegle, K., Christiaensen, L., Dabalen, A., & Gaddis, I. (2016). Poverty in a Rising Africa. Washington, DC: International Bank for Reconstruction and Development/The World Bank. Chigudu, D. (2014). Public Procurement in Zimbabwe: Issues and Challenges. Journal of Governance and Regulation, 3(4), 21–26. Fagbadebo, O. (2019). Corruption, and the Challenge of Accountability in the Post-Colonial African States: A Discourse. Journal of African Union Studies, 8(1), 9–32. https://doi.org/10.31920/2050-4306/2019/v8n1a1. GAN Integrity. (2016). Morocco Corruption Report. Available at: https://www. ganintegrity.com/portal/country-profiles/morocco/. GAN Integrity. (2020). Egypt Corruption Report. Available at: https://www.gan integrity.com/portal/country-profiles/egypt-corruption-report/. Global Financial Integrity. (2018). South Africa: Potential Revenue Losses Associated with Trade Misinvoicing. Global Financial Integrity. Jordan, M. J. (2014, December 11). Lesotho Wrestles with Corruption. Mail & Guardian. Available at: https://mg.co.za/article/2014-12-11-lesotho-wre stles-with-corruption/. Kramer, G. (2016). Electronic Public Procurement as a Tool of Reform in South African Public Procurement. African Public Procurement Law Journal, 3(1), 1–42. Lipson, R., Benouniche, S., Keita, A., & Faridi, K. (2014, March). Public Procurement Reform in Morocco. MENA Knowledge and Learning: Quick Notes Series, no. 17. Makiva, M., Ile, I. U., & Fagbadebo, O. M. (2019). Evaluating Transformation Progress of Historically Disadvantaged South Africans: Programme Perspective of the Downstream Petroleum Industry. African Evaluation Journal, 7 (1). https://doi.org/10.4102/aej.v7i1.373. Munzhedzi, P. H. (2016). South African Public Sector Procurement and Corruption: Inseparable Twins? Journal of Transport and Supply Chain Management, 10(1), Art. #197, 8 pp. https://doi.org/10.4102/jtscm.v10i1.197.

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OECD Economic Surveys. (2020). South Africa July 2020 Overview. Available at: https://www.oecd.org/economy/south-africa-economic-snapshot/. Patel, N. (2018, November 21). Understanding Poverty in Africa. Africa in Focus. The Brookings Institution. Pring, C., & Vrushi, J. (2019). Global Corruption Barometer Africa 2019: Citizens’ Views and Experiences of Corruption. Transparency International/Afrobarometer. Proclamation No. 649/2009. The Ethiopian Federal Government Procurement and Property Administration Proclamation—9 September 2009. Rahman, K. (2018, October 23). Overview of Corruption and Anti-corruption in Ethiopia. U4 Anti-Corruption Resource Centre, Transparency International. Available at: https://www.u4.no/publications/overview-of-corruption-andanti-corruption-in-ethiopia. Rana, A., & Khanna, A. (2020, February). Learning from Power Sector Reform: The Case of the Arab Republic of Egypt (Policy Research Working Paper 9162). Energy and Extractives Global Practice, World Bank Group. Sharife, K. (2017, January 6). The Myth of the Offshore: How Africa Lost $1 Trillion to Tax Havens. NewAfrica. Available at: https://newafricanmagaz ine.com/current-affairs/investigations/myth-offshore-africa-lost-1-trilliontax-havens/. SIGMA. (2020). Application of Public Procurement Rules During the COVID-19 Crisis from the Perspective of the European Union’s Procurement Directives and the Government Procurement Agreement. Available at: https://www. sigmaweb.org/publications/Public-procurement-COVID-19-crisis-SIGMAApril-2020.pdf. Soliman, K., & El-Barkouky, N. (2020). An E-government Procurement Decision Support System Model for Public Private Partnership Projects in Egypt. In J. Moreno-Jiménez, I. Linden, F. Dargam, & U. Jayawickrama (Eds.), Decision Support Systems X: Cognitive Decision Support Systems and Technologies. ICDSST 2020. Lecture Notes in Business Information Processing, Vol. 384. Cham: Springer. https://doi.org/10.1007/978-3-030-46224-6_9. The Economist. (2013, November 8). Senior Minister Sacked in the Face of Corruption Charges. Available at: https://country.eiu.com/article.aspx?articl eid=1191155503&Country=Lesotho&topic=Politics&subtopic=_7. The Global Competitiveness Report 2015–2016. Available at: https://reports. weforum.org/global-competitiveness-report-2015-2016/. Toeba, T. (2018). Corruption in Public Procurement in Lesotho. Law and Development Review, 11(2), 397–431.

CHAPTER 3

Corruption in Procurement- Antecedents, Practices, and Challenges Soma Pillay

Introduction While many scholars have maintained that, the success of transformation is country-specific and path-dependent, complex models influenced by culture are contributing factors to impinging on such successes (Wu and Jia 2018; Chiu 2018; Kuhlmann and Wollmann 2019). In Africa, as in most parts of the world, governments are major consumers of goods and services. It is therefore expected that government procurement present opportunities for governance challenges. Such governance challenges may be attributed to the area of government procurement having a series of unique features and as such, participants are susceptible to acts of poor governance, such as corruption.. Antecedents such as the magnitude and volume of procurement activities, ambiguity around the market value of many of the items being

S. Pillay (B) Durban University of Technology, Durban, South Africa e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_3

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purchased, the spaces for political discretion that exist within government, and interdependence among various agencies, all contribute to government procurement as a fertile ground for corruption (Tierney 2010; Coolidge and Rose-Ackerman 1999). To identify corruption in procurement, the literature emphasizes the role of internal controls and monitoring practices (Rendon and Rendon 2016; Neu et al. 2015; McCue et al. 2015). Such institutional measures are crucial to good governance, however legislative measures including government auditors and external government audit agencies ensure compliance. Therefore, the role of institutional measures and legislative controls contribute to addressing good governance and procurement practices. Transforming for Good Governance For most African countries, an implicit understanding carried out of the transitioning period into a democratic procewas the maintenance of most of its structures. In the case of countries such as South Africa, this transition also marked the beginning of democratic process and policies such as affirmative action, which required a review of employment practices, creating equity and opportunities for the less advantaged (Booysen et al. 2016; Tamale 2018). This was a concession by the new ruling party that recognized the reality that a new cadre of public officials has to be developed over time. Various public service structures and departments were staffed by less capacity and less sophistication, than anticipated. Professionalism, abilities, and capacities did not easily translate into democratic and efficient processes. With new systems came the urgent need for new staff, attitudes, skills, and concepts. The public service desperately required to do things differently, become entrepreneurial, and more orientated toward social and developmental partnerships. In the context of responsible and transformed management, what was urgently required was significant efficiency in systems, processes, and radical downsizing. In terms of strategic management and transformed systems, a sense of reengineering was required. While in some countries considerable efforts were made toward transformed systems, in other parts of Africa, little progress was noticed.

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Corruption as an Antecedent to Governance Challenges in Africa Corrupt public procurement practices constitute more than 30% of government spending in Organization for Economic Co-operation and Development (OECD) countries, and for this reason public procurement is perceived to be a corrupt sector (Fazekas and Kocsis 2017). Corruption is a global phenomenon and has been a subject of interest by social researchers for years. It has also received considerable attention across disciplines. This development is attributed to heightened awareness of the interdisciplinary topic and its associated consequences. Corruption remains a contentious issue especially in transitional economies where deep institutional weaknesses lead to inefficient economic, social and political outcomes (Ateljevic and Budak 2010). According to institutional theorists, reform and readjustments of political and economic systems in developing countries, combined with a rapid process of commerce and communication have created fertile grounds for new systemic corruption and an excessive misuse of public power (Saint-Martin 2015). Therefore, the political and social costs of corruption are increasingly high as resources, directly or indirectly, are compromised. The act of corruption occurs when a public official uses discretionary power to allocate public services to the private sector. According to Klitgaard (1991), corruption is equal to monopoly power plus discretion minus accountability. Various definitions have emerged over the years defining corruption as “moral decay” to “misuse of public power for private profit” or as an “act of bribery” (Andvig and Fjeldstad 2008). Rose-Ackerman (1977), associates corruption with a “partnership”, a partnership with the public and private sectors or where public officials have a direct responsibility for the provision of a public service or application of specific regulations. It is argued that bureaucrats and decision makers (agents) are often in positions of advantage than others to “protect” their personal interests, as they possess significant discretionary authority, core to acts of corruption. While economics scholars are interested in the adverse effects of corruption, a narrow definition of it is adopted in order to fit, oftenskewed empirical measures and bias policy recommendations. Abuse of public office or public resources for private gain is the most commonly used definition by both international institutions (Johnston 1996) and researchers (Kolstad and Wiig 2009). The public sector is always included in this definition, whether corrupt activities occur within the public sector

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itself or in interaction with the private sector. Perhaps this definition. It assumes that corruption within the private sector is easier to address and curb and therefore is less harmful. The most common forms of corruption include bribery, extortion, nepotism, patronage, rent seeking, and various administrative and political forms of corrupt behaviour. The economic form of corruption seems to be the most prevailing. Surmise to say then, some of the antecedents to governance challenges in Africa include fragile political systems, sectarianism, nepotism, the bad legacy of previous regimes, weakness in public administration, and institutional challenges to name a few (Al-Ajwad and Carr 2016). It therefore becomes relevant to understand corruption from an institutional perspective.

An Institutional Theory Perspective According to Rose (1993), in the time perspective, public management programs could be judged based on its past performances, as an indicative signal for future consequences. In addition, in the space perspective, programs could be judged by a comparison made across places. In this sense, effectiveness of a procurement program at one place could be compared with those of the same program at other places to find out similarities and differences so that improvement plans could be developed. Within this viewpoint, he argued that, in a national perspective, a country could learn how to deal with a common problem, e.g., public management, from other countries. However, he also emphasized that lessons should not be blindly drawn without a thorough consideration of specific characteristics of relevant country contexts. This argument suggests that comparisons only make sense if similarities in contexts existed. Therefore, in his later publication, Rose (1993) noted that, in the area of public management policy, leaders could draw proper lessons, both from time and space, based on different processes such as copying, adaption, synthesis, and inspiration. These guidelines acted as a checklist for the applicability of other models in a specific context. In addition, Rose also suggested a four broad stage process in lesson drawing, which included searching for, lessons, making a model, creating a lesson, and prospective evaluation. To this end, policymakers searched for policy elements, which were consistent and compatible with their core values. This normative consideration implied that policy lessons were mostly drawn from countries with similar levels of economic and

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political development. In other words, Rose’s discussions linked closely with the concept of institutional isomorphism. This school of thought fits perfectly with the objectives of this chapter. Public sector reforms represent attempts of countries to change the way public services are managed, controlled and delivered (Hood 1991). Those reforms take many forms, ranging from privatization to complicated partnerships between public and private bodies, with the aim of tackling different aspects of governance issues. This is a common perception of reform in public sector governance study contexts. As noted by Zabalza and Matey (2011), many countries have strengthened the role of the public sectors in their economies by nationalizing companies of all kinds during the period of 1929–1979. Initially, this reform wave gained certain successes. However, in crisis time, the public sectors showed their slowness and weaknesses in dealing with the new economic scenarios and risks. Therefore, starting from 1980s, many countries in the world stopped the trend of expanding the public sector and moved toward the ideology of market liberalization instead. This new ideology did prove the private sectors to be more efficient during shock times (Mueller 1989; Vining and Boardman 1992). Although sharing the same spirit of reform and indeed making their public companies privatized via reducing the shares of the Government in the company’s ownership structure, each country might have their own varying drivers for the public management decisions and processes (Newbery 1991; Boycko et al. 1996; Tittenbrun 2011). A driver of reform should be the failure of the public sector in providing public services. Webb (2010) argued that public management reform in South Africa was initiated with the aim of enhancing public service quality as well as the effectiveness and efficiency of the public service sector. Prior to the reform, during the past two decades of the South African history, its public sector has been criticized for poor performances in service quality, economic contribution, and corruption (Shamsul 2001). A similar setup for state owned enterprises (SOEs) in Hong Kong and Singapore. When comparing these two newly industrialized Asian economies, Lee and Shamsul (2006) found that one of the objectives of the new public management reform was to improve public service quality, efficiency, and productivity via creating market competition and flexibility and focusing more on performance. Moreover, in Hong Kong, public service departments were encouraged to outsource their services

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to private contractors as much as possible as well as to invite the private sector to engage in organizational restructuring and business process reengineering (Lee and Shamsul 2006). Similarly, the failure of the state sector in providing quality public services was also a major driver for public management reform in China, especially in the agricultural industry where‚ due to its top-down manner, the wholesales functions of the state in agriculture failed to operate smoothly (Waldron et al. 2006). As a result, enterprises in the agricultural sector are restructuring. The failure of the state in providing quality public services leading to reform was also revealed in Hungary where it was deemed necessary to “re-commodity” public services (Devas and Horváth 1997). Devas and Horváth (1997) argue that SOEs which were arm-lengths of the state failed to provide public services, as they were required by the central state. The failure was caused by a number of traditional problems such as lack of adequate working process, opaque accountability due to unclear performance measurement, and out-dated accounting system. Consequently, Hungary decided to reform those public services in the early 1990s. In short, the failure of the state in providing quality public services seemed to be a major driver for reform in many developing economies. In addition, past systems characterized by non-participative, non-transparent ethos that was neither accountable nor democratic, compromise political and institutional arrangements. Concerns About Service Quality As mentioned in the previous section, one of the drivers for public reform lies in the fact that the state sector fails to provide high quality services. This driver is even more highlighted when linked with another driver, namely, the increasing awareness and understanding of the public about the public service quality (Redman et al. 1995). Scholars Speller and Ghobadian (1993) maintained that establishing a strong positive relationship between the public understanding and comprehending of the quality of the public services provided and reform incentives, is significant to the whole process. Further, specific cases in the literature of the housing industry in Bulgaria (Hoffman and Koleva 1993) or of the electricity industry in Poland being privatized to improve the provision of electricity to the public (Freund and Wallich 1997) provide strong support to identify growing public concerns about public service quality as key to public reform.

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An emerging perspective in organizational theory and sociology, known as “the new institutionalism”, was suggested by Powell and DiMaggio (1991). This particular approach rejected the rational actor models of classical economics (Allison 1971) and adopted the properties of individual actors into consideration to find cognitive and cultural explanations for social and organizational phenomena (Siegel et al. 1997). Still, this treatment cannot be reduced to the aggregations or direct consequences of individuals’ attributes or motives (as mentioned in the study of Zucker [1987]). Though being continuously reviewed and adapted, institutional theories have not touched, in details, issues of institutional deficiencies (as noted in Srikantia and Bilimoria [1997]). In an attempt to fix this shortcoming, Martinsons and Hempel (1998) developed a theory of institutional deficiencies where relationship-based commerce prevails at the expense of rule-based markets in the presence of institutional deficiencies and used China as a case study. It was argued that due to the lack of trustworthy and enforceable set of rules for doing business, China faced numerous constraints in developing its online businesses, including but not limited to personal connections, informal information, and “blurred” business-government relations (Srikantia and Bilimoria 1997). Not surprisingly, the relationship-based e-commerce thrived in China instead of a rule-based one. Another aspect of institutionalization that needs to be taken into account is heterogeneity of response to shocks. Knetter (1989) found that firms operating in different types of economies react differently to similar challenges. In addition, social, economic, and political factors can affect the activities of a specific firm in a specific environment both negatively and positively. In fact, it is shown in Kondra and Hinings (1998) that firms tend to perform more efficiently if they receive the right institutional support. The new institutional theory by Dimaggio (1998), later turned out to be the most widely used in institutional studies, was developed in that context. The Dimaggio (1998) approach is mostly based on the previous work of Meyer and Rowan (1977) and Dimaggio and Powell (1983). Meyer and Rowan (1977) believed that organizations, within the limits of their structures and resources, achieve their legitimacy via constructing stories about their actions (which are the organization’s mirror images of the environment it operates in, based on socially prescribed practices). Those actions might or might not link to the organization’s actual responses but are used as forms of symbolic reassurance to satisfy potentially influential

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publics. Dimaggio and Powell (1983) further developed this approach, finding a high level of similarity among organizations, arguing that this similarity is not a result of market competition or organizational efficiency but rather of the organization’s mission to attain legitimacy within their larger environments (Greenwood et al. 2002). The two authors approached institutionalization via both historical and empirical dimensions. They argued, from historical evidence, that organizations resembled others as a response to institutional pressures. They also performed empirical tests to establish defining processes because “organizational fields can be identified only by investigation of processes that allow them to become socially defined as such, including an increase in interaction among organizations in the field, the development of clearly defined structures of domination and coalition, an increase in field-relevant information, and an increase in mutual awareness by members of the field” (Dimaggio and Powell 1983). Dimaggio and Powell (1983) described the process of resembling and adopting the ecological concept of isomorphism (also see Tan et al. 2013). Two types of isomorphism, namely competitive and institutional, were identified. Competitive isomorphism involves pressures toward similarity resulting from market competition, as in the type described by population ecologists (Hannan and Freeman 1977) while institutional isomorphism refers to organizational competition for political and institutional legitimacy as well as market position. The latter was considered “a useful tool for understanding the politics and ceremony that pervade much modern organizational life” (Dimaggio and Powell 1983). After defining the third process in institutionalization and classifying its corresponding isomorphism, Dimaggio and Powell (1983) proposed three mechanisms through which institutional isomorphism occurs, namely coerciveness, mimesis, and normativeness (Kallio and Kuoppakangas 2012). The first mechanism, coercive isomorphism, is driven by two forces: (a) pressures from the industry leader(s) on its (their) followers and vice versa in an oligopolistic or duopolistic environment and (b) an organization’s pressure to conform to the cultural expectations of the larger society. Understanding coercive isomorphism as being driven by these two factors, one could attribute to it such pressures as norms and regulations which can bring an organization to its desired position (Othman et al. 2011; Turner 2011). These attributions eventually turn out to be the organization’s responses to the expectations of the wider society.

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The second mechanism, referred to as mimetic isomorphism, was suggested to be a response to uncertainty (Lee and Pennings 2002; Barreto and Baden-fuller 2006) such that should a clear course of action be unavailable, organizational leaders may decide the best response by referring to a peer perceived to be successful (Wicks 2001). The third, and last mechanism proposed in Dimaggio and Powell (1983), is normative isomorphism which was considered a result of professionalization (Greenwood et al. 2002; Lounsbury 2002). There are two steps in normative isomorphism. Initially, members of the same professional body receive similar training, hence assuming homogeneity of response, should share similar views on any particular organizational issue. Later, via other professional and trade associations, these members exchange and share ideas across different organizations that they work in. Though, theoretically well-defined as separate processes, these three diffusion channels can operate simultaneously and hence are not necessarily empirically distinguishable (Lodge and Wegrich 2005). Various attempts by, for examples, Beckert (1999) and Venard (2009) were carried out to address this shortfall. Mizruchi and Fein (1999) recognized the contribution of these empirical attempts to institutional studies as “ample opportunities for future adoption and application”. To sum up, institutional isomorphism, pioneered by Meyer and Rowan (1977) and Dimaggio and Powell (1983) and more comprehensively presented in Dimaggio (1998), incorporates in it three defining processes, namely coerciveness, mimesis, and normativeness which can account for both internal and external factors governing the organizational reforms. Institutional isomorphism is a theoretical approach. However, empirical attempts have been made to refine the three defining processes to make them more distinguishable. Institutional isomorphism as in the Dimaggio (1998) paper has been extensively revised and developed to address various aspects of organizational reform analysis, from general organizations to specific public sector organizations.

Corruption and Public Procurement Over the years, public procurement has been increasingly associated with corrupt practices. Corrupt procurement activities operate on different levels. This is grand corruption where the procurement decision-making process is politically motivated and reflects unethical acts by political leaders and others. There are also public officials known as bureaucratic

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players who seek personal advantage for economic gain by manipulating the purchase of goods and services for their agencies. The result is bribery, secret commissions, various frauds, and distortion of procurement processes (Graycar and Futter 2019). Large amounts of financial resources are invested in public contracts and as such it makes it reasonable to assume that “human greed” explains most of this form of corruption (Soreido 2002). According to Ateljevic and Budak (2010), “corruption in the public sector arises from the legitimate responsibilities of public servants disposing with discretional power in performing public duties that might be misused for private interests”. Public procurement is described as acquiring goods and services from both the public and private sector. The term public procurement is synonymous to contracting, as it includes other activities that channel government expenditure. As public procurement or public contracting occurs at different levels of government, it is known to be complex ranging from contracting for an entire service to purchasing small assets such as office equipment. These activities create opportunities for incentives for corruption. Corrupt public procurement includes embezzlement of public funds by officials or public sector employees mostly due to the misuse of information for personal gain. Failures in information systems or “information asymmetry”, occurs when one party in an economic transaction has more material knowledge than the other party. It is argued that most, if not all forms of economic transactions involve information asymmetries. As we live in an environment with many layers of complexities, the process of public contracting often witnesses forms of irregularities such as information asymmetry. The model of information asymmetry is based on the premise that the principal (the firm) in a bidding process has relevant information while the agent does not. When information asymmetry occurs, public officials use information that is unavailable to the public to secure contracts with future clients. When a principal or a potential bidder is unaware of the agent’s (government) action in public contracting, it presents opportunities for public officials to misuse public power. In the process, the efficiency of public resource allocation is devalued. The public procurement process in transitional, democratic, and free market economies should be transparent. According to Graycar (2019), a principal–agent model explains the entrusted power of officials and their relationship with their principals. This model explains task descriptions according to rules, both written

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and unwritten. These dynamic relations also highlight that power may be entrusted by an employer to an employee, or by the populace to a government leader. Rose-Ackerman and Palifka (2016, p. 9) maintain that “if one abuses entrusted power the rules are broken, and the principal’s stated goals are subverted. The harm takes two forms: first in many cases the corrupt official acts inconsistently with his or her mandate, and second, the official has sold a benefit that was not supposed to be provided on the basis of willingness to pay”. This then leads us to examine accountability, responsibility, and roles of politicians and bureaucrats. According to Yukins (2011, pp. 63–64) the principal who assigns responsibility to an agent to undertake certain tasks can be used as a theoretical basis to explain the organizational structural successes and failures toward understanding the procurement system and its rules. In African countries as is the case in other parts too, there is evidence to suggest that when an agent’s interests diverge from the principal’s, ethics is compromised as issues of conflict of interest emerge. Graycar (2019) cites evidence from two Australian based studies where about 40% of respondents believed corruption in public sector procurement to be a problem, and about one third of suppliers said they were discouraged from seeking a government contract because of their concerns about corruption. According to these studies, the sectors most prone to corruption were claimed to be construction and education. Participants maintained that common forms of corruption included accepting gifts from suppliers, unequal information being provided to different suppliers and leaking of confidential information during the tender process. According to UNODC, measures to address and encourage reform in public procurement management include “integrity and transparency, structuring stakeholder participation, broader accessibility, e-procurement and oversight and control”. While there are various systems in place mechanisms to encourage the transparency and regularity of the public procurement system and minimize the risk of misuse of public funds, such initiatives and efforts are often ineffective. In addition to information asymmetry, another common source of corrupt public procurement is conflict of interest. This occurs when individuals misuse their power to exploit a government official for personal benefit (Miller 2005). According to institutional theorists, conflicts of interest are common antecedents to institutional corruption, and as such

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encourage the number of opportunities. In the public procurement literature, what is significant to conflict of interest is the principal–agent relationship that is the relationship between a public official and a private party. When trust is compromised, accountability and control systems become weak. The area of conflict of interest remains a difficult one to examine, as the complex networks of relationships are at times hard to discern.

Poor Procurement Practices and Governance Findings based on a study on corruption and procurement found that corruption occurs at most in 5 (five) stages or process (Arifin et al. 2018). Among other things: (1) budget planning stage; (2) the preparation stage of procurement of Government goods and services; (3) the implementation stage of procurement of Government goods and services; (4) the stage of handover and payment; and (5) supervision and accountability stages. According to Arifin et al. (2018) there are several modus operandi involvements of public officials and private companies in the corruption of procurement of goods and services. Common modes include: (1) bribery of private parties to public officials; (2) public officials use certain doll companies companies to be cooperated in for corruption; and (3) collusion among bidders, pricing, cartels, and uncompetitive practices. While corruption in the public procurement process takes many forms as is highlighted in Arifin et al.’s (2018) study above, poor public procurement practices has also been a consequence of poor organizational culture and poor decision-making. The is certainly no dearth of literature on the interplay between individual values, espoused organizational values and the values of the organizational culture which often leads to causation in systematic failures in procurement management (Casali and Day 2010). Incongruence in value systems, at various levels influences ethical decision-making in public procurement. Often in developing economies, the presence of institutional ethics systems and structures are insufficient to counteract the negative influence of informal codes of practice that undermine espoused organizational values and community standards. The ethical decision-making capacity of public officials is at the forefront in ethical decision-making in the procurement management system.

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Linking Organizational Culture with Ethical Procurement Decision-Making A strong organizational culture encourages shared values, beliefs, and behaviors. It also promotes congruence between the values of the organization and the values of staff working in it. Conversely, an organizational culture is considered unhealthy when the values and behaviors staff members and the espoused organizational values are contrary to each other. According to Liedtka (1989) the more universal these understandings are among organizational members, the stronger the culture. Conversely, a “weak culture” lacks such common themes. Beliefs held by members are more diffuse, according to Liedtka (1989, p. 806). Strongly held individual values can aid procurement decision-making in the face of corporate mixed messages, but ‘muddled organizational behavior can also be exploited by those “with little apparent sense of wrong-doing (p. 808). Ethical public procurement decisions can potentially form the basis for efficient and effective organizational culture and could be described as ‘choices guided by values” (Liedtka 1989). In procurement management, the concept of culture is significant when attempting to manage public service reform. Officials engaged with public procurement decision-making are coming to realize that, despite the best-laid plans, reform must include not only reviewing structures and processes, but also changing the organizational culture. According to Casali and Day (2010), systemic and ethically questionable decision-making approaches to procurement may be attributable to (i) poor decision-making processes in the recruitment, selection and placement of staff; (ii) poor decisionmaking processes and a culture of “cover up and protection”; and (iii) Poor decision-making processes and intimidation between principal and agent. When there is lack of value congruence, decision-making influenced by shared values, will not exist. In the procurement process, the motivating power of shared values is significant and, in its absence, unethical practices may be the result, to achieve compliance. A systematic failing of the managerial decision-making process and a compromise in major organizational procedures will prevent procedures, rules and regulations guiding employees, to promote or prohibit particular behavior and to set minimum standards (Liedtka 1989). When institutions introduce and are committed to public sector reforms toward improving organizational systems, organizational culture changes influencing individual

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behavior and vice versa. A poor and unethical procurement decisionmaking process can be seen as a direct failure to promote organizational values and a failure to fulfill a duty of care. An example is recruitment, selection, and placement of public officials. The function of human resource management is to engage in checks of individuals before their employment, and to regularly review their performance using a value congruence model, Lidtka (1989) argued that “individual values and organizational values can be either consonant (clear and in line with each other) or contending (ambiguous, and not in line with each other)”. When there is incongruence, the likelihood of it being attributed to the existence of informal institutions, is great. In line with institutional theory explained earlier, Helmke and Levitsky (2004, p. 727), describe informal institutions as institutional arrangements where “socially shared rules, usually unwritten, are created, communicated, and enforced outside of officially sanctioned channels”. Due to this likely incongruence, it is crucial in trying to understand how to alter, if necessary, an existing set of formal institutions. While in some instances, informal social and cultural institutions can potentially strengthen social systems, they can also present obstacles for change as they exhibit a strong tendency to preserve the status quo of social structures (Schweitzer 2017). A key feature of informal institutions is alienation from the broader collective purpose of institutions and where social cohesion in the society, economic citizenship, and loyalty to the political system are replaced by particularism and individual self-determination. Often formal institutions compete with informal institutions because of an incongruent value system. Subsequently, goals and outcomes of informal institutions diverge from those of matching, but ineffective formal institutions, and the formal rules become obscure compared to the informal ones. This creates two competing systems of rules and value systems, where principles and agents have to decide which version to comply with. Helmke and Levitsky (2004) maintain that “these informal institutions structure incentives in ways that are incompatible with the formal rules: to follow one rule, actors must violate another. Particularistic informal institutions such as clientelism, patrimonialism, clan politics, and corruption are among the most familiar examples”. Institutional theorists maintain that informal particularism, where individuals are treated differently according to status, is core to unethical procurement practices (Fazekas and Cingolani 2017). In some societies,

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public officials who have very low salaries live luxuriously, and riches come from procurement contracts. In such societies, corruption in the procurement process is the norm. In order to address the problems and challenges associated with informal particularism, procurement should encourage open and effective competition; should be ethical and fair; should be accountable and equitable.

Conclusion In this chapter, public procurement was examined from a governance and institutional perspective. The vision of governance in African economies certainly has institutional implications, specifically in terms of orientating governance and management systems toward achieving these objectives. The preceding chapters highlighted that public procurement accounts for a significant share of an economy’s expenditures. The challenge is that if public procurement lacks transparency, and most of the government contracts are awarded on a discretionary basis, then good governance is compromised. In many instances, officials and contractors strategically work together, compromising policy and administrative guidelines, to share the procurement proceeds. For good governance to take place in the procurement process, management and service orientation that is representative of needs and concerns of all stakeholders it serves, is imperative. As noted from preceding chapters, corruption damages the market infrastructure because of its effects on the economic efficiency and competitive fairness of the market. Designing and sustaining a proper anti-corruption mechanism will enhance economic efficiency and lead to a more socially desirable outcome. From the perspectives of institutional theory, one possible solution is formulating and analyzing the problem of mechanism design, as voiced by various world institutions.

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CHAPTER 4

Understanding Corruption in Africa from an Economic and Neopatrimonial Perspectives Nolubabalo Lulu Magam and Regis Wilson

Introduction A priori, in order for us to fight against corruption and its deleterious effects, there is a pertinent need to understand the nature, form and the causes of corruption. This is because corruption, as cited by several scholars, (Rose-Ackerman 1999; Lodge 2014; Beresford 2015) is very complex and all preventive and or eradicative measures need to take into cognizance the plethora of intertwined factors that contribute to the provenance and metastasis of corruption. Fortiori, this study begins with a critical analysis of two theories: The Economic Theory of Political Corruption and the Neopatrimonial Theory—in its broad exploration of the topic

N. L. Magam (B) · R. Wilson School of Social Sciences, University of KwaZulu-Natal, Pietermaritzburg, South Africa e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_4

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of corruption in Africa. The chapter begins by describing the provenance of a state from the Social Contract perspective. By drawing on the social contract theory, the chapter underscores the view that corruption serves as a breach of the social contract. The chapter then proceeds to unpack the Economic Theory of Political Corruption; so as to understand how self-interest and monetary motivations direct or indirect causes of corruption among public office holders in Africa can be. While classical liberal theorists assume a state that is neutral, objective and serve everybody’s interest, the reality is that Africa’s post-colonial states only serve sectional interests (Szeftel 2000; Lodge 2014). Consequently, the chapter deploys the Neopatrimonial theory to critically understand how patronage and rent-seeking, as evidenced in most in Africa’s political landscape, contributes to the growth of corruption.

The State of Nature and the Origin of Government Self-interest plays a pivotal role in social contract theories. Self-interest is not limited to the interests of an individual person; it includes “interests in the well-being of one’s family and peer group. Critics call it greed. Economists call it utility maximization. Whatever the label, societies differ in the way they channel self-interest” (Rose-Ackerman 1999, p. 2). For Voltaire “the policy of man [sic] consists of… how to procure for himself subsistence and accommodation, and protect himself [sic] from evil, comprises the whole object and business of man [sic]” (in Blaisdell 2003, p. 37). Most social contract theorists assume that the existence of the state can be described as a result of people coming together to promote mutual advantage. This provenance of the preceding supposition is espoused in the notion that a common characteristic of natural condition of humankind is a mutual unprofitable state of war of “every person against every other person” (Kavka 1983, p. 292). Since such a situation is said to unprofitable (the strong will always prey on the weak), there is, thus, a departure from such to a convergence of all for mutuality as “parties depart from the state of nature in order to gain a mutual benefit” (Nussbaum 2007). While such supposition rests on the idea that humans are first and foremost individualistic and only hold their personal interests (this would naturally include close kin) at heart, as they value selfpreservation above all else, Locke would make provisions for benevolent

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interests. By benevolent interests, Locke simply made a case for understanding this mutual advantage to go beyond a desire for self-preservation to include a benevolent interest of others as part of the reason for social cooperation (Nussbaum 2007). To this end, it can be asserted that an expedient and logical way to understand the modern state is to construe it as the product of a covenant, a compact or social contract. With regard to the establishment of a government, or a “sovereign”, the Hobbesian version of the social contract theory made a case for the existence of a government by suggesting that under the state of nature, which was a state of perpetual conflict, life was precarious and people driven by the fear of death and a need for cooperation for mutual advantage entered into a contract in order to achieve the above said end. There is a consequent ceding or transference of rights or will, as Hobbes called it, to a sovereign, who then makes use of these transferred will to promote the good of those bound by the contract (Evers 1977, p. 187). A sovereign or government in effect serves as a representative of the will of the people. In the Lockean version of the social contract, a basis for the existence of a government is also implied. As Alubabari (2012, p. 270) records it, Locke’s “contract of government” presupposes that the people had earlier given their mutual consent to the formation of society. And, then, as members of society, they later chose their rulers to form their government, each party having specific duties and obligations. The rulers hold power on fiduciary grounds and are accountable to the people.

The fact that Locke made a case for both the contract that brought a state and government to bear is quite relevant for this chapter. Both Hobbes and Locke’s construction made a case for the legitimization of a sovereign (government). Despite some fundamental differences between the Hobbesian and the Lockean social contract accounts, they both converged on the issue of tacit consent. “So while the social contract sets up an absolute sovereign in Hobbes’ theory, in Locke the social contract brings together the citizens so that they can delegate enforcement of the natural law to a trustee for the sake of convenience” (Simmons 1999, p. 912). Of relevance to this chapter is the way the Lockean version construed consent.

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Consent is signified by the receipt or acceptance of benefits, whether this be travelling on the roads enjoying the government’s protection or, more importantly, holding real estate under the government’s protection. In fact, Locke makes the social contract for landholders a covenant which runs with the land so that the inheritor of a piece of real estate inherits the obligation to the government. (Simmons 1999, p. 911)

The necessity of using the state of nature analysis as a part of this chapter is justifiable by the view expressed by Rawls (1971) that the evolution of society/state was as a direct result of a search for a “system of cooperation for mutual advantage between individuals”. Despite the underlying reality that conflict between divergent individual interests and an identity of collective interests is an indication of such a construct, a consistent search for a just or moral way of satisfying these divergent and often conflicting personal and collective interests is a political necessity. Rawls thus suggests that society should be a venture that cooperates to promote mutual advantage or gains. As such, the primary role of a social institution like the government is to ensure just distribution of resources. Such a government, in Rawls view, should be able to see to it that the social and economic benefits of society distributed in a way that would enable the have not’s of the society to be as well off as they can be, provided that they are granted equal opportunity in terms of education and employment. Implicit in Rawls position is the advancement of a welfare government that promotes equality in terms of resources and opportunity for its citizens. This would necessitate a government’s intervention in the economic activities of a country so as to ensure the just end (Rawls 2001). As such, Rawls (1971) describes a principle of justice as the proper distribution of the benefits and burdens of social co-operation. A situation whereby an individual or a group of individuals inappropriately try to gain more benefits than others is a travesty of justice. Corruption by no little means is a depiction of such. While Rawls advancement of a welfare government could ensure that resources are distributed equally and equitably, there is also a possibility of too much government intervention in the economy creating a ground for corruption to grow. In Rose-Ackerman’s (1999, p. 85), view one of the ways to curb corruption is to reduce or eliminate government’s activities with regard to economic transactions to the barest minimum. Arguably, it can be advanced that any action that breach the social contract is immoral and a regression to the state of nature. A possible

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result of that would be the creation of some sort of chaos. Individuals in the state of nature are in a “state of perfect freedom to order their actions and dispose of their possessions and persons as they think fit, within the bounds of the laws of nature, without asking leave or dependency upon the will of any other man [sic]” (cited in Simmons 1999, p. 999). Morris (2000, p. ix) points out that “the powers and privileges of our rulers… are conditional on their performance of their responsibilities. Rulers need to serve the interests of the governed”. A failure on the part of the government to serve the interests of the governed should be regarded as a breach of the social contract.

Government, the Economy and Economic Theory of Corruption Theories of welfare state assign an economic role for the government. This role aims to aid in the just and equitable distribution or redistribution (whatever the case may) of resources to the citizens, and to promote socio-economic welfare and development (Tanzi 1997; Turok 1999; Hirsch 2005). Krueger uses the term “benevolent guardian” to describe an ideal relationship that exists betwixt politicians and the populace—“politicians are supposed to make resources allocation decision based solely upon the interests of their principals - the populace” (Jain 2001, p. 73). Consequently, in the pursuit of its economic role, a state’s government makes recourse to “many policy instruments, and by so doing, it allocates resources, redistributes income, and influences the level of activity” (Tanzi 1997, p. 4). Using Musgrave’s (1959) classification, Tanzi derives that the abovementioned role of government can be described as a normative one. Such a normative role “determines the guidelines, principles, or norms for welfare-enhancing sector intervention in the economy… It attempts to define what the government should do to correct market imperfections and to complement the market in other ways to promote and maximize social welfare”. Such a role also necessitates that the government’s economic role should lead to socio-economic development. Government fulfils its economic role in one of the two ways: by allowing free market operations or by regulating free market operations. More to the point, “instead of enabling the free market to regulate relations and transactions among economic agents on the market, the government, whatever the motives may be, steps in and regulates these

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relations in a hands-on manner” (Begovic 2005, p. 5). By implication, the role of government as an arm of the state should be like a bridge between a free market economy and a regulated economy. It is widely argued that government has to find a way to marry the economic concept that “markets left in themselves have desirable outcomes” (Azfar et al. 2001, p. 43) and those who hold the view that government extensive intervention in the market can lead to development. Azfar et al. (2001, p. 46) state that economic development needs to be supported by a credible government. Azfar et al. (2001, p. 46) further describe economic development as a necessary function of a government. This includes but is not limited to “the formulation and enforcement of sensible laws to underpin the functioning of markets and other social institutions” (Azfar et al. 2001). There has been an upsurge in the economic role of government. This was in part due to the proliferation of the Marxist and Socialist ideas in the early twentieth century, which saw the role of the government in the redistribution of income and resources as pertinent (Tanzi 1997). Further still, Tanzi (2002, p. 22) opines that “the environment that prevailed in these years brought about (1) a large increase in the level of taxation in many countries; (2) a large increase in the level of public spending; (3) probably, though not statistically ascertainable, a large increase in regulations and controls of economic activities on the part of government”. By implication, bureaucrats’ overtime have been ordained with certain amounts of power to carry out monetary transactions on behalf of the state. While such a practice is necessary for the running of a state, an adverse effect of such a practice may be the inadvertent anointing of bureaucrats with an inordinate amount of discretionary power. Rose-Ackerman (1999, p. 9) suggests that, “all states, whether benevolent or repressive, control the distribution of valuable benefits… the distribution of these benefits and costs is generally under the control of public officials who possess discretionary power”. Due to such, many economic operations or activities usually require various kinds of “permits or authorizations on the part of, often, several public offices. This gives the bureaucrats charged with giving the authorizations the opportunity to request bribes or to accept offered bribes” (Tanzi 2002, p. 22). This also implies that, private individuals and firms who want to be treated with favourable preference may be willing to pay to obtain such permits or authorizations (Rose-Ackerman 1999, p. 9).

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The economic role of the state carried out by a legitimate government necessitates the allocation of scarce resources (equating demand with supply); thus, like in a game of soccer, there are usually rules and regulations put in place to guide the conducting of such businesses in order to ensure “fair play” (Myint 2000; Tanzi 1998). The common man or woman may not be extremely familiar with such rules and regulations, the bureaucrats are usually regarded as the custodians of such sacred rules of the state. Put in another way, the economic duties, of a government is a directive left to the discretion of its bureaucrats. The allocation of these scarce resources is done through the use of different kinds of regulations, permits, authorizations, and this in most cases creates a situation where payoffs can be made or demanded (Rose-Ackerman 1999; Tanzi 2002). To concretize, if the supply of a commodity like “credit and the rate of interests are controlled by the state, bribes may be paid for access… the allocation of scarce import and export incentives is a frequent source of payoffs and patronage with bribes linked to the value of the benefits conferred” (Rose-Ackerman 1999, pp. 10–11). The existence of regulations and authorizations bestows a monopoly of power on officials who must authorize or see such economic activities to its right end. Conclusively, Aidt (2003) purports that whenever authority is delegated; the potential for corruption is born. “The greater the discretionary power, ceteris paribus, the stronger the incentive for the agent to succumb to temptation” (Jain 2001, p. 78). Like the Classical Liberal theories, the Economic Theory of corruption assumes that individuals are motivated by self-interests. Classical liberal theory assumes that, individuals, out of a social contract, create a state that will serve everybody’s interests. The state is charged with a responsibility of providing goods and services. The conditions for corruption arise where “dual prices exist – a low state price and a higher free-market price” (Rose-Ackerman 1999, p. 10). Driven by their own self-interests, private citizens will “pay off officials for access to belowmarket state supplies” (Rose-Ackerman 1999, p. 10). Rose-Ackerman argues that “Corruption is a symptom that something has gone wrong in the management of the state. Institutions designed to govern the interrelationships between citizen and the state are used instead for personal enrichment and provision of benefits for the corruption” (1999, p. 9). The assumption by the economic theory of corruption that pecuniary gain is a motivating factor for gaining office is quite important to this analysis. It however robs the political scene of people who actually have

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a desire to make a change. It can be assumed that not all politicians are solely motivated by a desire for selfish maximization of utility. It is not every politician’s will to be corrupt. There will always be money involved in politics in the sense that there are certain duties that come with holding a political office that requires one to make transactions on behalf of the state. If one is therefore to make suggestions as to how to curb corruption from the lens of the economic theory, one requirement would be that all politicians be stripped off of any transactional responsibilities. This is not only impossible but undesirable. The reason for examining corruption from an economic perspective is to accent the issue from an individual perspective. As it can be demonstrated that personal and pecuniary reasons are primary motivating factors for public servants to engage in corruption. Whilst the economic theory offers us insights to the personal motivation for corruption, examining corruption from the Neopatrimonial perspective offers insights into what other factors— mostly institutional factor—that could be responsible for the growth of corruption. These institutional factors include public procurement. Ambe and Badenhorst-Weiss (2012, p. 244) provide a comprehensive explanation of Public procurement as: the function whereby public sector organisations acquire goods, services and development and construction projects from suppliers in the local and international market, subject to the general principles of fairness, equitability, transparency, competitiveness and cost-effectiveness. It includes many activities that support the service delivery of government entities, ranging from routine items to complex development and construction projects. It also directly or indirectly supports government’s social and political aims.

It is worth mentioning that political corruption which is the maladministration by government officials for illegitimate private gains, is perpetuated through public procurement. This is evident in South Africa’s biggest corruption scandals (Arms Deal and Nkandla). This corruption was achieved through rigged procurement processes. For government officials it is through procurement that they can easily access public funds for personal gains. Neopatrimonialism provides the rationale for the growth of corruption through institutional factors such as public procurement.

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Neopatrimonialism As a concept, neopatrimonialism is difficult to define. This is in part due to the employment of the word as a “blanket” term, which covers and subsumes a lot of other diverse sub-concepts like nepotism, rent-seeking, clientelism, cronyism, tribalism among others (Bratton and Van De Walle 1997). In reference to Africa in particular, the concept is often employed to invidiously and pejoratively describe the system and the challenges of leadership, the low pace of development and the economic woes in Africa (Bratton and van de Walle 1997; Chabal and Daloz 1999; Van de Walle 2001). According to Erdmann and Engel (2006, p. 8), neopatrimonialism is “regarded as a functional threat to the peaceful political development of African states and the development of societies in general”. Mkandawire describes the use of the term as being “tethered to a new problem: Africa’s poor economic performance and its internal causes”. In order to rectify the conceptual ambiguities associated with the use of the term Neopatrimonialism, Pitcher et al. (2009) submit that in most cases, the use of the term is often a “misreading” of Weber’s patrimonialism. On this basis, Tam O’Neil (2007, p. 2) submits that the term is derived from the writing of Max Weber, who employed it to describe traditional systems of “political authority, domination and legitimacy from modern ones. In particular, he distinguished between legal and patrimonial (traditional and charismatic) authority and described the characteristics of the corresponding forms of political administration: bureaucratic (legal-rational) and patrimonial”. Max Weber, as stated above, intended to describe a Patrimonial based system of authority, whereby power is “concentrated in an individual, who rules by prestige and influence” (Weber 1978, p. 1031). In his opinion, in such a system, “obedience is owed not to enacted rules but to the person who occupies a position of authority by tradition or who has been chosen for it by the traditional master” (Weber 1978, p. 227). As a way of expounding the Weberian delineation, Eisentadt (1983) was the first to coin the term neopatrimonialism, which he used to extricate traditional patrimonialism from the modern manifestation of patrimonialism (cited in O’Neil 2007). Mkandawire suggests that, in “its earlier incarnation, it was not about corruption or weakness of the state. Rather, it was simply one form of exercising power which incorporated Weberian forms of patrimonialism and rational-legal authority”. Clapham

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(1985) concisely construes neopatrimonialism to describe a system of organization, in which relationships of a broadly patrimonial type pervade a political and administrative system which is formally constructed on rational legal lines. Officials hold positions in bureaucratic organisations with powers which are formally defined, but, exercise those powers … as a form … of private property. (Clapham 1985, p. 48)

For Bratton and Van De Walle (1997), neopatrimonialism describes a situation where the foundation of leadership is patronage. Here, an individual rules by dint of personal prestige and power; ordinary folks are treated as extensions of the ‘big man’s’ household, with no rights or privileges other than those bestowed by the ruler. Authority is entirely personalized, shaped by the ruler’s preferences rather than any other codified system of laws. The ruler ensures the political stability of regime and personal political survival by providing a zone of security in an uncertain environment and by selectively distributing favours and material benefits to loyal followers. (Bratton and Van De Walle 1997, p. 61)

Bratton and Van de Walle (1994, p. 458) go further to assert that “the distinctive hallmark of African regimes is neopatrimonialism”. The position of these authors stems from their construing of the nature of regime change in Africa. In their opinion, regimes in Africa generally evolved within neopatrimonialism. Thus, the authority of African leaders is derived from personal patronage rather than from set bureaucratic norms or political ideologies (Bratton and Van de Walle 1994). Political legitimacy or the right to rule is not found in a particular office, it is rather ascribed to a particular individual or group of individuals. It can be assumed that the reason for the ascription of political legitimacy to an individual rather than to a particular office is a result of the evolution of administrative and political authority in Africa. To this end, Nyaluke (2014) posits that the application of the neopatrimonial approach to understanding African politics emerged from the theories of modernization. The purpose of the modernization discourse was to observe “how newly independent countries in Africa and Asia developed into modern states, building on the foundations of modern state institutions (parliament, courts, system of government, and bureaucracy) that had been established by departing colonial powers” (Nyaluke 2014, p. 141).

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The modernization perspective purports that these newly independent states in Africa and Asia would evolve into modernity by acquiring or replicating features that are atypical of Western states, and by merging and operating based on institutions of rational-legal authority, rather than making recourse to patrimonial authority, that were present in their largely traditional societies (Nyaluke 2014). The reality of African states however departed from this initial political prognosis. In post-colonial Africa, the reality was an evolution of a hybrid system (Clapham 1985; Bratton and Van de Walle 1994; Chabal and Daloz 1999; Erdmann and Engel 2006; O’Niel 2007). African political and administrative authorities combined the traditional patrimonial system (all power relations between ruler and ruled, political as well as administrative relations, are personal relations; there is no differentiation between the private and the public realm) and the modern state system (legal rational bureaucracy: things are to be done in a particular way, following a set of rules, codes of conducts, etc.) (Eisenstadt 1973; Bratton and Van de Walle 1994). These two systems are combined in such a way that, ideally there is an existence of formal structures and rules. In practice however, there is no dichotomy of the private and public sphere. The two systems intertwine, “the patrimonial of the personal relations, and the legal rational of the bureaucracy. Naturally these spheres are not isolated from each other; quite to the contrary, they permeate each other; or more precisely, the patrimonial penetrates the legal-rational system and twists its logic, functions, and effects” (Erdmann and Engel 2006, p. 18). By implication, formal structures, set norms, rules and regulations are invaded by personal and informal relations. For instance, administrative selection will be carried out based on the personal discretion of someone in power and not by particular bureaucratic or objective criteria (Erdmann & Engel). Chabal and Daloz (1999) further offer elucidation, by explaining that the addition of the prefix “neo” is to assert that African political systems have made a shift from being completely traditional. Patrons hold position in state institutions that are rational-legal and use state resources to buy patronage and consolidate power. This is particularly possible because the position of power not only bestows people with power; it also leaves the resources of the state at the disposal of their discretion. In Nyaluke’s (2014) opinion, “positions of power give access to monopolistic resources through which personal interests can be promoted”. The use of state resources by political actors to promote patronage by purchasing loyalty

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as a way of consolidating support and power is a defining feature of a neopatrimonial state. Further still, Bratton and van de Walle (1997) have noted that understanding the structure of political systems and the nature of regime change in Africa could assist in construing how neopatrimonialism operates. They argue that the prevalent political system in some African countries (Central and West Africa) is the presidential system. Again, during the struggle for independence, ethnicity was used as a tool for interest mobilization and aggregation (Bratton and Van de Walle 1994). In other words, ethnic groups have a profound significance in the African political setup. Consequently, neopatrimonialism runs smoothly as a system because of the inordinate bestowment of discretionary power or what Nyaluke (2014) refers to as the disproportionate centralization of administrative power in the president. The effect of an individual having such inordinate amount of power is the tenacity for most African regimes to denigrate into personal rule (Bratton and Van de Walle 1994). There are also situations when political accountability becomes weak, this is due to the susceptibility of the abuse of discretionary power and resources by political figures who use these power and resources at their disposal to purchase loyalty, appease and control ethnic or political groups and build political hegemony (Bratton and Van de Walle 1997). In sum, central to the Neopatrimonial perspective is the claim that personal relationships form the core and permeates all political and administrative parastatals in Africa. Also, political patrons use state resources to buy loyalty and consolidate political hegemony (Chabal and Deloz 1999; Bratton and Van de Walle 1997). A basic assumption of the social contract theory, as noted previously, is that government came into being because of the need for social order. There is the tacit assumption that a government irrespective of whatever cleavage they represent should be neutral in their dealings with the denizens of a country. Economic theory of corruption postulates that the involvement of the state in economic sphere creates opportunities for corruption. However, neopatrimonial perspective suggests that opportunities for corruption are available only to certain factions or ethnic interests. Aubrey Matshiqi (2012) suggests that the blurring of the public sphere and the private sphere can create a situation whereby political power becomes predatory, parasitic and kleptocratic. Such a situation as the study maintains creates a fertile ground for corruption to fester.

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Arguably, several practices, such as Cadre deployment in South Africa, within Africa’s socio-political milieu are redolent of neopatrimonial practices. In most cases, an adverse result of this particular practice is the creation of an avenue for politicians to consolidate power through the use of state resources to buy loyalty. This chapter contends that once there is no separation between the public and the private spheres, the consequence is the “private appropriation of the public sphere and the use of public resources for, inter alia, political legitimation. It is also intimately related to other relationships and practices, including clientelism, nepotism, horizontal exchange relationships and corruption” (O’Neil 2007, p. 3). In sum, this section has shown that neopatrimonialism can be used to explain the existence of political corruption in South Africa. In contextualizing neopatrimonialism, O’Neil (2007) suggests that in explaining the causes of corruption, a lot of divergent factors converge and should be examined. In making a case for South Africa thus, through assessing the administrative and political structure, the existence of variables like weaker application of the legislation, political deployments, and an absence of a meritocracy in the system inter alia, should take prominence. From the economic analysis of political corruption, it came to the fore that the transactional duty of bureaucrats, the discretionary power they possess, creates a situation where they are susceptible to the selfish maximization of utility. Thus, from the economic theory of corruption, the desire for pecuniary gains was described as a primary motivation for corruption. By employing the Neopatrimonial theory, further insights will be offered as to how personal relationships shape the bureaucratic structure of South Africa and how this can be understood as an institutional factor for the growth of corruption. Neopatrimonialism has become an invariable, common and ubiquitous moniker deployed to describe the style of leadership in Africa states. The justification for such an attribution hinges on the notion that prima facie, the exercise of authority in Africa is effectuated in a rational-legal style. Beneath this, however, power relations and exercise of authority in Africa is deeply personalized and characterized by a “primordial sense of selective interest” (Nkadawire 2013). More than just pecuniary interests, Neopatrimonialism gave insights as to what other factors contribute to public venality in South Africa. It came to the fore that relations of patronage broadly shape the political configuration of most African states. As rational-legal authority is executed in a personalized manner, which blurs the line between the public and private sphere. In a manner

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of speaking, leaders serve as proxies for sectional interests and public resources are used to gratify such selective interests. The problem with such a hybridity is that since personal relationships form the core of bureaucracy, there is a tendency for such a configuration to lent normalcy to incidences of nepotism, corruption and public venality.

Conclusion The argument in this chapter rests on the premises: economic gains and the selfish maximization of utility can provide insights into why political corruption persists. In the sense that pecuniary motivation, the economic rents associated with political offices, create discretionary power and an avenue for political corruption. Secondly, by employing the neopatrimonial theory to the corruption discourse, it was gathered that due to a lack of dichotomy between the public and private sphere in Africa, the formal sectors, like the state and government, become entangled in private relationship. The underpinning rationale is that when the lines between the public and private sphere become blurred, an environment in which abuse of power can ensue, is created and this effectually can further corrupt transactions. It is the aim of this study that through its broad examination of the economic and political system obtainable Africa, the inadvertent effect of some of such practices unique to the continent creates a fertile ground for malfeasance and corruption through its inordinate bestowment of the power to act with discretion on politicians.

References Alubabari, D. N. (2012). The Social Contract Theory: A Model for Reconstructing a True Nigerian Nation State. International Journal of Humanities and Social Science, 2(15), 267–278. Ambe, I., & Badenhorst-Weiss, J. (2012). Procurement Challenges in the South African Public Sector. Journal of Transport and Supply Chain Management, 6(1), 242–261. Azfar, O., Lee, Y., & Swamy, A. (2001). Causes and Consequences of Corruption. The Annals of the American Academy of Political and Social Science, 573, 42–56. Beresford, A. (2015). Power, Patronage and Gatekeeper Politics in South Africa. African Affairs, 1–23. Blaisdell, B. (Ed.). (2003). The Communist Manifesto and other Revolutionary Writings. New York: Dover Publications Inc.

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Bratton, M., & Van De Walle, N. (1994). Neopatrimonial Regimes and Political Transitions in Africa. World Politics, 46, 453–489. Bratton, M., & Van De Walle, N. (1997). Democratic Experiments in Africa: Regime Transitions in Comparative Perspectives. Cambridge: Cambridge University Press. Chabal, P., & Daloz, J. P. (1999). Africa Works: Disorder as Political Instrument. London: International African Institute. Clapham, C. (1985). Third World Politics: An Introduction. Madison: University of Wisconsin Press. Erdmann, G., & Engel, U. (2006). Neopatrimonialism Revisited: Beyond a Catch-All Concept (Working Paper No. 16). Hamburg: German Institute of Global and Area Studies. Eisenstadt, S. N. (1983). Transcendental Visions, Other Worldliness and Its Transformations. Religion, 13(4): 1–17. Evers, W. M. (1977). Social Contract: A Critique. Journal of Libertarian Studies, 3(3), 185–194. Hirsch, A. (2005). Season of Hope: Economic Reform under Mandela and Mbeki. Durban: University of KwaZulu-Natal Press. Jain, A. K. (2001). Power, Politics and Corruption. In A. K. Jain (Ed.), The Political Economy of Corruption. London: Routledge. Kavka, J. (1983). Hobbes’s War of All Against All. Ethics, 93(2), 291–310. Lodge, T. (2014). Neo-Patrimonial Politics in the ANC. African Affairs, 113(450): 1–23. Matshiqi, A. (2012). Reflections on the Relationship Between the Party and the State. The Journal of Helen Suzman Foundation, 67, 4–12. Morris, C. W. (2000). Social Contract Theorists: Critical Essays on Hobbes, Locke, and Rousseau. Oxford: Rowman & Littelfield Publishers, Inc. Musgrave, R. A. (1959). The Theory of Public Finance. The Economic Journal, 69(276), 766–770. Myint, U. (2000). Corruption: Causes, Consequences and Cures. Asia-Pacific Development Journal, 7 (2), 33–58. Nussbaum, M. C. (2007). Frontiers of Justice. Disability, Nationality, Species Membership. Scandinavian Journal of Disability Research, 9(2), 133–136. Nyaluke, D. (2014). The African Basis of Democracy and Politics for the Common Good: A Critique of the Neopatrimonial Perspective. Taiwan Journal of Democracy, 10(2), 141–164. O’Neil, T. (2007). Neopatrimonialism and Public Sector Performance and Reform. ABIA Background Note1. London: ODI. Pitcher, A., Moran, M. H., & Johnston, M. (2009). Rethinking Patrimonialism and Neopatrimonialism in Africa. African Studies Review, 52(1), 125–156. Rawls, J. (1971). A Theory of Justice. Cambridge, MA: Harvard University Press.

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Rawls, J. (2001). Justice as Fairness: A Restatement. Cambridge, MA: Harvard University Press. Rose-Ackerman, S. (1996). The Political Economy of Corruption: Causes and Consequences. World Bank Viewpoint, 74, 1–8. Rose-Ackerman, S. (1999). Corruption and Government, Causes, Consequences and Reform. Cambridge: Cambridge University Press. Rose-Ackerman, S. (2004). Governance and Corruption. In B. Lomborg (Ed.), Global Crises, Global Solutions. Cambridge: Cambridge University Press. Simmons, J. A. (1999). Locke’s State of Nature. In C. W. Morris (Ed.), The Social Contract Theorists. Oxford: Rowman & Littlefield. Szeftel, M (2000). Clientelism, Corruption and Catastrophe. Review of African Political Economy, 27 (85), 427–435. Tanzi, V. (1997). The Changing Role of the State in the Economy: A Historical Perspective. Available from http://www.imf.org/external/pubs/ft/wp/ wp97114.pdf. [Accessed 3 March 2019]. Tanzi, V. (1998). Corruption Around the World: Causes, Consequences, Scope, and Cures. International Monetary Fund Staff Papers, 45(4), 559–594. Tanzi, V. (2002). Corruption Round the World: Causes, Consequences, Scope, and Cures. In Abed, T. G. and Gupta, S. (Eds.), Governance, Corruption, and Economic Performance. Washington, DC: International Monetary Fund. The Economist. (2012). South Africa: Over the Rainbow. Available from http:// www.economist.com/news/briefing/21564829-it-has-made-progress-bec oming-full-democracy-1994-failure-leadership-means [Accessed 19 May 2015]. Turok, B. (1999). Beyond the Miracle: Development and Economy in South Africa: A Reader. Cape Town: University of Cape Town Press. Van de Walle, N. (2001). African Economies and the Politics of Permanent Crisis 1979–1999. Cambridge: Cambridge University Press Weber, M. (1978). Economy and Society. Berkeley: University of California Press.

PART II

Country Cases

CHAPTER 5

Exploring the Procurement Challenges in the South African Public Sector Thokozani Ian Nzimakwe and Andile Clifford Biyela

Introduction Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source. This is often via a tendering or competitive bidding process. Therefore, procurement is used to ensure the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimising risks such as exposure to fraud and collusion. Public procurement is a sub-field of public administration, emphasising purchasing, supply chain management, and project management through

T. I. Nzimakwe (B) · A. C. Biyela School of Management, IT and Governance, University of KwaZulu-Natal, Durban, South Africa e-mail: [email protected] A. C. Biyela e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_5

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effective strategies, proper planning and collaborative execution. The South African public sector has challenges with regard to the administration of procurement practices in all spheres of government. Despite extensive government codes of conducts mechanisms and policies, there seems to be a manifestation of unethical procurement practices. This chapter presents an analysis of and discussion on the procurement challenges of the South African public procurement system and process. Secondly, this chapter explores the link between procurement and supply chain management in the South African context and discusses the legislative and policy framework on public procurement systems in South Africa. Thirdly, the chapter discusses the key drivers for centralisation and decentralisation. Fourthly, the specific challenges confronting public procurement in South Africa are discussed. Finally, this chapter discusses the impact of centralised procurement on accountability and its compatibility with the relevant provisions of key pieces of legislation on public procurement.

Procurement and Supply Chain Management in South Africa Public procurement is a business process with a political system. In South Africa, procurement is of significance in the public sector and has been used as a policy tool due to the discriminatory and unfair practices of the past (Bolton 2006). Procurement is central to the government service delivery system and promotes aims which are secondary to the primary aim of procurement such as using procurement to promote social, industrial, or environmental policies. However, despite the reform processes in public procurement, the employment of Supply Chain Management as a strategic tool, South Africa faces enormous challenges in its public procurement practices. Reforms in public procurement were initiated to promote principles of good governance and introduced a preference system to address socio-economic objectives. In South Africa, Supply Chain Management (SCM) is an integral part of the procurement process. It is a policy tool used in the management of the procurement process. According to Brooks (2016) public procurement refers to the process by which the state obtains goods and services. Such a process includes identifying goods and services needed, selecting suppliers, contracting and contract management. Public procurement entails public administration as well as public finance management

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(Brooks 2016). Procurement in the public sector can be defined as the acquisition of goods and services, other than the services of officials, for the citizens and their administration by means of commercial transactions. Public procurement then refers to those government administrative activities that concern the purchasing of the goods and services that the government need from the private sector (Mantzaris 2014). It also refers to the government activity of purchasing the goods and services needed to perform its functions. According to Odhiambo and Kamau (2003) cited in Ambe and Badenhorst-Weiss (2012), public procurement is broadly defined as the purchasing, hiring or obtaining by any contractual means, goods, construction works, and services by the public sector. It involves the purchase of commodities and contracting of construction works and services if such acquisition is effected with resources from state budgets, local authority budgets, state foundation funds, domestic loans or foreign loans guaranteed by the state, foreign aid, and revenue received from the economic activity of state. According to Hommen and Rolfstam (2009) in Ambe and Badenhorst-Weiss (2012), public procurement is ‘the acquisition (through buying or purchasing) of goods and services by government or public organizations’. They further contend that the concept of public procurement can be referred to as procurement planning, contract placement and contract administration. Based on the above discussion, public procurement, according to Ambe and Badenhorst-Weiss (2012, p. 244), can be defined as follows: Public procurement is the function whereby public sector organisations acquire goods, services and development and construction projects from suppliers in the local and international market, subject to the general principles of fairness, equitability, transparency, competitiveness and costeffectiveness. It includes many activities that support the service delivery of government entities, ranging from routine items to complex development and construction projects. It also directly or indirectly supports government’s social and political aims.

In South Africa, Supply Chain Management is an important tool for managing public procurement. According to Hanks, Davies and Perera (2008) cited in Ambe and Badenhorst-Weiss (2012), Supply Chain Management operates within a regulatory framework set by the national government and extended by provinces and local government bodies to specific policies, legislation, and regulations. The aim of Supply Chain

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Management is to add value at each stage of the procurement process— from the demand for goods or services to their acquisition, managing the logistics process, and finally, after use, to their disposal. In so doing, Supply Chain Management aims to address deficiencies in current practice relating to procurement, contract management, inventory and asset control, and obsolescence planning. An adoption of a Supply Chain Management policy thus ensures uniformity in bid and contract documentation, and options and bid and procedure standards, inter alia, will promote the standardisation of Supply Chain Management practices (National Treasury 2003).

South African Legislative and Policy Framework on Public Procurement Legislative statutes and policy framework are the drivers of procurement in the public sector as well as in other sectors. The objectives of public procurement are achieved through various means, and legal and regulatory rules on conducting public procurement. The followings are the legislative frameworks that guide procurement practices in South Africa: • • • • • • • • •

The Constitution of the Republic of South Africa of 1996; Public Finance Management Act No 1 of 1999; Promotion of Administrative Justice Act No 3 of 2000; Promotion of Equality and the Prevention of Unfair Discrimination Act No 4 of 2000; Preferential Procurement Policy Framework Act No 5 of 2000; Construction Industry Development Board Act No 38 of 2000; Broad Based Black Economic Empowerment Act No 53 of 2003; Municipal Finance Management Act No 56 of 2003; and Prevention and Combating of Corrupt Activities Act No 12 of 2004.

With regard to the above, the public sector in so far is covered under these and it is important to understand that businesses at large are greatly affected by these acts. Not only from a governing standpoint but because the act insofar demands application of the rule of law. Section 217 of the Constitution of the Republic of South Africa of 1996 stipulates the primary and broad secondary procurement objectives. Section 217(3) of the Constitution requires that national legislation

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prescribe a framework within which the preferential procurement policy must be implemented. The Preferential Procurement Policy Framework Act No 5 of 2000 was promulgated in response to this constitutional imperative. Procurement by organs of state (national and provincial departments, municipalities, constitutional entities, and public entities) is also governed by a number of other pieces of legislation (Ambe and Badenhorst-Weiss 2012). Public procurement entails public administration as well as public finance management. As a result, public procurement in South Africa is regulated within a broad legal framework including, amongst others, the Public Finance Management Act 1 of 1999 (PFMA) and the Local Government: Municipal Finance Management Act 56 of 2003 (MFMA). Furthermore, Section 217 of the Constitution of the Republic of South Africa, 1996 establishes fundamental principles governing procurement systems across the different spheres of government. The Preferential Procurement Policy Framework Act 5 of 2000 (Procurement Act) provides insights, in relation to substantive equality in procurement. The Procurement Act describes substantive equality as allowing preferential procurement policy to include the goal of contracting with categories of persons previously discriminated against based on gender, race, or disability.

Centralised Procurement Systems Procurement can be operationalised utilising the centralisation and decentralisation system, with the former locating power and authority in one place and the latter devolving procurement processes to multiple players within an institution or externally. According to Leenders and Johnshon (2000), all main procurement is controlled at one central location for the entire firm. Also, Weele (2010) asserts that in a centralised system of procurement, the purchasing unit is placed in both a tactical and central position. According to Karjalainen (2009), the purpose of centralisation is to acquire ‘the economies of scale in purchasing prices and process costs’ by way of shifting from individual procurement done by line-divisions to institution-wide agreement. Structurally, this means that an institution will have one centrally placed procurement division with a responsibility to facilitate purchasing processes for the entire institution. Among many of its activities, this division focuses on drafting specifications and terms of reference for procurement services required; the

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selection of suppliers through internally acceptable processes; service level agreement negotiations and coordinating the activities among the various involved stakeholders. Centralisation enables the resources to be better monitored at one central location. In the case of South Africa, for example, procurement is decentralised considering that several public entities in the different spheres of government implement their own procurement. For the successful implementation of the centralised approach to procurement, the division that is responsible for procurement establishes the processes and systems of procurement and develops supplier base reduction. This section will explain the purpose and implications of choosing the centralised procurement approach. According to PurchaseControl (2019), with a centralised purchasing platform, procurement officers have a place to store product information and photos, track orders, and supplier notes, so that they can keep track of who is the easiest work with. This makes it easier to match capabilities with low cost pricing. In the end, moving to a centralised purchasing platform that allows procurement officers to automate processes. This will not only streamline the purchasing experience but makes it easier to see the overall benefit to an organisation. Dynamics of Centralisation An evaluation of industrial practices revealed three key factors that influence centralisation and decentralisation of supply chain practices (Karjalainen 2009): Cost:

Customer Service: Control:

In order to exploit the economies of scale and gain a competitive market advantage, organisations, which aim to achieve a target cost would often centralise their procurement functions. Decentralisation is often chosen by organisations, which want to provide high customer service. Within the ‘control’ factor, two key variables, which are used to better understand this factor, are: risk and reward.

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Advantages of Centralisation in Procurement The advantages of centralised procurement include the following (Weele 2010): • Staff specialisation Staff that can specialise in one area of procurement and improve on their knowledge and skills, become more efficient and while lowering costs within an institution. Staff specialisation also ensures greater depth in an area and minimises risks. For example, if 5 procurement practitioners are spread across 5 divisions, each of them will have general understanding of procurement including the legal prescripts and requirement. However, if the same 5 practitioners are deployed within the same division of procurement, they are likely to delegate core functions among themselves and specialise. In this manner, they become more skilled in their core areas and reduce risk while become more efficient. • Bulk Purchasing It is common for organisations to run out stock for frequently used items. Centralisation affords procurement practitioners the opportunity to order stock in large quantities and avoid multiple orders of the same item in smaller quantities. This, in turn, reduces transport costs, transactions fee, and also enables the procurement division to negotiate better rates for items being purchased considering that the purchase is in bulk. This approach also streamlines the number of suppliers and also reduces the administrative work associated with several procurement activities. • Improved procurement coordination When procurement is centralised, organisations can implement uniform policies and practices. This can improve compliance with legislation and speed up procurement processes. Scheduling of meetings, planning of activities, following up on deliverables and implementation can be enhanced.

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• Standardised Specifications The standardisation of specifications can enhance an institution’s ability to procure quality products given the use of an acceptable standardised specification. Also, quality can be enhanced through focusing the supplier base, reducing inventory and handling costs, and facilitating the consolidation of orders. • More effective control of procurement activity For closer accountability, a separate cost centre can be established for the central procurement division. This plays a major role in budgetary control and performance monitoring in line with the defined key performance areas. With a centralised system, however, it can be easier for central/national government departments to keep track of contract awards, tender documents, and other things they are required to have within the legal framework. The more information that can be stored in the system, the more accurate the data and the more streamlined the procurement process becomes (PurchaseControl 2019). Disadvantages of Centralisation in Procurement There are several disadvantages of centralised procurement (Weele 2010). These are listed below: • Delay: There are several delays that can be experienced in the procurement process as a result of centralisation. In the case of large and geographically spread out organisations, delays can be caused by the amount of time taken for requisitions to reach the procurement division. Also, the procurement division needs to understand all specifications and requirement of each project, communication delays between the user department and the supply chain division can cause a delay in the procurement process. • High initial cost: The establishment of a specialised department to solely focus on procurement will result in high expenditure as specialised infrastructure and operational resources will be required such as IT, staff, furniture and financial systems.

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• Local Purchase: Centralisation can lead to compromising the avail and use of local purchase. This is due to the fact that centralisation purchases are commonly large in quantity and may be beyond the capacity of local suppliers. • Emergency Purchase: Research shows that centralised purchasing can result in difficulties when emergency procurement is required. There are several delays that can be experienced with centralised procurement. • Communication difficulty: The centralised system of procurement results in communication challenges between the user departments and the procurement division. When to Centralise For many years, organisations have struggled to respond to the question of what should be centralised and what should not. To arrive at a correct decision, Weele (2017) considers three common factors that should be considered before an organisation takes a decision to centralise or not. • A feasibility study should be carried out on all products that an organisation wants to purchase and establish potential ‘bulk purchasing’ discounts. Items that are purchased in large volumes and quantity often warrant an organisation lie way to negotiate prices. • Procurement practitioners with should be familiar with the products that they want to order. When there is greater familiarity amongst the products, the centralisation approach can conveniently be used to standardise the scope of work and package across an organisation. • The supply market structure can have a great impact on the supply and pricing of goods. If, for example, there are only a few reputable and capable suppliers, an organisation can opt to enter into long term agreements, through centralisation, with the various suppliers in other to renegotiate power and pricing (Paranikas et al. 2015).

Decentralised Procurement Decentralised procurement is a form of procurement that empowers operational user departments within an organisation to directly engage suppliers towards the provision of services. According to Leenders and

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Johnson (2000), the decentralisation approach ensures that ‘all main purchasing is controlled at the business units, and/or divisions’. Essentially, what this means is that an organisation which has several departments will equally have several supply chain management and procurement practitioners within each business unit to oversee procurement needs of a business unit. Van Weele (2005) further emphasises that this structure can be commonly found in organisations with a business unit structure wherein procurement functions are carried out in each business unit. This structure and procurement approach is common in organisations with various projects at a business unit level and where quantities of purchased products or secured services will be in smaller quantities. Advantages of Decentralised Procurement The advantages of decentralised procurement include the following: decentralised procurement enhances communication between operating departments and procurement departments; decentralised procurement systems have been widely acknowledged for their customer orientation approach; the response time is quicker in terms of attending to and resolving queries from suppliers; there is greater knowledge of skills and expertise among the local based suppliers and an institution; smaller purchase quantities; and accountability (Leenders and Johnson 2000). Disadvantages of Decentralised Procurement The disadvantages of decentralised procurement include the following (Leenders and Johnson 2000): • An organisation does not enjoy the discounts and savings that come with bulk purchasing; • Procurement staff may lack specialisation knowledge; • There are risks of under-purchasing; and • Control of material may be lacking. Centralisation and decentralised can be used to refer to the degree that a firm manages its power on procurement, i.e. does it share it among user/business units or does it keep it in one central place. The degree to which associated resources, responsibilities and activities are grouped

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within one central place, for example, is purchasing separately done centrally or by line departments. Whether an organisation chooses to centralise or decentralise its procurement processes remain an important decision that should be informed by an organisation’s configuration and aims. Whether an organisation chooses to centralise or decentralise, customer relations management should be at the heart of the organisation. Key functions such as research, policies and long-term frameworks should, ideally, be centralised as these forms the core business of an entire organisation’s procurement outlook.

Public Procurement Challenges in South Africa This section of the chapter discusses the challenges that restrain public procurement practices in South Africa. It is important to note that SCM is an integral part of procurement in the South African public sector. Therefore, it is used as a tool for the management of public procurement practices. However, despite the employment of SCM as a strategic tool, public procurement in South Africa still faces enormous predicaments. These include among others: lack of proper knowledge, skills and capacity; non-compliance to SCM policy and regulations; inadequate planning and linking demand to the budget; accountability, fraud and corruption; inadequate monitoring and evaluation of SCM; unethical behaviour; and inequality of wealth. Procurement is becoming a more integral part of an organisation’s efforts to reduce cost and increase efficiency. Because of this, procurement managers are under pressure to remain responsive to move with the changes. In the public sector, however, there are additional challenges associated with implementing changes to the procurement processes in existing operations. In the public sector, procurement managers often have a specific procurement framework in which they are required to work, where there is typically a focus on strong moral principles, without a traditional supply chain model. It is also worth noting South African public sector procurement departments are responsible for some of the highest levels of spend in the economy, because of national, provincial, and local agencies needing to purchase for public services across a number of industries, including healthcare, education, and infrastructure. Government spending covers more than the procurement of goods and services, of course, but budgets are always an issue. Procurement

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activities must operate within confines of the available funds they have to work with as well as the established procurement policy, and that means getting creative and cutting costs where possible (PurchaseControl 2019). The risks of corruption, non-compliance, overspending and wasteful expenditure have manifested into practical challenges faced by public procurement managers in South Africa (Brooks 2016). Public procurement in South Africa still faces enormous predicaments. These include, among others (Ambe and Badenhorst-Weiss 2012): accountability, fraud and corruption; and ethical behaviour. Accountability, Fraud and Corruption Accountability constitutes a central pillar to public procurement. Without transparent and accountable systems, the vast resources channelled through public procurement systems run the danger of being entangled with increased corruption and misuse of funds. Fraud and corruption cost South African taxpayers hundreds of millions of rand each year. Over the last few years, the impact of fraud has led to the promulgation of special legislation and improvement in existing legislation that led to the creation of, among others, the Directorate of Special Operations, commonly known as the Scorpions, the Asset Forfeiture Unit, the Public Protector, the Special Investigation Unit, Commercial Crime Units, Internal Audit Units, Special Investigation Units within departments, and the appointment of forensic consultants (Mahlaba 2004). Recently the South African government has appointed a Commission of Inquiry into State Capture to look into cases of corruption in all spheres of government. Unethical Behaviour Ethics is the study of moral judgements and right and wrong conduct. Ethics and conflict of interest greatly affect SCM implementation. Enormous power is wielded by some chief financial officers but there is also a lack of proper consultation with other senior officials. While the National Treasury’s guide to accounting officers prescribes a standard approach towards procurement procedure, in many instances there is lack of compliance and application of the guidelines. This has resulted in differentiation in approaches and a lack of standardisation. The completeness of tender documents in many municipalities is difficult to verify.

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According to Brooks (2016), South Africa is an example of a procurement system facing external challenges incorrectly attributed to the procurement system itself. The South African procurement system mitigates and aggravates certain risks attaching to its implementation, of which properly formulated policies and directives may guard against such risks. The risks of corruption, non-compliance, overspending, and wasteful expenditure have manifested into practical challenges faced by South African supply chain managers. There are national, provincial, and local challenges relating to the procurement system. The annual reports of the provincial treasuries indicate a number of challenges encountered in SCM implementation. Overall, the Auditor-General made material SCM findings in 185 municipalities (66%). The Auditor-General highlights a number of reasons for these material findings. Firstly, 76 municipalities (28%) failed to achieve adequate contract management due to a lack of contract monitoring and weak controls. Secondly, vacancies and instabilities were experienced in key SCM unit positions such as the municipal manager and chief financial officer. Thirdly, the Auditor-General highlights continued non-compliance with SCM legislation as the main reason for increased irregular expenditure. In 2014/2015 SCM amounted to 100% of the irregular expenditure incurred by the four worst performing municipalities (Brooks 2016).

Impact of Public Procurement on Accountability According to Brooks (2016), Section 38(1)(a)(iii) of the Public Finance Management Act No 1 of 1999 (PFMA) designates the accounting officer of the department, trading entity or constitutional institution as the responsible official for ensuring and maintaining an appropriate procurement and provisioning system that echoes the Section 217 principles. The PFMA requires the accounting officer, inter alia, to prevent irregular expenditure, manage resources, and control the budget of the department or entity. Furthermore, the accounting officer may delegate any power conferred by the PFMA, however the accounting officer maintains full accountability. Similarly, Section 115 of the Municipal Finance Management Act No 56 of 2003 (MFMA) designates the accounting officer of the municipality as the responsible official for the implementation of Supply Chain Management policy.

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The PFMA imposes fiduciary duties on the accounting authorities including a duty of utmost care as well as a duty to act with honesty, fidelity and in the best interests of the entity. Section 83 of the PFMA further provides that accounting authorities will be jointly and severally liable for negligently breaching their fiduciary duties. Importantly, Section 86 of the PFMA imposes criminal liability, and possible imprisonment, on accounting officers if that official wilfully or grossly negligently fails to ensure and maintain an appropriate procurement system or perform their fiduciary duties. The MFMA provides similar provisions relating to fiduciary duties and liability. It should be noted that Section 3(3) of the PFMA expressly provides for its prevalence in instances of conflict with any other legislation. Therefore, legislation that centralises the procurement system will need to amend the PFMA and the MFMA to divest the accounting officer of its procurement duties or indemnify the accounting officer against responsibility and liability in a centralised procurement system (Brooks 2016).

Types of Challenges Confronting Public Procurement Each country has its own economic, social, cultural, and political environment, and each country’s public procurement practitioners face different types of challenges, or the same types of challenges but at different levels from their counterparts in other countries. In a developed or developing country, public procurement practitioners have and will face always many challenges. According to Thai (in Knight et al. 2007) public procurement is an important function of government for several reasons. First, the complete magnitude of procurement expenses has a great impact on the economy and needs to be well managed. Efficiently handling this size of procurement expenditures has been a policy and management concern as well as a challenge for public procurement practitioners. Second, public procurement has been utilised as an important tool for achieving economic, social and other objectives. Third, due to many reasons (including greater scrutiny of taxpayers and competing vendors), public procurement has been perceived as an area of

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waste and corruption. According to International Transparency, corruption and bribes are widespread in government contracts. Overcoming the negative perception, and the objective reality, to a certain extent, is one of the biggest challenges in public procurement. Fourth, as many countries have moved to a regional and or global economy, public procurement practitioners face another challenge, which is, how to comply with their government’s procurement regulations and social and economic procurement goals without violating regional and/or international trade agreements (Thai, in Knight et al. 2007). Fifth, in developed as well as developing countries, disregarding their economic, social, and political environment, a sound procurement system has accomplished two sets of requirements: management requirements and policy requirements. Finally, facing the challenges above and others, including rapid developments in technology (which have led to new procurement methods), public procurement cannot be perceived as mere a ‘clerical routine’, as procurement practitioners are and should be involved in strategic procurement planning.

Key Challenges for Public Sector Procurement Public sector procurement is different to private procurement because of the many policies that need to be met before making a final purchasing decision. Buyers or commissioner of products and services for the public sector need to comply with specific regulations. This means that they to know and be aware of the public sector procurement policies applicable. When procuring for the public sector, money has to be spent wisely, therefore procurement managers are pressured into making smarter buying decisions daily, be open to new ways of savings costs and make their time more efficient. Effective supply chain assurance and compliance are key to developing healthy relationships with manufacturers, suppliers, and procurement departments. By working closely with the public and private sectors, the procurement officers meet and are confronted by the following key challenges in their everyday activities (Progora 2019): Embedding New Purchasing Approaches The adoption of new purchasing techniques and tools can be quite scary as people often need to get out of their comfort zone and familiarise

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with new suppliers and ways of doing business. But change is not bad, especially when things get optimised and become more efficient. Overcoming Supplier Related Issues Finding and qualifying suppliers is one of the most common procurement challenges. With so much governance and compliance to adhere to, it can be a challenge to maintain smooth supply chain performance. Making promises is not enough to ensure a smooth supply chain and ensure a long-lasting relationship with the buyers. Procurement practitioners need to be able to deliver according to their customer’s expectations. Being Realistic It goes without saying that procurement managers have big expectations. They want high quality products at very low costs, with free next day delivery. But in reality, this is often not attainable, and in many cases, it is hard to find one supplier to satisfy multiple needs. If the supplier cannot deliver the order on time or in the amount requested, additional time, money, and resources are spent on market research and gaining quotes. Technologies such as Progora in the United States, allow complex orders to be dealt with faster and more efficiently. Creating easier and more efficient ways of working lowers their cost of engagement that can lead to savings on the products or services they offer. Making Informed Buying Decisions The main advantages of having a centralised purchasing platform are making more informed decisions, reducing time, and optimising systems to automate processes and create streamlined purchasing experiences. A few of the challenges facing procurement practitioners when performing market research are lack of product information; missing product pictures; inability to track orders; and supplier’s inflexibility. Matching capabilities and requirements with low cost pricing is almost a myth when it comes to public sector procurement. Making informed buying decisions has proved time and time again that it is possible to deliver a genuine service that benefits both buyers and the sellers.

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Accurate Data It has been proven that customers’ buying decisions are based on rational and emotional reasoning. With the rise of automated operations and online shopping, every customer now expects a smooth buying experience, whether they procure for their organisations or for themselves. In business-to-business (B2B) environments managing return on investment is critical to a healthy business while the main job procurement managers have is to ensure is that their budget is well spent, and they get the highest quality products and services, on time, every time, ensuring a positive and effective procurement strategy (Progora 2019). Public procurement practitioners have always walked on a tight rope. Thai (in Knight et al. 2007) contends that their ability to accomplish procurement objectives and policies is influenced very much by internal forces including: interactions between various elements of the public procurement systems, various officials and organisations in the three branches of government; types of goods, services and capital assets required for an organisation’s missions; professionalism or quality of procurement workforce; staffing levels and budget resources; procurement regulations, rules and guidance; and Internal controls and legislative oversight. On the other hand, public procurement practitioners have always faced challenges imposed upon by a variety of environment factors including market, legal environment, political environment, organisational environment, and socio-economic and other environmental factors. Market conditions have a great influence on public procurement practitioners’ effort to maximise competition. Moreover, the market determines whether or not socio-economic objectives of procurement are accomplished, whether or not a governmental entity can fulfil its needs; the timeliness of fulfilment; and the quality and costs of purchased goods, services and capital assets. As there are different levels of economic growth among countries in the world, market conditions are very favourable in industrialised countries, while they may be unfavourable in developing countries. Apart from public procurement regulations and rules, there is the legal environment. The legal environment refers to a broad legal framework that governs all business activities including research and development (regulations dealing with safety and health of new products), manufacturing (safety and health regulations at workplace and pollution control),

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finance (regulations dealing with disclosure of information), marketing (regulations dealing with deceptive advertising, disclosure of product characteristics), personnel (regulations dealing with equal opportunity for women and minorities), and contracts. While some countries impose social policies on their public procurement practices (such as a policy placing a fair proportion of government acquisitions with woman/small-medium-macro-owned small business, or economically disadvantaged areas), most governmental entities, be it a developed or developing country or national, regional/provincial, and local governments, use their large procurement expenditures for economic stabilisation or development purposes by preferring national or local firms over firms from other countries or other geographic locations. Public procurement practitioners may be in a favourable economic environment or market (with many competing tenderers in their country or local areas) or an unfavourable economic environment (where competition hardly exists). This environment would have a great impact on their practices as they may face an imperfect competitive market (Thai in Knight et al. 2007).

Future Research Directions A study conducted by Motuba (2014) in one of the district municipalities in South Africa revealed that implementation of Supply Chain Management and procurement broadly was far from satisfactory, and some municipalities are faced with problems of lack of skills and capacity in the implementation and executive of Supply Chain Management. Furthermore, non-compliance to Supply Chain Management and Procurement regulations was highlighted. The regulatory framework of the South African government has ensured that all significant changes and improvements in the supply chain practices of government are well maintained, in an effort to encourage efficiency and effectiveness in government supply chain management processes. Tighter controls have been placed in government procurement sector to ensure value for money. However, the challenge still remains with changing how people in government supply chain management receive these efforts of government, and how they accept this shift in the way they do things.

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According to the National Treasury of South Africa, Supply Chain Management is one critical area, which will assist in ensuring that government financial reforms are achieved. Therefore, for this reason, the National Treasury has issued supply chain management regulations in line with the Public Finance Management Act of 1999 as well as in line with the Municipal Financial Management Act of 2003 to guide and add to the requirements of the legal framework.

Conclusion Public procurement has important economic and political implications; ensuring that the process is economical and efficient is crucial. This requires in part that the whole process is well understood by both the actors (the government, the procuring entities, the business community/suppliers) and other stakeholders, including the professional associations, academic entities and the general public. Public sector procurement has the same overall goal as private sector procurement—serve the needs of your end customer as well as possible, for the least amount of money possible. For the private sector, it’s about making a profit, and for the government, it’s about maximising the budget. In either public procurement or the private sector, making the change to the procurement system, whether centralised or decentralised, can bring its own challenges. This chapter has addressed some of these challenges. There are many others that have not been touched. Moreover, due to its nature as elaborated above, public procurement practitioners will never get bored as they continue to face contradictory and contrasting procurement requirements and objectives imposed by policies and trade agreements. There are many ways to help public procurement practitioners cope with the myriad challenges they must face. They include increased efforts in research, knowledge advancement, and experience exchanges.

References Ambe, I. M., & Badenhorst-Weiss, J. A. (2012). Procurement Challenges in the South African Public Sector. Journal of Transport and Supply Chain Management, 6(1), 242–261. Bolton, P. (2006). Government Procurement as a Policy tool in South Africa. Journal of Public Procurement, 6(3), 193–217.

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Brooks, M. (2016). The Legality of Centralised Public Procurement in South Africa. African Public Procurement Law Journal, 3(1), 42–71. Karjalainen, K. (2009). Challenges of Purchasing Centralization: Empirical Evidence from Public Procurement. Helsinki School of Economics: Helsinki. Leenders, M. R., & Johnson, P. F. (2000). Major Structural Changes in Supply Organizations. Center for Advanced Purchasing Studies: Tempe, AZ. Mahlaba, P. J. (2004). Fraud and Corruption in the Public Sector: An Audit Perspective. Service Delivery Review, 3(2), 84–87. Mantzaris, E. (2014). Public Procurement, Tendering and Corruption: Realities, Challenges and Tangible Solutions. African Journal of Public Affairs, 7 (2), 67–79. Motuba, L. L. (2014). Challenges Facing the Supply Chain Management System of Dr Ruth Segomotsi Mompati District Municipality. Unpublished Masters Dissertation. North-West University. Mafikeng. National Treasury. (2003). Policy Strategy to Guide Uniformity in Procurement Reforms Processes in Government. Pretoria: Government Printer. National Treasury. (2005). Supply Chain Management: A Guide for Accounting Officers and Municipal Entities. Pretoria: Government Printer. Paranikas, P., Tevelson, B., Belz, D., & Whiteford, G. P. (2015). How to Negotiate with Powerful Suppliers. Harvard Business Review. PurchaseControl. (2019). 5 Common Public Sector Procurement Problems. Accessed on 17 May 2019. https://www.purchasecontrol.com/blog/publicsector-procurement-problems/. Progora. (2019). Key Challenges for Public Sector Procurement. Accessed on 18 May 2019. https://www.mercatosolutions.co.uk/r/Progora.aspx. Republic of South Africa. (1996). Constitution of the Republic of South Africa of 1996. Pretoria: Government Printer. Republic of South Africa. (1999). Public Finance Management Act 1 of 1999. Pretoria: Government Printer. Republic of South Africa. (2000). Preferential Procurement Policy Framework Act 5 of 2000. Pretoria: Government Printer. Republic of South Africa. (2003). Local Government: Municipal Finance Management Act 56 of 2003. Pretoria: Government Printer. Thai, K. V. (2007). Challenges in Public Procurement. In L. Knight, C. Harland, J. Telgen, K.V. Thai, G. Callender, & K. McKen (Eds.), Public Procurement: International Cases and Commentary. London: Routledge. Weele, A. J. V. (2005). Purchasing & Supply Chain Management: Analysis, Strategy, Planning and Practice. Andover: Cengage Learning. Weele, A. J. V. (2010). Purchasing & Supply Chain Management: Analysis, Strategy, Planning and Practice. Andover: Cengage Learning. Weele, A. J. V. (2017). Purchasing & Supply Chain Management: Analysis, Strategy, Planning and Practice. Andover: Cengage Learning.

CHAPTER 6

Weak Procurement Practices and the Challenges of Service Delivery in South Africa Koliswa Matebese-Notshulwana

Introduction This chapter discusses weak procurement practices and the challenges of service delivery in South Africa. Ambe (2016) argues that since procurement is a key tool and mechanism enabling government policies of socio-economic development and transformation, it is used to address the anomaly created by a pre-democratic South Africa which was characterised by discrimination and prejudice that favoured the white minority and disadvantaged the black majority. According to Bolton (2006), public procurement has been granted constitutional obligation and is recognised as a means of addressing past discriminatory policies and practices. In this regard, it became central to the government service delivery system as it promoted aims which were, arguably, secondary to the primary aim

K. Matebese-Notshulwana (B) Department of Political Science, University of Pretoria, Pretoria, South Africa © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_6

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of procurement to promote social, industrial or environmental policies (Cane 2004).

Understanding Public Procurement and Its Significance in South Africa According to Odhiambo and Kamau (2003), public procurement is broadly defined as the purchasing, hiring or obtaining by any contractual means, goods, construction works and services by the public sector and involves the purchase of commodities and contracting of construction works and services if such acquisition is effected with resources from state budgets, local authority budgets, state foundation funds, domestic loans or foreign loans guaranteed by the state, foreign aid and revenue received from the economic activity of state. Kashap (2004) also defines it as an indispensable economic activity for good governance. Hommen and Rolfstam (2009) argue that public procurement is “the acquisition through buying or purchasing of goods and services by government or public organizations”. Ambe and Badenhorst-Weiss (2012) argue that public procurement is the function whereby public sector organisations acquire goods, services and development and construction projects from suppliers in the local and international market, subject to the general principles of fairness, equitability, transparency, competitiveness and cost-effectiveness. It, therefore, supports directly or indirectly the social and political aims of the government. For purposes of this chapter, with the consideration of the above definitions, public procurement is defined as a function whereby public sector acquire goods, services and development and construction projects from suppliers in the local and international market, subject to the general principles of fairness, equitability, transparency, competitiveness and cost-effectiveness (Ambe and Badenhorst-Weiss 2011). According to Bolton (2006), public procurement has been used by governments to achieve socio-economic objectives such as stimulating economic activity; protecting national industries from foreign competition; improving the competitiveness of certain industrial sectors and remedying national disparities. In keeping with this assertion, Ambe (2009) makes the point that since the end of the apartheid regime in South Africa, public procurement has been used explicitly to pursue socioeconomic objectives. Turley and Perera (2014) concur that procurement

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in the South African public sector is a key mechanism that enables government to implement socio-economic objectives and, therefore, serves both as a strategic tool and a mechanism enabling government to implement policies for socio-economic development and transformation. This is because prior to 1994, the then apartheid government in South Africa made use of the Exchequer Act of 1975 to regulate the financial management of the time. This Act was used as a tool to prescribe rules and provide systems for financial expenditure. However, in 1996, the Constitution of a democratic South Africa was enacted and introduced a change from such Act which was ineffective and encouraged corruption. The 1996 Constitution made provisions for the use of procurement as a policy tool. In February of 2000, the relevant section of the Constitution was given effect with the promulgation of the Public Procurement Act. Section 217 of the Constitution of the Republic of South Africa which essentially stipulates the primary and broad secondary procurement objectives. Section 217(3) requires that national legislation prescribes a framework within which the preferential procurement policy must be implemented. The Preferential Procurement Policy Framework Act, (Act no 5 of 2000) (PPPFA) was thus promulgated in response to this constitutional imperative. Procurement by organs of state (national and provincial departments, municipalities, constitutional entities and public entities) is also governed by several other pieces of legislation, such as Public Finance Management Act, (Act 1 of 1999 as well Municipal Financial Management Act 56 of 2003 (MFMA). The Constitution of the Republic of South Africa placed premium of improving the lives of all South Africans by ensuring that all spheres of government must promote transparency, accountability, effective and efficient management of the economy (Section 215 (1)). Significantly, the Constitution recognises procurement as a means of addressing past discriminatory policies and practices (Bolton 2006). Therefore, procurement is guided by the principles of fairness, equitability, transparency, competitiveness and cost-effectiveness as the Constitution requires in Section 217 (Constitution, Republic of South Africa 1996). To this end a new and strategically more powerful concept was pursued, namely, supply chain management. Supply Chain Management (SCM) was introduced in the public sector in South Africa around 2003 after the government decided to introduce procurement reforms. Section 217 of the Constitution (Act 108 of 1996), forms the basis for the introduction of Supply Chain Management in the Public Sector.

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Today the implementation of SCM currently occupies a centre stage in the financial management reform process in the public sector in South Africa (Mkhize 2004). The emphasis of these financial management reforms is on the way in which financial resources are allocated, managed and reported in the public sector (Mkhize 2004). Supply chain management is the broad range of activities required to plan, control and execute a product’s flow, from acquiring raw materials and production through distribution to the final customer, in the most streamlined and cost-effective way possible. It is a financial management function and therefore requires the accounting officer to observe general financial management practices (Dlova and Nzewi 2014). SCM in the public sector can be defined as an integral part of Financial Management that seeks to introduce internationally accepted best practice. It bridges the gap between traditional methods of procuring goods and services and the balance of the supply chain whilst addressing procurement related matters that are of strategic importance” (Policy to Guide Uniformity in Procurement Reform Processes in Government 2003). Essentially, the new procurement system was applied for two reasons, namely for the promotion of the principles of good governance and the introduction of a preferential system to address socio-economic objectives (National Treasury 2003; Ambe 2009). More so, reforms in public procurement were initiated in 1995 to promote the principles of good governance and introduced a preferential system to address socioeconomic objectives (Ambe 2009). In this regard, the reform process was initiated due to inconsistences in policy application, lack of accountability, lack of supportive structures and fragmented process (Ambe 2016). Prior to 1994, the government procurement system was geared towards large and established contractors. Thus, new contractors found it very difficult to participate in government procurement procedures (Bolton 2006). According to Ambe (2012), the use of the logistics system as a tool for asset management also raised concerns regarding the improper handling of movable assets within the governmental environment. The procurement reform processes are embedded in Section 112 of the Municipal Financial Management Act 56 of 2003 (MFMA), in Section 76(4) (C) of the Public Finance Management Act (PFMA), and in the PPPFA, Section 217 of the Constitution and the Public Finance Management Act, (Act 1 of 1999). This, however, should be followed by a process characterised by good ethical standards to ensure that services delivery is not compromised and undermined. This became even more

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important as emphasis was placed on integrated infrastructure development and the unlocking of government property to contribute to the optimization of resources (Ambe 2016). Considering that governments spent large sums of money to produce goods and services, public procurement has remained one government activity that is most vulnerable to waste, fraud and corruption due to the magnitude of the financial flows involved. It thus stands to reason that the primary defence against the possibilities of corruption should involve full and proper everyday management of procurement activities. What the above implies is that public procurement is closely associated with transformation, development and the betterment of the quality of life and the livelihoods of the majority of South Africans. However, this can only mean that good governance and strong public procurements are prerequisite for effective controls to ensure proper oversight mechanisms to achieve accountability and transparency. In the absence of effective controls and commitment to procurement practices, corruption occurs resulting in poor service delivery in the country. Since procurement accounts for such a large portion of public resources, it is important that the procurement process occurs in an accountable, transparent and wellmanaged manner to ensure high quality service delivery and safeguard the public interest (OECD 2015).

Procurement and Challenges of Operationalisation in South Africa In 2001, the National Treasury completed a joint Country Procurement Assessment Review (CPAR) in collaboration with the World Bank to assess procurement practices throughout the public sector. The CPAR identified certain deficiencies in procurement practices relating to governance, and the interpretation and implementation of PPPFA and its associated regulations. According to (Smart Procurement 2011), there is evidence of non-compliance with procurement legislation and policies, as well as of various tender irregularities. Moreover, President Cyril Ramaphosa in his State of the Nation Address (SONA) of 2018 makes reference to the state of state-ownedenterprises (SOEs) which were experiencing several challenges including severe financial, operational and governance challenges that have impacted on the economy. He assured South Africans that, “We will be initiating measures to set the country on a new path of growth, employment and

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transformation that will result in tough decisions being made to close our fiscal gap, stabilize our debt and restore our SOEs to health” (Ramaphosa 2018). Accordingly, the (Ambe 2016) asserted that “taxpayers were fleeced of R30bn” due to corruption, incompetence and negligence by public servants. Most of this spending was linked to corruption, incompetence and negligence by public servants. More so, The Smart Procurement report 2011 also confirmed that government had spent some R26.4 billion in 2010 in ways that contravened laws and regulations. The national and provincial governments and their entities notched up R21 billion in irregular expenditure in 2010, a 62% rise over the R13 billion of previous year (Smart Procurement 2011). According to the briefing made by the Auditor-General Kimi Makwethu in parliament on audit outcomes for 2013–2014, it reported that there were no clean audits in the big-spending departments of health, education and public works, which showed a deterioration in their financial management (Makwethu 2014). The former chairperson of SCOPA, Themba Godi confirmed this assertion in parliament and said, “The deterioration was “disappointing”, especially in light of the considerable efforts to improve matters. “It is a worry that we are not making as fast and as good progress as we would want”. Thus, this section provides a discussion on challenges associated with procurement within the South African public sector. One being operationalisation of procurement as tender procurement is a problem in South Africa as far as financial irregularities are concerned. Below are some of the challenges associated with weak procurement that hinder service delivery such as oversight negligence, good ethical conduct, noncompliance with rules and regulations as well as the effects of corruption with the procurement process. What is clear is that when there is no meaningful oversight implementation in the governance processes, weak procurement result. It is therefore argued that proper oversight assists with monitoring of government processes with the utilisation of public funds, detecting and preventing maladministration, as well as proper procedures in terms of rules application. Essentially, the task of oversight is the responsibility to monitor and detect maladministration, abuse and misuse of public funds within the public sector (Mukura et al. 2016). In South Africa, although the Constitution gives mandate to the existence of oversight in parliament, there are still serious challenges of weak

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procurement within the public sector. Therefore, this chapter advances that failure of oversight in the public sector is responsible for the persistence of maladministration and misuse of public funds leading to poor service delivery. According to, Stapenhurst, Pelizzo, Olson and Von Trapp (2006), oversight is defined as a constitutionally mandated function of legislative organs of the state to scrutinize and oversee executive action and any other organ of the state. The term is used to define many activities executed by legislatures in relation to the executive. For the purposes of this chapter, the following working definition of oversight is used: “the review, monitoring and supervision of government and public agencies, including the implementation of policy and legislation” (The Constitution of the Republic of South Africa, 1996 Act 108 of 1996). This definition focuses on the purpose and nature of oversight in ensuring the monitoring and detection of maladministration with the government machinery, in this case public sector. The Constitution of the Republic of South Africa stipulates that, an oversight function of parliament is to detect and prevent abuse, arbitrary behaviour as well as the protection of the rights and liberties of citizens. Relevant to oversight is to improve the transparency of government operations and enhance public trust in the government, which is itself a condition of effective policy delivery (AGSA 2014). As well as to, detect and prevent abuse, arbitrary behaviour, or illegal and unconstitutional conduct on the part of the government and public agencies. At the core of this function is the protection of the rights and liberties of citizens. Oversight control assist with procurement procedures with adequate internal controls to prevent irregularities. One of the fundamental measures to control utilisation of public funds is the proper and adequate application of oversight mechanisms that are provided for in the Constitution to monitor the utilisation of public funds as well as to detect wasteful, irregular and fruitless expenditure within the state machinery. Procurement is a strategic function that requires appropriate checks and balances (oversight) providing assurance on accounting authorities that SCM functions were executed in a manner that supports good governance practises (SCM Review 2016). According to OECD (2007), ethics code of conduct are universally applied principles that are considered essential to all public sector procurement transactions, all aspects of procurement must be seen to be ethical and honest, strong and clear accountability arrangements must be in place, stringent transparency requirements must be met, procurement

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must be open to competition, procurement must be fair and impartial, the interests of taxpayers, suppliers and customers must be paramount (they are usually paramount to the people), infringement reaction procedures must be applied quickly and decisively. These practices should, of course, be included in the organisation’s procurement rules and should be enforced (OECD 2007). One of the problematic areas with regards to operationalising procurement is that there were 36 different government SCM systems which were generally poorly integrated and non-automated (National Treasury 2015). Each organ of state determines its own procedures and policies, which were consistent with the legislative framework (Watermeyer 2011). According to National Treasury (2015), internal controls were, therefore, diluted by not being applied consistently and this contributed to the high levels of cases of non-compliance reported by the Auditor-General. The treasury plans to replace all these systems with a single system, the integrated financial management system (IFMS) and the central supplier database will fall under it (ibid.). More so, it will assist the government to identify trends, calculate costs accurately and improve the planning and costing procedures when compiling the budgets of departments, municipalities and parastatals (Mail & Guardian 2015). The Office of the Chief Procurement Officer (OCPO) was established in 2013 with the primary purpose of modernising and overseeing the South African public sector SCM system, to ensure that the procurement of goods, services and construction works is fair, equitable, transparent, competitive and cost effective in line with the Constitution and all relevant legislation (Watermeyer 2011). However, the OCPO is not directly involved in procurement, but leads and manages procurement reform, maintains the procurement system and oversees the way in which government does business with the private sector (National Treasury 2017). In line with the PFMA and the MFMA, the accounting officers and accounting authorities of departments and entities are responsible for all day-to-day SCM activities (Watermeyer 2011). Their responsibilities will include developing their own SCM policies and management systems, and provide staff training and development in line with the national supply chain framework. They will also be required to adhere to national supply chain norms and standards of reporting and compliance (SCM Review 2016). From the discussions above, it is evident that public procurement in South Africa has undergone dramatic transformation which was enacted due to fragmented processes and is currently evolving in the quest for

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better services. Public Finance Management Act (1999) marks the transition to a decentralised procurement system, managed by accounting officers in national and provincial departments, and it also governs the timing and content of public budgets. Despite the reform processes in public procurement and the employment of SCM as a strategic tool, there are predicaments in South African public procurement practices, for example non-compliance with procurement and SCM-related legislation and policies as well as tender irregularities (Smart Procurement 2011). According to De Lange (2011), “Taxpayers were fleeced of R30 billion and corruption, incompetence and negligence by public servants” were to be blamed. The South African government spent R26.4 billion in 2010 in ways that contravened laws and regulations (Smart Procurement 2011). The SCM Review (2016) revealed that the implementation of consistent procurement practices across all spheres of government was all but satisfactory. Furthermore, practitioners responsible for the implementation of procurement policies are hindered by the lack of operational guidance on how to implement consistent procurement practices and how to put appropriate departmental policies into practice (Ambe 2016). It is a matter of concern that government is not making enough progress in implementing consistent procurement practices at the rate it would like it to be. In view of this, the National Treasury has implemented numerous changes to improve public procurement practices to address the socio-economic issues of the country (Ambe 2016). According to SCM (2016), government projected an investment up to over R750 billion in economic and social infrastructure over the next three years to support economic growth and improve the quality of life of its citizenry. The report stated that, failure to deliver and maintain infrastructure would disrupt the lives of people and communities and would have economic consequences. In this respect, an efficient and costeffective infrastructure supply chain management system is critical for economic and social progress (SCM 2016). Therefore, it is critical for the procurement of goods and services to be done through proper application of rule and regulation to ensure compliance. Hence, compliance in public procurement involves making sure that public procurement regulations are followed to the letter (Mwangi 2017). Regulatory compliance is an organisations’ adherence to laws, regulations, guidelines and procedures relevant to its business (Payan and McFarland 2005; Gelderman et al. 2006). Whereas compliance is the

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degree to which an agent adheres to principal’s directives, policies and procedures, non-compliance is the degree to which an agent initiates deviant policies and procedures that are not approved by the principal, Roodhooft and Abbeele (2006). Thus, compliance with public SCM rules, legislation, norms and standards is critical to ensure that government’s policy objectives achieved and sustained. This is so because accountability constitutes a central pillar to public procurement (Soudry 2007). Without transparent and accountable systems, the vast resources channelled through public procurement systems run the danger of being entangled with increased corruption and misuse of funds (Jeppesen 2010).

The Effects of Corruption Within the Procurement Process Having discussed weak procurement practice as a challenge for service delivery in South Africa, the reform processes in public procurement and the employment of SCM as a strategic tool, it is clear that South Africa continues to face enormous challenges in its public procurement practices (Munzhedzi 2016). Ambe (2016) argues that there were constant allegations of corruption and inefficiencies in the procurement processes, and the significant number of service delivery protests in the country signals the prevailing dissatisfaction with basic services. Corruption in procurement can impede economic development, distort market mechanisms and create inefficiencies reducing competitiveness, trade and foreign direct investment (Soreide 2002). It therefore, occurs through violations of procurement rules or through legitimate deviations from the rules (Soreide 2002). Thus, a challenge of corruption is considered in this chapter a major contributor to poor service delivery with great potential for instability. During 2013–2014 financial year, the report revealed that the Free State Province was hit by a huge irregular expenditure of R2.429 billion incurred mainly caused by non-compliance with supply chain management requirements. The report also revealed that, during the same financial year, nearly 60% of the auditees had material findings concerning uncompetitive and unfair procurement processes and these findings were also the main cause of the irregular expenditure of R11.351 billion. These are some of the experiences of weak procurement process in South Africa. These weak procurement processes have led Munzhedzi (2016) to

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conclude that corruption in the procurement process is one of the biggest challenges facing the South Africa government. These incidents are part of the wider level of corruption commonly referred to as state capture, which saw many public officials and politicians embroiled in public sector mismanagement of funds and improper utilisation of public funds, including acceptance of bribes in exchange of goods and service instead of choosing the best price-quality. Consequently, the efforts of public officials to get into positions for obtaining bribes may represent a significant cost to the public service (Soreide 2002). Furthermore, the main reason for the rife corruption in the public sector is that there is non-adherence to policy prescripts including the Public Finance Management Act, 1999 (Act 1 of 1999) and the Municipal Finance Management Act, 2003 (Act 56 of 2003). This enormous predicament may only be addressed if government officials were to show political will and commitment by punishing offenders who did not comply with the said legislative framework (Munzhedzi 2016). The existence of corruption is associated with weak procurement practice and has gradually eroded governance structures and caused serious threat to the country’s sustainable economic development. Consequently, corruption in procurement not only undermines service delivery, it also fuels public disorder and destruction of existing properties by dissatisfied members of the public. According to Pillay (2004), the effects of corruption in South Africa have seriously constrained development of the national economy and this has significantly inhibited good governance. Heyman and Lipietz (1999) support this assertion, noting that South Africa was quickly learning that corruption was one of the major impediments to effective development. It therefore fundamentally runs contrary to accountability and the rule of law because it undermines governance, diminishes public trust in the credibility of the state and threatens ethics of government and society. The consequence of this is not limited to the socio-economic growth and welfare of the citizens but also to the country’s general economic growth. As Warren (2004) has noted, corruption reduces the effective domain of public action, and thus the reach of democracy, by reducing public agencies of collective action to instruments of private benefit. In the public sector, the heartbeat of service delivery is the management of procurement of services and materials (National Treasury 2015). It therefore, entails the acquisition of relevant services and goods for the purpose of government policies for effective service delivery (Arrowsmith

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2010). Since service delivery is the sole responsibility of government, internally and externally, for a wide array of public needs, procurement, therefore, is a crucial institutional process and measure for the functioning of the government. Because of its centrality to public administration, government across the globe, apply rules and regulations to promote the best ethical standards in the procurement process. When the ethical standard and rules become compromised, service delivery would be hampered while good governance would be in jeopardy as well. However, it is a common practice to target the procurement process when contemplating corruption. At the centre of this malaise is the political class, seeking to leverage on the power of the state to advance the socio-economic interests of their sponsors and lackeys. In a bid to accomplish this, the procurement process becomes compromised, respect for the standardised rules would be put in abeyance, while private individuals, by virtue of their political connections, access the public treasury at the expense of service delivery. While procurement is an institutional arrangement to advance effective public service delivery, the menace of corruption permissible by the political elite compromises the responsibility of the government, thereby jeopardising good governance. The consequence of this procurement–corruption nexus is the prevalent of governance crisis. Effective procurement management seeks to ensure the best practice, in terms of transparency in the acquisition of services and materials for the execution of public policy. Most often, this is done through a rigorous tender process, aimed at ensuring the choice of the economically and qualitatively best options out of the various alternatives presented by the different bidders. The assumption is that the choice would guarantee the best quality of the outputs of the projects thereby leading to effective service delivery. However, when the process is compromised through corruption, the quality of the outputs would be suspect, and the outcomes would create poor service delivery. Consequently, good governance would be in abeyance; abandoned or incomplete. This is a recurring problem in South Africa. In South Africa, large-scale corruption continuously undermines the capacity of the state to function effectively. Institutional arrangements to safeguard public interest through oversight of public policy management are weak to harness the constitutional responsibilities to tame the corruption monster while the actors exploit the structural deficiencies to advance personal interest.

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According to Mahlaba (2004), fraud and corruption cost South African taxpayers hundreds of millions of rand each year. Over the last few years, the impact of fraud has led to the promulgation of special legislation and improvement in existing legislation. This has led to the creation, among others, of the Directorate of Special Operations, commonly known as the Scorpions, the Asset Forfeiture Unit, the Public Protector, the Special Investigation Unit, Commercial Crime Units, Internal Audit Units, Special Investigation Units within departments and the appointment of forensic consultants (Mahlaba 2004). This particular trend of misuse of public funds continues to be of major concern to both the public and private sector in South Africa. Poor expenditure management, particularly fiscal discipline in the Public Service, hampers economic growth and service delivery. Public sector reports continue to reflect incidents of unauthorised, irregular, fruitless and wasteful expenditure. These fiscal irregularities need to be minimised by setting up effective internal controls and linking planning with budgeting in order to avoid the financial abnormalities or irregularities. Without a doubt, these financial mismanagements could affect the government’s ultimate objective of delivering services to the people. This signals weak internal controls and ineffective managerial leadership without the ability to manage public expenditure. To improve public expenditure management, it is important that incidents of unauthorised and irregular expenditure be treated when discovered. This can only be done through the proper financial management and effective oversight application. A general lack of effective accountability in the public sector has seriously constrained sustainable economic development and seriously affected service delivery in South Africa as most of it centres on corruption. South Africa’s most of the irregular expenditure took the form of corruption during the fourth administration despite the promise in the 2014 State of the Nation Address that government would spend public funds prudently (SONA 2018). Despite this promise, inferences have been made that irregular expenditure is a function of the lack of accountability on the part of the accounting officers who bypass regulations because of the pressures of the executives. The truth of the matter is that, there is a lot of work to be done to turn around South Africa in terms of irregular expenditure. An evaluation of SOEs indicates that they are vulnerable to debt burdens, underinvestment, depreciation of assets, corporate governance quagmires and

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corruption problems (Rondinelli 2007). Alexander (2013) argues that service delivery protests continue unabated and that government attempts to improve service delivery have not been sufficient to address the frustration and anger of poor people in South Africa. Moreover, service delivery protest includes many other concerns such lack of jobs, poverty and high levels of inequality.

Conclusion and Recommendations Ambe and Badenhorst-Weiss (2012) view public procurement as increasingly recognised as a profession that plays a key role in the successful management of public resources. In addition, a number of countries have become increasingly aware of the significance of procurement as an area vulnerable to mismanagement and corruption and have thus made an effort to integrate procurement into a more strategic view of government efforts. Mahmood (2013) suggests, as part of the efforts to adopt, a long-term and strategic view of procurement needs and management; most countries have resorted to using their annual procurement plans as a possible problem solver. Munzhedzi (2016) argues, to this end that, it is safe to argue that the relationship between public sector procurement and corruption is inevitable and it seems as though one cannot exist without the other. According to Munzhedzi (2016) procurement practices and corruption in the South African public sector are inseparable twins. It is important that procurement practitioners and academic institutions take centre stage in the enhancement of procurement practices in the country. This chapter concludes that without transparent and accountable system, the majority of resources acquired through weak procurement process run a danger of being entangled with increased corruption and huge misuse of public funds. Hence, there is an urgent need to rethink innovative ways of combating corruption and some other administrative malpractices within South African spheres of government. To fight the scourge of maladministration, mismanagement of finances, fraud and corruption, government need to strengthen and review existing internal control systems to detect deficiencies. Though the South African government has made significant gains with regards to creating a more equal society, divides and challenges are still rife. Challenges include unemployment, poverty, crime and inequality.

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To ensure good governance as well as effective public sector procurement practices, this chapter therefore makes the following recommendations: a. There should be a concerted effort in dealing with consequences for non-compliance and misuse of public resources. This will also help combat corruption. b. Institutional entities must ensure full compliance with procurement legislation and processes. c. Public sector officials ought to be decisive in dealing with both corruption and non-compliance as major challenges confronting procurement in the public sector. d. To succeed in the battle against corruption in the public sector procurement, officials who contravene rules must be held accountable subsequently charged.

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CHAPTER 7

Public Procurement Governance: Toward an Anti-corruption Framework for Public Procurement in Uganda Benon C. Basheka

Introduction The quest for good governance appears to have tormented humankind for several hundred thousand years and this threatens to remain so for the next several years. The greed by people against fellow people and the broader collective interests of society seem to be unending. Indeed, corruption has remained a key roadblock to the quest for good governance and it remains a thorn unless concrete actions are undertaken. The quest for good governance will not be possible unless renewed coordinated efforts on the fight against corruption are initiated and implemented. Corruption takes many forms and a bribe (which is one of the forms) corrupts the conscience of humankind (Exodus, 23:8) to do acts that benefit only self at the expense of society. Bribes bring chaos (Amos, 5:12) and they thus merit punishment (Amos, 2:6).

B. C. Basheka (B) Kabale University, Kabale, Uganda e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_7

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The citizens and inhabitants of every country and generation deserve good public services from their governments. However, the occurrence of corruption makes governments fall short of the citizen’s expectations. In this chapter, the call for good governance generally and specifically in public procurement is not only a legitimate concern but also it is a moral obligation. Since the inception of the state, the task of government has been to govern and to cater for the needs of society (Mukherjee 2010, p. 53). Governance has been a concern to humankind throughout the journey of civilization, although the dawn of globalization has recently tended to bring upon governments the need to adopt good governance and the phrase has tended to appear to be a new development. Good governance has tended to be associated with much recent efforts by multinational organizations like the World Bank, the International Monetary Fund, and United Nations Development agencies and within public administration discourses, it is associated with the post New Public Management (NPM) ideology of the late 1990s. Good governance and Good government have sometimes been confused to mean the same thing. Hughes (2003, pp. 76–77) attempted to differentiate government and governance by stating that government was the institution itself while governance was a broader concept describing the forms of governing which are not necessarily in the hands of formal government. Governance need not be exclusively conducted by governments (Keohane and Nye 2000, p. 12). Private firms, associations of firms, non-Governmental organizations (NGOs), and associations of NGOs all engage in governance. The long historical context of governance is pertinent as it enables one to have a comprehensive debate on developing a framework for anticorruption efforts in public procurement. From ancient time through medieval, industrial revolution, and contemporary times, the role of government in society and service deliver in particular has not been uniform (Basheka 2018a, p. 1). Anghi (2000, p. 1), in his synthesis of the relationships between civilization and commerce, placed the concept of governance in a historical perspective and suggested that there ought to be a need to always excavate such history and connect the good governance debate with earlier, colonial enterprise. In this regard, the works of John Locke, an ancient social contract theorist in the Two ‘Treatises on Government,’ is pertinent. The author indicated in the Treatises that there were great questions, which in all ages had disturbed humankind and brought on them the greatest part of mischiefs. Such mischiefs had

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in turn ruined cities, depopulated countries, and disordered the peace of the world. The key struggle was the question of ‘whether there be power in the world, nor whence it came, but who should have it’ (Hoff 2015, p. 4). Corruption and the governance questions appear to have occupied humankind more than any other activity. Governance, which from a conceptual context, is about power distribution and who controls it, is relevant to a debate on public procurement governance frameworks. VyasDoorgapersad and Aktan (2017, p. 30) have exceedingly acknowledged the historical origin of the concept of good governance from ancient times. The authors extensively give the Indian examples of how ancient societies conducted themselves regarding the ideals of good governance. According to them, good governance first appeared in the 1990s within the World Bank, the United Nations (UN), and the International Monetary Fund (IMF), who largely used the governance concept to depict how public organizations best conducted public affairs and deliver public goods and services. A debate on what public procurement governance entails would imply how best public procurement acquisitions processes are conducted within public organizations and agencies as they attempt to facilitate the delivery of public services. Good governance succeeded the New Public Management (NPM) doctrines, which had themselves replaced the ‘old public administration’ (Basheka 2018a, p. 4). To be in the good books of the multilateral funding agencies, governments in Africa had to undertake several reforms in their governance arrangements. In defending this change, Ergun (2011, p. 130) suggests that ‘public administration is a combination of theory and practice. In an age of globalization, the traditional role of government has to be changed accordingly. Rapid changes create new challenges to and opportunities for public administration.’ Good governance was thus introduced as part of the Third World counties project (Anghi 2000, p. 8). Developed countries in the West have tended to be associated with good governance while those of other continents like Africa have been labeled to have bad governance characterized by lack of rule of law, corruption, corruptive police force and judiciary, lack of participation and involvement, poor transparency, and accountable leadership and several ills. Despite its apparent long history, good governance tends to be labelled as a new paradigm within public administration (Doorgapersad and Aktan 2017, p. 30; Ikeanyibe et al. 2017, p. 3). The advocates of this reasoning

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tend to depict good governance as a replacement to the New Public Management (NPM) philosophies that characterized most governments in the 1980s. While terms like good governance could be of recent, the ideals and intentions of managing better the public resources through dispersed power centers beyond one individual or organ has been in existence. This was indeed the preoccupation of earliest philosophers when they conceived the concept of government. Good governance is not the same as good government, but good government can be a condition for attaining good governance. Good governance is now a theme in most public administration discourses and as an extension in public procurement issues that is concerned with efficient and effective ways of doing public service delivery. It is no longer contestable that the African continent in its diversity faces complexities in the delivery of public services and one major area widely fingered as the cause for this malaise is corruption. While good governance is seen in contemporary times as a solution to the problems of most African societies, there is an apparent absence of analytical frameworks to guide how best the good governance prescriptions can be applied in addressing corruption, which remains a biggest threat in the management of most public sector functions. In the context of the current debate a framework for addressing corruption to better improve public procurement governance is presented. While corruption appears in every sector and government function, the corruption in public procurement is much more detriment. This is for a number of reasons which are the attention of the next section of this chapter.

Why a Concern for Public Procurement Governance? Public procurement is part of the public fiscal management function of government but on the expenditure side. Hughes (2003, p. 165) once describes financial management as the most important part of the internal management of government as any activity of government needs money in order to operate and that the ability to raise taxation and to spend distinguishes the institution of government from other parts of the society. Public procurement is such a vital activity of government that facilitates government operations. To argue, therefore, that public procurement is central to the architectural design of democratic governance structure should be uncontested. The question before us is whether corruption in

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the public procurement function has negative implications to the good governance agenda of any government. Public procurement has its origins in the fiduciary obligation of government administrations to deliver goods and infrastructure (Odhiambo and Kamau 2003, p. 10). African governments thus need to accept the fact that increasing the efficiency and transparency in the use of public funds requires the existence of an adequate national procurement system that meets both national and international standards and operates efficiently (Ameyaw et al. 2011). For most developing countries, public procurement is a fertile ground for corruption in Government. In Uganda, specifically, corruption in public procurement, which involves the abuse of the procurement processes and diverting from established legal frameworks, has been a common challenge and it takes a multitude of forms. Public procurement corruption is perpetuated through procurement planning distortions, supplier collusion and suppliers-government officials’ collusion, unrealistic computation of contract award or variation costs by evaluation teams, poor quality goods and services delivered, poor performance of civil and construction works, and outright bribery before contracts are awarded among others. There are numerous reasons why there is a need for heightened concern about corruption in the public procurement function. Key to Delivery of Public Services Public procurement has important economic and political implications. Ensuring that the process is economical and efficient is crucial. This requires in part that the whole procurement process should be well understood by the actors: government, the procuring entities, and the business community/suppliers; and other stakeholders including professional associations, academic entities, and the public (Odhiambo and Kamau 2003, p. 10). Public procurement is a channel through which other public services are delivered. Public procurement through its acquisitional function facilitates how well or badly other functions of government can be undertaken. It tends to be placed at the center of all government service delivery system, and if well undertaken can promote aims the development goals of government. Arguably, one of the secondary aims of procurement has always been to use procurement to promote social, industrial or environmental policies (Bolton 2006, p. 193). Public procurement (PP) is a core government

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function that can positively equalize opportunities of Women-Owned Businesses (WOBs). This function of government can address the barriers that affect women’s participation in tendering processes at both the central government and local government levels (Basheka 2018, p. 87). Roads, hospitals, water systems, defense installations, oil discoveries, and exploration, running public administration systems among other at all levels of government require public procurement. Resource Magnitude Involved The size of public procurement has always varied between 5 and 8% of the gross domestic product (GDP) in most industrialized countries (Basheka 2017). In the Middle East and Africa, central government purchases range from 9 to 13% (Gul 2010, p. 1). This indicates that public procurement plays a vital role in a country’s economy (Odhiambo and Kamau 2003, p. 10). The procurement budget in Uganda estimates that over 60% of government resources are spent on the public procurement function and this estimate only excludes moneys spent on salaries (Basheka 2017; Obanda 2010). Private Sector Role The debate on whether public services should be provided by the government or the private sector became a battle ground of scholarly and policy arguments during the 1980s. This was a time when governments were accused of being part of the old public administration and the private sector was argued to be much more efficient and effective in public service delivery (Basheka 2018, p. 1). While it should not be construed that the private sector is the bedrock of corruption, what is uncontested is that the private sector is profit oriented. In the quest to make these profits, practitioners in the private sector are often associated with unethical business practices. They offer bribes and inducements to whoever can receive them as long as they get an opportunity to make profits. When this goal meets with the often heavily underpaid public officials, the appetite for fraud is ignited. Public procurement is easy to build a network through which corruption is orchestrated. Most of the goods and supplies needed by government are obtainable from the private sector who have a natural fear of government machineries and often want to use unethical practices to get business.

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Lack of Robust Procurement Systems Public procurement has not yet built robust systems to withstand the blowing thirst for money among politicians and those who run the bureaucracies. The function has had an unfortunate trend of its systems being subjected to reforms regularly before they have matured. Compared to other government functions, like finance, auditing, and personnel, reforms in public procurement often take a shorter gestation period of not more than 10 years. While some commendable effort has been made through public procurement reforms, the systems for managing public procurement are not stable compared to other well-established disciplines like accounting and finance. Lack of Procurement Capacity There are capacity gaps regarding the management of public procurement, and this creates a conducive environment for corruption. Capacity building efforts have tended to target individual capacities not organizational capacities. Staff in procurement functions once trained leave their work stations for other organizations and tend to move with their skills. Yet, research has shown that practitioners with high skills levels and knowledge have significant impact on financial performance and operational efficiency in terms of quality improvement, design, and reduction of lead times (Cousin et al. 2006). While at a technical level some capacity among the procurement officials exists, there are serious challenges for the policy makers (the politicians). The capacities also differ, depending on the level of government each country adopts. Central agencies tend to post better capacities than local or regionally based agencies. Absence of Policy Framework Public Procurement reforms are expected to be undertaken after a relevant policy framework. Public procurement reforms in most African countries were undertaken without such policies. The laws and institutional frameworks undertaken in many countries lacked a policy anchor. In such an environment, there is a danger of every actor claiming adequate understanding of the direction of public procurement and this environment has made corruption flourish. Public procurement is thus one of the most reformed functions of government. When approved, legal

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and institutional reform frameworks create roadblocks for accumulation of wealth by those who anticipated the reform to benefit them, then a new initiative is introduced to make new reforms. In 2003, Uganda made a new Public Procurement and Disposal Act. This was reformed in 2014 and the same Act is currently under review.

Public Procurement Governance: A Conceptual Framework The quintessence of good governance appears to be a set of principles toward maximization of citizen welfare—efficiency, effectiveness, participation, accountability, rule of law. With political scientists, economists, policy makers emphasizing on different criteria of good governance and with burgeoning scholarly discourse on it, courtesy, the World Bank funding different projects for good governance, it is widely contemplated that the notion is both Western and modern. This is more so because, presumption was that ancient governments were mainly monarchial and the times did not favor good governance rather it was all dependent on the will of the king, law was the command of the sovereign, the king personified the state. And citizens had no role in rule making. The government consisted of numerous organs, but the king was supreme. It is strongly contended that citizen responsive administrative is a Western model and a product of globalization (Mukherjee 2010, p. 53). Public procurement is increasingly recognized as a professional area of practice that plays a key role in the successful management of public resources for any country. While a number of countries have become increasingly aware of this fact, the procurement area has become vulnerable to mismanagement. Corruption makes it hard to integrate procurement into a more strategic view of government efforts (Ambe and Bandenhorst-Weis 2011, p. 244). Quinot (2013, p. 405) reminds us that governments have long used public procurement as a tool to promote socio-economic objectives, which are sometimes referred to as ‘horizontal’ or ‘collateral’ because they are ancillary to the primary purpose of PP–acquiring goods and services for the government. Indeed, as part of these efforts to adopt a long-term and strategic view of their procurement needs and management, most countries now use their annual procurement plans as possible problem solvers (Mahmood 2010, p. 103). This is not strange given the origins of public procurement.

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A well-functioning public procurement system is the one that is governed by a clear legal framework which establishes the rules for transparency, efficiency, and mechanisms of enforcement, coupled with an institutional arrangement that assures consistency in overall policy formulation and implementation (Hunja 2003). This system needs to be supported by strong systems of monitoring and evaluation and a valuebased belief system driven by the core traditional public service values of the need to serve a broad citizen audience than individual interests. Most donors have, for sometimes, considered that a well-functioning procurement system is an essential requirement of government reform efforts if their funds are able to be used effectively to promote development (Abeille 2003). Most of these expectations are unfortunately not always met because of many problems of inefficiency and the malaise of corruption. Dza et al. (2013, p. 1) remind us of the state of public procurement more than 16 years ago to the effect that while procurement reforms in Africa had to some extent brought modernity, transparency, competition, as well as fairness in the procurement process, the improved administrative and structural systems put in place to enhance efficiency in public procurements, have not gone without blemish. Indeed, the implementation of procurement reforms in Africa has been fraught with cultural insensitivity, the disregard for countries’ political, socio-economic, ethical, and environmental structures and systems. In most African countries, the aim of accepting and instituting public procurement reform programs was to establish a strong and wellfunctioning procurement system, governed by a clear legal framework and established rules for transparency, efficiency, and mechanisms of enforcement, coupled with an institutional arrangement that ensured consistency in overall policy formulation and implementation (Hunja 2003). African countries had various reasons for wanting to undertake such procurement reforms. Some countries undertook reforms to support essential internal administrative improvements, while others accepted reform programs to help qualify for international financing from multilateral institutions, or to help integrate a country into the multilateral trading system. Despite these goals, procurement reforms were also often seen as an important feature of anti-corruption efforts that could help promote good governance (Thai 2008). Besides the fiduciary obligation to deliver goods and services to the constituents of the particular government administration, public

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procurement addresses a wide range of objectives. It has been used by governments to achieve socio-economic objectives such as stimulating economic activity; protecting national industries from foreign competition; improving the competitiveness of certain industrial sectors; and remedying national disparities (Bolton 2006; Thai 2006). The objectives of public procurement are achieved through various means, and legal and regulatory rules on conducting public procurement (Arrowsmith 2010, p. 4). With changes in Information and Communication Technology (ICT) within and between organizations occurring at a fast pace (Zsidisin and Ellram 2001), it is imperative that African governments keep pace with modern approaches to information management in order to be competitive and the use of e-procurement systems which have had varying levels of success stories comes into perspective. The overall conceptual exposition in this chapter is that public procurement governance needs to be anchored on an elaborate policy framework. The legal and institutional reforms that come along this framework need to adopt flexible approaches with deliberate efforts directed at the areas that have the greatest dividends to deliver the required results. Principles like transparency, accountability, value for money, competition and transparency need to be supported by public service wide culture; and, the societal foundational values are vital to the creation of a mass of champion leaders. Monitoring and evaluation will be critical; and with the emergence of technical solutions, there will be a need to imbed ICT in the structures. The citizens have to be brought into the picture. Rule of law and respect for functional systems and structures will be critical.

The Infrastructure of Public Procurement Corruption The constitution of any country establishes the executive, judiciary, and legislature and allocates powers and responsibilities to each of these organs of state (Funk 1972, p. 296). The functions of law are often defined with respect to one type of society and it is inaccurate to say that law may serve exactly the same function in another type of society. Dicey (1885, p. 1) in his classical book entitled ‘Introduction to the study of the law of the constitution,’ is credited for having introduced the concept of rule of law. Law aspires to create social order and social order is an important prerequisite for development. It can also, however, be argued that the attainment of development is a key factor in creating an orderly society.

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Societies, which have prioritized orderly styles in the management of government affairs have produced greater development trajectories unlike those countries which have opted to be governed under disorder, anarchy, and confused systems. Laws are established to regulate the governance of the state and each country’s supreme law (the Constitution) sets the parameters for the operation of each branch of government. Adamolekun (2002, p. 2) reports that rule of law, underpinned by an independent court system, which implies a predictable legal framework helps to ensure settlement of conflicts between the state and individuals on the one hand and among individuals or groups on the other. An administrator with sound understanding of law is likely to apply fair and just reasoning in the execution of their mandate compared to those who are only schooled in the specific fields of public administration. This is possibly why some schools of public administration have tended to encourage the teaching of administrative law, although the depth and coverage missed the foundational pillars. While generally engaging in a debate on whether corruption in public procurement does exist is an unproductive venture; it is worth understanding the infrastructure of this corrosive undertaking. It is probable that if corruption did not exist, possibly, countries in Africa would have attained some development trajectories A review of reports on resources wasted in public procurement undertakings makes one wonder what countries would have attained if the public procurement function was efficiently and effectively managed. Attention needed to be directed toward the understanding of the environment which created the loopholes for corruption. This would provide the opportunity to identify and implement the appropriate anti-corruption frameworks and measures to deal with the loopholes. Only then can the citizens feel they have functional governments in place. Public procurement takes place within the law and most African countries have, since the 1990s, passed new public procurement laws, which have established new institutional arrangements for the management of public procurement. Public procurement in some countries like South Africa has been granted constitutional status and is used as a policy instrument for addressing past discriminatory policies and practices (Bolton 2006, p. 193). Most of the public procurement reforms decentralized public procurement management to what are called Procuring and Disposing Entices (PDEs) in different Ministries, Departments and Agencies (MDAs). Corruption appears to have correspondingly been

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decentralized. Good governance is based on respect for rule of law and since public procurement has been described as a highly regulated function of government (Thai 2008), it is imperative to venture into some classical dispositions on the importance of rule of law in governance of the state and by extension such rule of law needs to apply to public procurement. On the broad purpose of law, Schubert (2012, p. 6) suggests that law exists for resolving disputes and for controlling government officials. New institutions such as the public procurement authorities and the procurement appeals and complaints handling panels, which have been set up to formalize and improve procurement performance (Honkaniemi 2010); need to operate in strict compliance to the procurement laws but also the general principles of fairness and justice. Cooper (1997, p. 118), a notable leading public administration scholar, had earlier cynically reported that the grounding of public administration in law was a ‘simple truth’ and that ‘the law provides the tools that are used to make the most important, and often the most challenging public decisions.’ Public procurement officials who manage the technical processes of government acquisition are expected to undertake their professional mandates in complete regard to the provisions of public procurement laws but also broader laws that guide conduct of public management. In countries like Kenya and South Africa, where public procurement has been elevated to be a constitutional matter, public officials managing public procurement have a better latitude to operate within the ambit of the law and subjected to constitutional protection. Public procurement arguably operates in an environment of increasingly intense scrutiny and driven by technology, as well as program reviews, public and political expectations for service improvements (Bolton 2006; Eyaa and Oluka 2011). Most procurement literature tends to suggest that public procurement is a highly clerical or a tactical function (Snyder 2010, p. 275), and is a function highly regulated functions of government (Thai 2008). There, however, exists a number of loopholes which have always been exploited by corrupt people to manipulate the procurement process. Better public procurement governance and addressing corruption’s real or actual negative and detrimental effects requires an understanding of the ideals of good governance and its philosophies, which by coincidence appear to relate to the wellknown principles of public procurement. Mukherjee (2010, p. 53) reports that the quintessence of good governance is a set of principles toward maximization of citizen welfare—efficiency, effectiveness, participation,

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accountability, rule of law. Efficiency, effectiveness, value for money, competition, transparency, non-discrimination, and fairness, are some of the key principles of public procurement. Both public procurement professionals (procurement officers in their various categories) and non-professionals, who get involved either as the users of the required procurements or as part of the decision-making actors, manage public procurement. All this fall under what are called public administrators who drive the machinery of government in their thousands and at different ranks. Basheka (2014, p. 655) asserts that public administrators (including public procurement officials) either can enable the effective functioning of government or can even lead to the overthrow of government. Legitimate governments are run on institutionally strong, efficient, effective systems, anchored on publicly determined, predictable, and increasingly rational rules of behavior. In such a system, the public service becomes a central pillar of the government as it regulates, administers, executes, mediates, invests and delivers the construction, operations, maintenance and servicing of service delivery infrastructure, and ensures that the public service machinery is oriented to diligently serve the citizens. In one of his works on Uganda, Basheka (2013a, p. 45) has raised a concern of how corruption continued to poison any efforts to provide members of society with better services and that the marriage between public administration and corruption seemed to be a forced one. The two functions seem to have evaded ‘any judicial separation or divorce.’ As Shafritz et al. (2011, p. 19) have observed, public administrators tended to the public’s business-like building bridges and highways, collecting garbage, putting out fires, plowing snow, spraying for mosquitos, and providing essential social services for the less fortune. In provision of water, defense services, education, health, and agricultural services by public administrators, they need procurement services. Where there is corruption in any of the processes for the acquisition, the ultimate burden lies on the doorsteps of the common citizen. Such is the danger of allowing corruption in public procurement function. Basheka (2013a, pp. 50–51) exemplifies the dangers of corruption through the following examples: • Education: Children in schools lack essential facilities and are forced to study under difficult situations, yet government budgets for the sector and those facilities keep on increasing. Teachers remain

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primitively underpaid, and even the little they expect is sometimes swindled or delayed by those running the bureaucratic system. The quality of education at all levels become compromised. Health care: Health facilities are underutilized, doctors are not paid, the little allowances are delayed and the only language that seems to awaken government to pay them is the threat of violence of strike. Drugs are openly stolen by people working in hospitals and poor citizens cannot get what they expect. Roads and Transport: Roads are either nonexistent, where they ought to have been, or if in existence, are poorly constructed even after millions of taxpayer’s money has been spent. Roads are completed with potholes. Water and electricity: Getting adequate water and electricity supplies in all the parts of the country become a problem. Foreign private companies awarded contracts for electricity installations and supply contracts through faulty processes continue to do a very poor job; but government pays for these inefficiencies. Minerals and resources: Oil contracts are reportedly awarded in complete disregard of the existing procurement regulations and only companies connected to powerful politicians tend to have the perfect criteria for winning the sector lucrative contracts. Governance: Ineffective but politically connected managers poorly run the corporations. Well-connected business people continue to get high compensation from government and top government officials openly and approve such payments in complete disregard of public financial management regulations.

The 2019 governance and architectural environment through which corruption prevails in Uganda is not any different from that described in 2013 above. In fact, the environment has become more too complex to understand, and corruption now has a fertile ground through which it thrives. The architecture of public procurement runs through many layers and each of these layers is an avenue for fraud. Moreover, the actors are many and play varying roles. Akullo (2013, p. 47), identifies political and technical staff as major actors in procurement corruption in Uganda. She scaled these two broad categories to specific players who included political leaders at all levels, Engineers, accounting officers, internal and external auditors, head teachers, procurement officers, heads of departments, accountants, store-keepers, lower cadre staff involved in

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implementation activities, service providers/contractors, members of the contract committees/evaluation committees, private individuals who buy favor, and those conniving with public officials. It has been argued (Lau 2010) that in the face of mounting economic uncertainty, huge expectations are placed on procurement practitioners to source the best business solutions from their supply network partners, and to achieve the innovation, value and services that their customers are looking for. However, these officers do not act alone. While corrupt procurement officers can, in their own interest, chose to violate procurement procedures, they work in most cases under the influence of powerful politicians (Akullo 2013, p. 48). By their design and procedural requirements, public sector organizations or agencies identify their required needs, which are essential for attainment of the organization’s mandate for a financial year. These needs are integrated into the organization’s planning and budgeting activities where resources to be spent on each need are allocated. Government entities usually classify their needs into goods/supplies, services and works. The budget and procurement plan are taken through relevant approval processes until entities are now ready for implementation. This starts at the beginning of the new financial year and it is possible only after the approval of the Government budget by the Legislature of the country. As part of the procurement cycle requirements and in preparation for the invitation or solicitation of bids, organizations develop specifications (for procurements classed as goods or supplies), terms of references (for consultancies) and Bills of Quantities (for works). They undertake a process of prequalification of providers, which generates a shortlist of bidders for the needed items. Through the respective procurement methods, which are a function of the legal regime and thresholds, organizations through the procurement and disposal unit, working with the contracts committee and accounting officers solicit for bids. This can be done either through selective means where prequalified lists exist, or it could be with competitive methods. Still, there can be a use of direct procurement method or micro-procurements depending on the nature of what is to be procured and the value of money involved. Bids are received, evaluated, and a report prepared by the evaluation teams and contract award approval is now sought from the contracts committee and the accounting officer. A communication is made to the winning provider. There is, however, a window for raising complaints against the entire

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procurement process by dissatisfied actors. This is termed administrative review, which runs throughout the various institutional arrangements. Assuming there is no complaints and the procurement decision has been accepted, then implementation is expected to start. The procurement laws in each country create the above procedures and the various stages managed by different categories of officers. They are in the context of our debate layers of enrichment and eating ! This is the chain of corruption. Each of these stages is susceptible to fraud and depending on the nature of the procurement and the resources involved, the levels of corruption are likely to differ. The corrupt tendencies likely to be exhibited at the stage where bids are submitted and where agencies have to evaluate the bids received through an evaluation process and prepare a report of this evaluation process to the contracts or tender committees is likely to be different from corruption likely to be exhibited at prequalification of providers. There are approval levels by those in charge of agencies who have been given a nomenclature of accounting officers. The corruption magnitudes are likely to be expanded as the levels of approval scale up. Corruption in public procurement involves the abuse of the procurement processes and diverting from established legal frameworks and it takes a multitude of forms and takes place at each of the stages of public procurement. Both senior and junior bureaucrats are involved, covertly or overtly, in public procurement corruption. Covertly, those with interests often appoint those to manage the processes and they remotely manipulate the processes to their favor because of the influence they preside over. Politicians and administrators are heavily involved in public procurement contracts. Lucrative contracts, that often involve huge finances, are usually direct preferences for senior politicians and bureaucrats. Hardly can a minister of government of a Permanent or chief secretary of a ministry get crazy about moneys involved in acquisition of stationeries. There are however some exceptions. A ministry involved in national examinations systems, for example, would deal with stationery of a huge budget and this makes it lucrative. It is perpetuated procurement planning distortions, through supplier collusion, dodgy computation of costs by evaluation teams, poor quality goods and services delivered, pitiable performance of civil and construction works, etc.

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The Extent of Public Procurement Corruption in Uganda Public procurement corruption in any country is influenced by the magnitude of the procurement spend. Worldwide, governments have been estimated to spend approximately US$11 trillion per annum on procurement (Hetland 2012). In absolute terms, annual federal procurement in the Unites States was estimated to be about US$250 billion previously while in the United Kingdom, annual procurement expenditure was estimated to be around £240 billion (US$367 billion). In South Africa, one of the strong economies on the African continent, public procurement spending was estimated to be R600 billion in the 2010/11 financial year. According to the International Trade Centre (ITC) research (2014), public procurement constitutes 10 to 15% of the GDP of developed countries and up to 30 to 40% of the economies of least developed countries, but women-owned businesses receive only a tiny (and frequently undocumented) share of that market. In Uganda, The New Vision (2005) cited the Executive Director of the PPDA as stating then that the Government would save 330 billion Uganda shillings by eliminating losses incurred through corruption in public procurement. Mahmood (2010) reports that public procurement represents about 18.42% of the world’s gross domestic product. It had also been estimated that Uganda lost 600 billion shillings in corruption related to procurement in a single financial year and this was only half of the budget for the ministry of education (Obanda 2010). A proxy measure of the magnitude of corruption can be derived from analyzing the trend of government financing of the Inspectorate of Government (IG) which is an institution mandated to fight corruption. The increasing funding government has allocated to the inspectorate of government in the last five years as seen in the table below suggests an annual increment which could be an indicator of the increasing corruption generally. Because public procurement takes place in a broader environment of government operation, where there is an increase in general corruption occurrence, corruption in public procurement is also certainly to be rising (Table 7.1). In the last five years, as seen from the above table, the income to IGG has nearly doubled. From 27.7 billion shillings, in 2012/2013, it had increased to 45.4 billion shillings by the 2016/2017 financial year. It is

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Table 7.1 IGG Financial Resources/Income Source of income Consolidated funds Non-tax Revenue Donor Funds Total

2012/2013

2013/2014

2014/2015

27.741

33.559

36.142

0 1.87 29.611

0 1.87 35.429

0 1.98 38.122

2015/2016 38.72 0 1.301 40.021

2016/2017 43.441 0 1.98 45.421

Source Compiled by author from the Inspectorate of Government Annual Reports

also pertinent however to analyze the expenditure patterns of the same financing period (Table 7.2). The inspectorate of Government is spending an average Shs3 billion in allowances alone, Shs2.7 billion on local travel, Shs2.5 billion on rent in a year and Shs565 million in car maintenance. These costs highlight the lack of strategic planning on the part of IGG as the high costs of vehicle maintenance is attributed to the fact that IGG is operating a very old fleet of cars. Also, the high rental costs could be avoided if IGG prioritizes construction of her own premises. In the FY 2016/17, the Inspectorate introduced an Online Declaration Portal code named IG-ODS. Using this portal, a total of more than 22,000 leaders were able to declare their income, assets, and liabilities. However, annually the IG has capacity only to verify 65 declarations with an average cost of UGX 3,000,000 per verification. This figure can increase up to UGX 50,000,000 if there is need for valuation and investigation into breach of the Leadership Code of Conduct. It is estimated that nearly 40% of public resources in Uganda are swindled and a need to strengthen the anti-corruption forces and agencies including ombudsman (Inspectorate of Government-IGG). The fight against corruption also suffers from some mandate overlap among agencies like State House, the Judiciary, Auditor General, and PPDA. Public procurement in Uganda is highly susceptible to corruption. Several highprofile governmental tenders for infrastructure projects have in recent past been suspended or delayed as a result of allegations of corruption. The prevalence of bureaucratic influence, which causes a contract to be awarded because of subjective or unannounced criteria to an apparently specially favored contractor, has also been evident in some cases.

13,178,520,643 2,303,105,029 1,066,483,376 191,306,535 7,827,276 1,692,257,280 25,339,200 290,800,760 18,755,640,099

Salaries Allowances Local Travel Intl Travel Workshops & Conferences Rent Building Maintenance Car Maintenance TOTAL

15,177,046,920 2,549,828,501 1,582,748,798 198,689,801 8,696,000 1,786,878,370 46,540,000 362,202,879 21,712,631,269

2013/2014

Source Compiled by author from the Inspectorate of Government Annual Reports

2012/2013

IGG Financial Resources/Expenditure

Budget line

Table 7.2

16,760,495,416 3,023,364,360 2,422,645,232 212,900,900 5,000,000 1,656,872,455 42,890,000 408,582,819 24,532,751,182

2014/2015

17,494,138,869 3,281,845,581 2,758,952,672 124,608,000 74,770,098 2,360,379,040 45,800,000 428,082,882 26,568,577,142

2015/2016

20,174,540,710 3,427,493,696 2,727,912,769 137,069,446 49,998,999 2,565,302,137 62,118,800 564,966,028 29,709,402,585

2016/2017

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The stringent rules and regulations that have become a part of the battle against corruption complicate the procedure for securing government contracts. For example, simply qualifying to bid for a contract requires an individual or company to meet certain criteria. According to Akech and Karanja (2005), ‘the person has necessary qualifications capability, experience, resources, equipment and facilities to provide what is being procured; the person has the legal capacity to enter into a contract for procurement; and the person is not insolvent, in receivership, bankrupt or in the process of being wound up and is not the subject of legal proceedings relating to the foregoing’ (Aketch and Karanja 2005).

Toward a Framework for Public Procurement Governance Governance of public procurement undertaking demands application of well-known best practices and principles of public procurement and these have to be implemented alongside the governance benchmarks. While public procurement continues to evolve both conceptually and organizationally (Thai 2007, p. 1) and at times tends to be much more complex than ever before implying officials must deal now with a broad range of issues to fulfill government objectives in procurement and meet the professional expectations of the field; an agreed framework to guide both the academic study and professional practice is necessary. It is appreciated that public procurement is a lucrative academic field and area of practice, which has increased debate among policy makers (Basheka 2013b, p. 290). Public procurement supports all government functions (McCue and Gianiks 2001) and if the procurement function fails to deliver quality goods and services in a timely fashion and at an economical price, the performance of government suffers (Coggburn 2003). Corruption in public procurement, therefore, undoubtedly affects every function of government and its corrosive effects can be felt beyond the walls of the procurement process. It affects the young or the old, the highly connected and the less connected members of society, women and men, the educated and the uneducated; the living and those yet to be born. Corruption stands on the way of every effort to ensuring effective service delivery. Society at the broader level thus suffers from the activities of few individuals who engaged corrupt public procurement processes.

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The framework intended to address corruption in public procurement needs to adopt a network-based system that includes laws and policies as well as the various players who have a role to play. The framework needs to be grounded in cultural beliefs and values attitudes and practices that ensure every member of society has a shared understanding of the dangers of corruption. The community generally would need to play a key role in ensuring a cultural mindset. The framework must acknowledge that government through its agencies remains the legitimate institution to manage the affairs of society. Government, working through its three arms of the legislature, the judiciary, and the executive, establishes the rules and processes through which public procurement policies are implemented. An effective governance framework requires fairer rules and those that encourage competition, value for money, participation and those that are transparently undertaken, and are subject to public scrutiny. The government as the primary agent of the people has a role to create systems and structures, which are intended to serve the greater common good. Most public procurement systems in Africa were conceived and implemented based on the models that had presumably worked or experimented in the developed world and now needed to be benchmarked to Africa. While indeed, public procurement systems in different countries share some common knowledge and practices (Thai 2007, p. 12), the environment in Africa presents its own circumstance due to among others absence of strong systems and political interferences. In developing a public procurement governance framework, which addresses the gaps that create a fertile ground for public procurement corruption, development partners who have always been the major supports of most public procurement reforms in Africa will need to nurture and develop procurement systems that take into account the African context. Most governance projects have failed to attain the intended goals because the ‘one-size fits all’ syndrome, which has been applied to Africa, did not take cognizant of the African context factors. While development partners can help in building transparent procedures that can help attract more investment by lowering risks and the resulting transparent procurement system which should allow competing private enterprises to judge the risk of doing business with the government; they need local partners who have an understanding of the unique and country-specific challenges and opportunities that could promote or inhibit procurement efficiency. To address public procurement corruption, government actors need to have a strategic view of the public procurement function. Despite its

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potential to assist in the attainment of government goals (McCue and Gianiks 2001), very few governments have always used public procurement as a tool to unleash the vast economic potential to a number of actors including women entrepreneurs (International Trade Centre 2014). To harness the potential of women-owned businesses, procurement policies must be gender sensitive (Basheka 2017). Governments need to structure, carefully, the rules that govern Procurement processes to achieve various policy objectives (Anderson 2013). An increased emphasis on the rules focusing on encouraging participation of women entrepreneurs in public procurement is a key policy agenda. The argument is that while the main goal of public procurement is to buy goods and services that governments need it procurement should be used to promote socio-economic objectives (Quinot 2013). Public procurement laws and policies are critical for a governance framework intended to address public procurement corruption. Procurement law will need to be highly imbedded in the teaching of public procurement courses and in professional workshops. Procurement policies and laws should aspire to create institutions, processes, and systems that are driven by the need to meet the goals of government but also the professional standing of the public procurement profession. Such institutions, processes, and systems should be based on public service values which champion the greater common good and harmony of society. The public procurement governance framework presented in Fig. 7.1 should be based on sound systems of monitoring and evaluation and ought to have reliance ICT technologies. Procurement practitioners need to play a central role in creating confidence among the different players that the rules of public procurement can be made fairer and that every provider who competes for a government tend is assured of competitively participating and to be assured that market-based systems work best with less pressure or inducements from corrupt tendencies. The state and its subsidiary organs need to oblige to public procurement domestic laws and various international agreements to transact procurement in a fair, transparent, and non-discriminatory manner. The role of procurement association and capacity building interventions will be central in creating a cultural shift of thinking among the professionals. Academia and think-tanks will be fundamental in undertaking regular research and managing the knowledge systems created from such research findings. Public procurement needs to be divided into the academic study

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Fig. 7.1 Public Procurement Governance Framework Source Created by the author

and the area of practice (Basheka 2013b, p. 292) and the two should be reinforcing each other. The academic study should advance knowledge and impart skills necessary for making the public procurement function work better. It is this academic part that prepares and grooms people from the education systems to work in public procurement. The practice component implements the policies of government regarding public procurement. The practice translates theory into practice. Addressing public procurement corruption requires accountability of all actors and a good framework of the procurement system should be based on adequate procurement reporting which promotes information sharing. Reports should be prepared and disseminated to various stakeholders on progress being made to fill the loopholes of corruption and fraud and how agencies of government have used public procurement to achieve government economic objectives. The reports should capture the extent to which public procurement has been used to involve the participation of marginalized groups like women. The procurement governance framework will need champions who have to be in both the academic sphere and practice areas. The politicians,

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providers of goods and services, the procurement professionals, bureaucrats, and development partners will be key in working toward creating such a system of public procurement. The private sector, the Civil Society Organizations (CSOs), religious, and cultural institutions will all need to work to this collective goal. This is what governance entails-shift from reliance on government to all other players. As seen in Fig. 7.1, there are 8 elements proposed for the governance framework with the 9th element of monitoring and evaluation being imbedded in each of the other elements. The elements reinforce each other. There is a need for appropriate procurement laws and policies which are driven by the desire to address corruption in public procurement. The laws and policies need to be supported by internationally recognized procurement principles and practices. The system will need champions and committed political and administrative actors and will need support from academia, development partners, and the community. The system should adopt ICT and the competence of the procurement professionals in terms of skills, knowledge, and attitudes will be critical. Good procurement reporting systems will be critical. The framework is based on the underlying philosophy that the corruption problem in public procurement is built on a broader systems of corruption within the entire administrative system of government but efforts to improve the efficiency and effectiveness of the public procurement function has potential in generating broader dividends given the criticality of the public procurement function to the performance of government. The framework further has its foundations in understanding and use of the cultural norms of society which when effectively nurtured can produce well-groomed public procurement process actors.

Policy and Legal Implications A framework is used as a guiding analytical tool on how the corruption problem can be addressed through making improvements in the conduct of the public procurement function. It does not offer necessarily the one single prescription for terminating corruption in the public procurement chain. It only suggests areas which need attention to addressing the challenge. Such a framework needs to be accepted, understood and then implemented, and monitored to assess the extent to which it is helping in the fight against corruption. Evaluations of this nature would result in necessary modifications.

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Scholars of our times are often called upon to address their minds to the needs of policy makers. Policy makers need to make policies and laws aimed at tackling the corruption problem in a much collective and networked approach. Leadership is critical and evidence needs to be adduced to support decision-making. Research and knowledge management practices will offer useful guiding principles only if policy makers can appreciate their role. Laws need to be amended where necessary and new one developed as long such a move aims at addressing a new emerging loophole due to the changing nature of the public procurement function. Policy makers will need to concern themselves with understanding the likely Critical Success Factors (CSFs) for implementing the framework. First, there will need to be a renewed commitment by the political and administrative actors from the highest levels of government to address corruption in public procurement. Second, there will be a need to invest resources to implement agreed upon actions and strategies by all the players. Thirdly, there will be a need for encouraging networks and collaborative approaches in the fight against corruption in public procurement. Fourthly, investing in capacity building especially organizational capacity building will need emphasis. Fifthly, Monitoring and evaluation systems will need to be adopted and strong reporting systems will need to be broadened and scaled across various levels. Such can be ICT enabled systems to achieve this goal.

Concluding Remarks Governance: be it in public procurement or any other area is about who has power to make decisions and how this power should either be concentrated or dispersed in one institution or individual. Public procurement governance would thus constitute the entire apparatus through which procurement decision-making is distributed among institutions and actors who are a creature of a law. The lack of effective coordination of anticorruption efforts within the public sector and among the various state and sector actors is presumably the main reason why the corruption battle is almost lost. A framework that could be applied in addressing the public procurement corruption malaise has been developed and this proposed framework has a set of critical success factors (CSFs) that ought to be applied by government in striking hard against the corruption dilemma. The views in the chapter have been shaped by three main disciplines of law, public administration, and public procurement. Law provides the

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overriding framework for management of society. It accordingly enables government structures in the executive, judicial, and legislature to function. It is through these structures that public administration takes place. Public administration preoccupies itself with the management of public affairs. To manage these public affairs needs services provided by the procurement function. Each of these three disciplines are both areas of study and practice. They all advocate for their disciplinary parameters, but the multidisciplinary approach is adopted in this chapter for one to have a deeper appreciation of the proposed governance framework. Corruption and the public procurement function are rather becoming much more complex that a single viewpoint is unlikely to lead to a useful analysis and prescription of a monster like corruption.

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CHAPTER 8

Rising Above the Tide: Review of Anti-corruption Measures in the Ghanaian Procurement Process Evans Sokro and Ruby Melody Agbola

Introduction The Ghana Public Procurement Act, 2003 (Act 663) is a legislative instrument that regulates public procurement in all state institutions and established the Public Procurement Authority (PPA). The PPA, as a regulatory body, is tasked with the responsibility for ensuring the effective implementation of Ghana’s Public Procurement Law. The prime objective of the Authority is to harmonise the processes of public procurement to secure judicious, economic, and efficient use of state resources in order to guarantee that public procurement is carried out in a fair, transparent,

E. Sokro (B) Department of Human Resource Management, Central University, Tema, Ghana R. M. Agbola Department of Management and Public Administration, Central University, Tema, Ghana © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_8

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and non-discriminatory manner. The aim is to promote a competitive local industry and increase the confidence of varied stakeholders in public procurement processes in Ghana and the world. Prior to the enactment of the Public Procurement Act, Ghana’s procurement system was characterised by discrimination, favouritism, nepotism, and tribalism. The system favoured the political class, especially the party in government and their cronies to the disadvantage of the ordinary Ghanaian. There was absence of equal opportunities; thus, the system lacked fairness and transparency. As pointed out by Jeppesen (2010), the absence of a transparent and accountable system implies that vast resources could be channelled through public procurement systems that are engulfed with increased corruption and misuse of public funds. Ghana’s Procurement Act, 2003 has been in operation for nearly two decades and contributed to the injection of some level of competition, transparency, and accountability into the public procurement process. However, major constraints continue to plague its effective implementation fuelling corruption at various level of the implementation process. Key flaw in the Act is its silence over the abrogation of contracts and compensation for termination of such contracts. Consequently, most of the procurement contract abrogation results in gargantuan judgement debt lawsuits, which the state frequently loses. The current study posits that Ghana can reap the full benefits of its Procurement Act only if successive governments create the enabling environment for the anti-corruption institutions to work effectively without political interference. This paper takes a critical look at the various anti-corruption measures embedded in the public procurement and proposed a framework for the effective prevention of corruption in the procurement process.

Procurement and Corruption Corruption in the procurement process is a major concern for most governments as many countries have become increasingly aware of the unique role of procurement in mismanagement and corrupt practices (Ambe and Badenhorst-Weiss 2012). In fact, Munzhedzi (2016) described procurement and corruption in South Africa as inseparable twins. He argues persuasively that it is often difficult to separate corruption from procurement because “whenever one is mentioned, the other one has to follow in the next line.” (p. 1) Similarly, Osei-Tutu et al.

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(2010) investigated corrupt practices in public procurement of infrastructural projects in Ghana and found that the procurement process has been faced with numerous challenges including conflict of interest, bribery, embezzlement, kickbacks, tender manipulation, and fraud. Corruption has been recognised as a destructive social phenomenon that nurtures an anti-democratic environment; characterised by uncertainty, unpredictability including declining moral values and disregard for authority and constitutional bodies (Gyimah-Boadi 2002; Mensah et al. 2003; Osei-Tutu et al. 2010). Corruption is defined as “offering or granting, directly or indirectly to public official or any other person, of goods of monetary value, or other benefit, such as a gift, favour, promise or advantage for himself or herself or for any other person or entity, in exchange for any acts or omission in the performance of his /her public functions” (Thornhill 2012, p. 140). The central idea regarding corruption is the abuse of entrusted power for personal advantage (Munzhedzi, 2016); as in the “sale of government property for private gain” Aidt (2009). Globally, corruption has been acknowledged to negatively impact economic development and progress, divert investments in infrastructure and social services which impact the poor substantially and responsible for low income and poverty traps (Aidt 2009; Andvig and Moene 1990; Blackburn et al. 2006). Specifically, pervasive corruption in modern states undermines the competency of state institutions, fairness, and democratic legitimacy (Rose-Ackerman 2010). Even though corruption is a worldwide problem for both developed and developing countries, the later seem to be most vulnerable to corrupt practices (Webb 2010). This study seeks to examine how corruption can be effectively dealt with through the implementation of anti-corruption measures in Ghana’s procurement process. To prevent corruption and abuse in the procurement process, a number of control mechanisms are put in place to facilitate judicious disbursement of public funds and value for money in the procurement of goods and services for the public. Figure 8.1 below presents a conceptual framework depicting the interrelationships between the elements in Ghana’s anti-corruption eco-system for the effective prevention of corruption in the public procurement process.

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Fig. 8.1 Framework for effective prevention of corruption in the procurement process (Source Authors’ own creation [2020])

Framework for Effective Prevention of Corruption in the Procurement Process The institutional framework for preventing corruption in the public procurement process as depicted in Fig. 8.1 above, include the Financial Administrative Regulation, Public Procurement Act, the Auditor General’s Reports, Parliamentary Control, the Judiciary, the Security and Intelligence Agencies, Office of the Independent Prosecutor, and the E-Procurement system. The framework indicates that the extent to which these anti-corruption institutions function successfully to curtail corruption in the procurement process, depends upon the effectiveness of implementation and enforcement of the procurement law, the level of media freedom and publicity as well as the degree to which political interference operates to frustrate the implementation and enforcement process. The next section presents a review of the elements in the corruption prevention framework.

Institutions for Corruption Prevention in the Public Procurement Process Financial Administration Laws and Regulations To ensure financial propriety and accountability, public officers/heads of department, and spending officers are regulated by a set of financial procedures, rules and regulations including the Financial Administration

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Regulations (FAR) NRCD 123 1979, the Financial Administration Act 2003, Act 654, and the Public Procurement Act 2003, Act 663, which indicate the manner in which security and custody of assets as well as expenditure are disbursed. The Financial Administration Act 2003, Act 654 was established “to regulate the financial management of the public sector; prescribe the responsibilities of persons entrusted with financial management in the government; ensure the effective and efficient management of state revenue, expenditure, assets, liabilities, resources of the government, the Consolidated Fund and other public funds and to provide for matters related to these.” Article 17(1) states that “a contract that provides for the payment of any money by the government shall not be considered valid without the prior approval of the Minister.” However, our analysis of the Auditor General’s Reports of (2008–2017) reveal palpable breaches of the FAR as in some cases, procurement was carried out without tender or goods supplied even before a contract is approved. The Auditor-General’s Department The office of the Auditor-General (A-G) is extra ministerial and is given power by Article 187 (2) of the 1992 Constitution to audit all the public accounts of Ghana, including the courts, central, and local government bodies, all bodies enacted by an Act of Parliament and all institutions in which government has shares or a stake (Agbola and Sokro 2015). The job of the auditor general revolves around tracking government finances, keeping track of how the government is spending public funds, making sure it’s used effectively, watching out for waste, embezzlement, and other corrupt practices. A critical review of A-G reports from 2009 to 2018 reveal that the most common types of procurement violations fall into six major categories, namely: a. sole sourcing b. non-competitive bidding c. contracts awarded above the threshold d. wrongful procurement e. supply of goods before contracts are awarded f. procurement without tender

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A major problem associated with the auditing of the accounts of public institutions has been the effectiveness and honesty of internal auditors in these institutions. Speaking at a public lecture on the topic: “Implementation of the Auditor-General’s Reports: Achievements, Challenges and Prospects so far,” the Auditor-General stated that a major challenge to effective auditing of accounts of public institutions has been the tendency by auditors to give a clean bill of health to organizations and institutions that were bankrupt. Such unprofessional acts encourage and promote corruption, financial indiscipline, and the misappropriation of public funds. Between 2008 and 2017, at least 69 procurement violations have been reported in the Auditor General’s Report out of which 39 were clear breaches of the PPA 2003 (A663) laws. Thirty of the violations reported were miscellaneous consisting of minor infringements. Of all the ministries investigated, Ministry of Education (MOE) committed the most violations comprising of 23 serious violations and 15 minor violations: 58.97 and 50% of the violations, respectively, and 55% overall. Ministry of Water Resources, Works and Housing and Ministry of Employment and Labour Relations (MELR) offended the least registering only one violation each (Table 8.1). Parliamentary Control Parliament functions to watch and control the government, throw the light of publicity on its acts, compel a full exposition and justification of acts that anyone considers questionable; and to censure them if found condemnable (Mills 1859). In Ghana, the legislature has the oversight responsibility over government operations to ensure that government and spending officers disburse the accounts of the country in a judicious and responsible manner to prevent misappropriation and corruption in procuring goods and services for the state. Parliament exercises its oversight responsibilities through The Public Accounts Committee (PAC). The PAC derives its existence from Article 103 of the 1992 Constitution of the Republic of Ghana. Established by Order 151(2) of Parliamentary Standing Orders, the PAC is granted the powers of a High Court and is responsible for scrutinising government and public spending. To make sure money granted by Parliament is disbursed judiciously, efficiently, and appropriately accounted for without Executive interference in its oversight

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Table 8.1 Number of procurement violations reported in the auditor general’s report/selected years between 2008–2017 by type and institution Type of violation Wrongful procurement Sole sourcing Procurement fragmentation Uncompetitive procurement Procurement without tender Contract award above thresholds Supply of goods before contract Miscellaneous Total

MOJ

MOH

MOE

MOFA

MOF

MOWR

MELR

MOI Total

1

0

4

0

0

0

0

1

6

0 1

2 1

0 0

1 0

1 0

1 0

0 0

0 0

5 2

0

2

17

2

0

0

0

0

21

0

0

1

0

0

0

0

1

2

0

0

1

0

0

0

1

0

2

0

0

0

0

1

0

0

6

1

0 2

8 13

15 38

3 6

4 6

0 1

0 1

0 8

30 69

Source Compiled by the authors from the Auditor General’s Reports of 2008–2017

duties, the PAC, is chaired by the Minority or the Opposition in Parliament. Consequently, the PAC among others, “retrieved Ghc20b of state cash in 2014” (www.adomonline.com, cited in Draman 2017, p. 29). The main challenges to Parliament in exercising its oversight responsibility include, PAC dealing with a backlog of A-G reports (The Parliamentary Centre, 2009). Even when the PAC “reviews the A-G’s report in a timely fashion … its recommendations are not strictly enforced as required by law” (Draman 2017, p. 13). Further, lack of follow-up on cases to ensure PAC recommendations are implemented has been lacking. Moreover, Parliament has no legal power to initiate independent investigations and must wait for the A-G’s reports to act largely because Article 187 (7a & 8) of the Constitution makes such initiatives the preserve of the President. Parliament also “suffers from a crisis of credibility” (Former PAC Chairman, Kan Dapaah, cited in Agbola and Sokro 2015). The Legislature has been criticized for the partisan manner in which it carries out its oversight role as the ruling majority has endorsed, over time, in an omnibus manner whatever the Executive presented. This, according

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to Gyampo (2015), is because of the “winner-takes-all politics” of our democracy (p. 1). Hence, the extent to which Parliament is able to check corruption in the public procurement process will largely depend upon MPs ability to defend the Constitution of the State as against parochial party and personal interests. The Judiciary The Judiciary or the law courts is the branch of government responsible for the settlement of disputes, enforcement of civil and criminal cases, and interpretation and protection of the laws of the country. The judiciary exercises legal and horizontal accountability over the executive to ensure government and public officials who break the law are duly punished. Cases handled by the PAC in Parliament are referred to the Attorney General’s department for prosecution. According to Oquaye (2013), the independence of the judiciary is clearly provided for under the 1992 Constitution. The Judiciary is subject only to the Constitution and cannot be subject to the control or direction of any person or authority. Hence institutions and persons found implicated in the A-G’s report for breaching the public procurement law, technically are expected to be adjudicated in a free and fair manner so that those found culpable can be duly punished. The capacity of the law courts, especially the Attorney General’s Department, to effectively prosecute and punish those found culpable by the A-G’s Report has been a contentious issue raising questions about government’s commitment to prosecute corruption cases and the ability of the Ghanaian courts to exercise effective oversight over government (Agbola and Sokro 2015). Critics have therefore called for the separation of the functions of the Attorney General who is the lawyer for the State of Ghana from the Minister of Justice who is the lawyer for the government of the day (IEA, Democracy Consolidation Strategy Paper 2006). The fusion of the two functions militates against the independence of the Judiciary, its ability to exercise meaningful oversight over government and the effective prosecution of corrupt government officials and their allies. Moreover, the Judiciary is plagued with severe resource constraints including qualified, competent, and motivated State Attorneys as well as skilled legal personnel leading to undue delays in the prosecution of cases and disproportionate loss of cases against the State with serious financial

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consequences for the State (Gyampo 2015). The reputation and credibility of the Judiciary itself has also been tarnished by the 2015 revelations of the investigative journalist Anas Aremeyaw Anas and the Tiger Eye PI. Colossal corruption in the Judiciary exposed led to the dismissal of 20 Magistrates and Circuit Court judges. Hence, the extent to which the Judiciary can contribute to the eradication of corruption in the public procurement process depends, to a large extent, on its ability to clean up its own acts. The Economic and Organised Crime Office (EOCO) The Economic and Organized Crime Office (EOCO) was set up by Act 804 of 2010 in line with Article 190 (1) (d) of the 1992 Constitution as one of the Public Services of Ghana to supplement and augment government’s effort in the fight against corruption in the State. The Office was established as a specialized agency of government to monitor, investigate and, on the authority of the Attorney General, prosecute any offense involving serious financial and economic loss to the state. However, the effectiveness of EOCO to investigate fraudulent and corrupt practices in the procurement process is severely curtailed by political interference. For example, in November 2018, the Eastern Regional Director of EOCO, Fred Dzeny, was suspended for demanding the prosecution of government appointees as a strong signal of the Government’s anti-corruption commitment. Such blatant abuse of power by the ruling government cripples the EOCO, restricting it to the witch hunting and prosecution of political opponents. The Bureau of National Investigations (BNI) The Bureau of National Investigations is the internal intelligence agency of Ghana and an integral part of the National Security Council, which oversees matters of the counterintelligence and internal security of Ghana. The BNI was legally created by Section 10 of The Security and Intelligence Agencies Act (Act, 526) 1996 with the investigative jurisdiction to arrest or detain and interrogate over a wide range of criminal offenses including organized crime, financial crime, espionage, sabotage, terrorism, hijacking, piracy, drug trafficking, and all activities that threaten the security and economic wellbeing of the country. The BNI has faced

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serious challenges that militate against its effectiveness as a crime prevention tool. As noted by Lord Aikins Adusei (2016), the failure of the BNI to live up to expectation is partly due to the overwhelmingly broad functions, tasks, powers, and fields of work assigned to it by the Security and Intelligence Agencies Act (Act 526) 1996 that set it up. The BNI doubles as a domestic and foreign intelligence agency and with limited resources and capacity, has become increasingly ineffective in gathering vital intelligence, arresting, interrogating, and prosecuting corruption cases across the country. It has been accused of politicization and “the manipulation of intelligence to reflect policy preferences” of the ruling government (BarJoseph 2013). The BNI often comes under political pressure to please the government of the day by often overreacting to issues associated with the political opposition while turning a blind eye to corrupt activities of government cronies (Adusei 2016). Office of the Special Prosecutor The Office of the Special Prosecutor (OSP) was established in 2017 demonstrating “President Akufo-Addo administration’s will to create a specialized agency, capable of investigating and prosecuting corruption cases concerning political exposed persons and recovering monies stolen for the State” (Corruption Watch 2019). The OSP Act, 2017 (Act 959) provides for the appointment of a Special Prosecutor, a Deputy Special Prosecutor and the constitution of a Governing Board to manage the affairs of the Office. The office serves as an independent investigating and prosecution body to make inquiries into corruption, bribery, or other criminal cases at the national level whether they be in public or private sector. The OSP is deemed a solution to political graft and is intended to lessen the burden on existing anti-corruption agencies and remove the institutional roadblocks that hinder the fight against corruption. As noted by the Daily Graphic (23rd May 2019), “the efforts of all those investigative bodies had been tainted by allegations of political influence. The consequence is that some of their investigations suffer stillbirth, while many others never reach the desired destination.” Therefore, the Office of the Special Prosecutor serves as the autonomous body to handle politically sensitive cases which the Attorney General will otherwise be ineffective at handling. Regrettably, the OSP has been dormant as it faced serious resource limitations. According to Ghanaweb.com, 26 cases have been tabled for

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handling by the OSP and 12 of them are procurement related such as violation of the procurement law, sole sourcing, and misappropriation of funds including the case against Bennet Aboagye former Managing Director of the Metro Mass Transport involving procurement malpractices in the award of a contract for the purchase of about 300 new buses (Corruption Watch 2019). The main problems facing the office relate to lack of adequate office space, experienced lawyers, investigators, prosecutors, and legal and administrative staff. As a result, the Ghana Bar Association (GBA), has called on government to as a matter of urgency, resource the OSP to carry out its mandate of fighting corruption and prosecuting corrupt officials. Thus, the extent to which the OSP can function as an effective tool for fighting corruption in the public procurement process will largely, depend upon the willingness of government to commit resources to the office to ensure full implementation and enforcement of the law devoid of government interference. E-Procurement Governments worldwide are faced with the challenge of transformation and the need to reinvent government systems in order to deliver efficient and cost-effective goods and services to their citizens (Fang 2002). Application of information and communications technologies (ICT) is seen as a means of securing simple, moral, accountable, responsive, and transparent (SMART) governance (Harris and Rajora 2006). “E-governance systems can be designed to increase competition, reduce discretionary power, remove bottlenecks in routine transactions, increase reliability and predictability of government actions, ensure better and equal access to information and services, and promote transparency and accountability” (Singh et al. 2010, p. 2) leading to internal efficiency, service improvement, and citizen satisfaction (Iqbal and Seo 2008). Electronic procurement or E-procurement is an integral part of the e-governance system, a technology solution that facilitates government buying via the Internet (Presutti Jr 2003). It is a Government-toBusiness (G2B) or Business-to-Government (B2G) electronic transactions initiatives that drive the development of an “electronic marketplace for government purchases; and carry out Government procurement tenders through electronic means for exchange of information and commodities” (Fang 2002, p. 7). Addison (2016) identified six key benefits that can

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be derived from e-procurement including “improved efficiency and transparency; reduced administrative procedures; shortened procurement cycle times; reduced transaction cost; increased supplier based; and sharing of information” (p. 23). Ghana launched its e-procurement project on April 30th 2019 as part of a wider e-government program dubbed “The E-Ghana Project” under the auspices of the World Bank. It was intended to automate the process of public procurement using ICT. Led by the Public Procurement Authority (PPA), the e-procurement project seeks to ensure that public procurement is undertaken in accordance with the annual procurement plans as stipulated by the Public Procurement Act 663. Prior to its launch, the PPA in June 2018 unveiled the public procurement database registration portal requiring all suppliers, contractors, and consultants interested in government tenders to register using valid registration documents and ID numbers. Ghana’s Electronic Procurement Systems (GHANEPS) program is designed to address corruption in procurement procedures by limiting human face-to-face interaction and increase efficiency, effectiveness and productivity. It is expected that e-procurement will minimize the risks and turnaround time for tenders, considerably reduce the use of paper, improve monitoring and audit, data collection, and the accuracy of statistics and reporting. It will also increase supplier participation in public procurement and the number of tender responses as well as reduce the procurement lead time. It is estimated that procurement breaches make up to 90% of corruption cases and the adoption of e-procurement could save countries up to 2% of GDP (Entsie 2019). Research by Addison (2016), shows that adoption and implementation of e-procurement in the public sector in Ghana results in benefits such as efficiency, cost reduction, reduced procurement process, decreased corruption, and enhanced compliance and standardization of procurement, which could save Ghana $100 m annually. Addison (2016) summarized the challenges to effective e-procurement implementation particularly in Ghana as high cost of initial setup; poor supplier relationship; security/safety and trust issues; lack of standard data formats; lack of technical expertise; perceived lack of real benefits; low priority; supplier lack of expertise/interest; and lack of e-procurement competency (p. 27). Similarly, Price Water House Coopers (2007) indicated that the high cost of technology is a barrier to adoption of e-procurement. Effectiveness of the e-procurement system is dependent on availability of financial resources in order to meet such technological

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costs as software and hardware, skilled human resource capacity, and availability of infrastructure to support the process including computers and servers. Data security and authentication issues are also sources of concern (Wyld 2006).

Implementation and Enforcement Government procurement involves enormous amounts of money and because such money comes from the public, there is need for accountability and transparency (Hui et al. 2011). Implementation of reforms directed at ensuring transparency and accountability in the public procurement space is mostly driven by development partners focusing on the implementation of procurement systems that meet international standards developed by the United Nations Commission on International Trade Law. The problem of corruption and inefficiency in public procurement in Ghana and Africa is not the lack of a regulatory framework but rather that of poor implementation and non-compliance with the reforms and the enforcement of procurement laws and regulations (Osei-Tutu et al. 2010). According to Transparency International (2009), effective law enforcement is essential to ensure the credibility of anti-corruption efforts and break the cycle of impunity. The paper suggests a set of conditions that must be met before effective enforcement of laws can be realized including “the existence of a strong government commitment against corruption, a supportive legal and institutional framework, and sufficient state capacity and stability” (p. 2). Unfortunately, these conditions are far from being met. Studying the implementation of the Public Procurement Act (Act 663) in 49 District, Metropolitan and Municipal Assemblies in the Ashanti, and Brong Ahafo Regions of Ghana, Ameyaw et al. (2012) identified low capacity of procurement professionals; low interaction between procurement entities and the Public Procurement Authority, deliberate controlling of competition; non-compliance; contract splitting into smaller lots; and unavailability of funds, and lack of supplier cooperation as the major challenges militating against the implementation of the Public Procurement Law. Assessing the level of compliance with the Act, Seglah (2014) identified a number of factors that militate against effective implementation including, poor dissemination of the procurement law, lack of effective monitoring, political interference, poor records keeping, and delays in payment of contractors and suppliers as well as lack of proper training for

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the managers of the procurement process with the effect that most of the staff responsible for procurement were not procurement-proficient. This supports the Procurement Assessment Report of Ghana’s (2003) caution that successful implementation of the Act especially standard tendering and contract documentation is impossible without broad training and continuous retraining of procurement officers. Nonetheless, Ghana has made great strides in the procurement of public goods since the enactment and implementation of the Public Procurement Act. Adu-Fosu (2016) found a strong positive correlation between compliance with the Act and procurement performance in selected Senior High Schools in Ghana. Consequently, building the capacity of service providers has been identified as one of the success factors in the implementation of the PPA. Many bidders are limited by a lack of basic knowledge in the law; inadequate capacity to appreciate the standard tender documents; poor access to tender information; and insufficient technical and managerial skills to be competitive in the tendering process. Thus, effective implementation and enforcement of the PPA will depend on the level of monitoring, political interference, capability, knowledge and skill of procurement officers, availability of resources, and building capacity of service providers.

Media Publicity The media play a critical role in public compliance. Through the media, the general public, corporations and public institutions that procure goods and services for the public are made aware of the regulatory outcomes (Zubcic and Sims 2011). Publishing tenders in the media help reduce corruption by increasing transparency and participation, thereby enhancing compliance (Hui et al. 2011). The media hold governments socially accountable and play a critical role in public and corporate accountability. According to Borden (2007), media exposure reduces the incidence of malfeasance through press coverage that highlights instances of wrongdoing. In an environment of heightened and effective press coverage of misconduct, others contemplating similar malpractices may be discouraged. Zubcic and Sims (2011) found a direct correlation between negative media publicity about an organization and their subsequent approach to corporate compliance. Accordingly, many procurement scandals have been uncovered by the media and a free and independent press is a powerful tool to promote transparency and accountability.

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Ghana has won international acclaim as having one of the freest media in the world. Ranked 23rd in the world and 1st in Africa, the media in Ghana has been at the forefront in the fight against corruption, especially corruption in government procurement of public goods. Media revelations with respect to grand corruption in the Judiciary, Ports and Harbor Authority, and other public institutions have led to a number of prosecutions. Recently, media revelations about corruption in the AMERI power deal has led to the removal of the Energy Minister. However, there also appears to be some attack on media freedom recently as some journalists are being threatened, one of them, Ahmed Hussein-Suale of the Tiger Eye PI gunned down in the open and some radio stations are also closed down. This has led to Ghana’s ranking on the 2019 World Press Freedom Index as the first in Africa and the 23rd in the world to be downgraded to the 27th in the world losing its first position in Africa to Namibia.

Political Interference Modern democracy suggests the separation of public administration from politics. As noted by Woodrow Wilson (1887), public administration lies outside the proper sphere of politics. The domain of politics lies in the determination, crystallization, and the declaration of the will of the state while the execution and implementation of that will is reserved solely for the administration. Thus, politics is the “expression of the will of the state” while administration is “the execution of that will” (Goodnow 1900). Hence, although politics sets the tasks for administration, it must not be allowed to manipulate the administration. Political interference occurs when political leader(s) meddle in decision making in administrative matters such as planning, organizing, staffing, directing, coordinating, reporting, and budgeting, allocation, and use of public funds (Mfuru et al. 2018) as well as in law enforcement and the administration of justice. Political interference in public administration is one of the major leadership challenges facing developing democratic countries, especially in Africa (Wangwe et al. 2012; Mfuru et al. 2018). In most African democracies, “politicians interfere unnecessarily in public administration matters, exploit the public officers and present an exaggerated picture of public administration officers’ works” (Mfuru et al. 2018, p. 22), and encourage public demonstrations and agitations for political gain.

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In Ghana, political interference has infiltrated all spheres of public administration leading to grand corruptions in the various public institutions. A change in government is normally swiftly followed by dismissal, removal or transfer of key public administrators occupying sensitive positions and the appointment of political sympathizers to those positions. Politicians also use allocation of resources as a tool for controlling or sometimes punishing government departments deemed to be uncooperative. However, the most debilitating form of political interference in Ghana is in respect of public procurement and law enforcement. According to Aning and Edu-Afful (2013) procurement processes in Ghana are burdened with political interference at the national, regional, and district levels. Procurement corruption is dominant from the procurement planning to the final account preparation stage opening the process to manipulation and fraudulent deals which compromises the effectiveness of procurement decisions taken by procurement practitioners (AddaiDonkor 2014). Such interferences disrupt the procurement process and deter transparency; weakens the motivation of public officers to remain honest (Badaso 2014). Political pressure on procurement decision makers has led to capricious decisions giving rise to corruption at different levels of the procurement process in the country (Ameyaw et al. 2012). Political interference will thus moderate the relationship between the institutions of accountability and effective control of corruption in the public procurement process.

Conclusion and Recommendations The enactment of the PPA 2003 (Act 663) has, to a large extent, ensured some level of efficiency, fairness, and judicious use of state resources in the provision of goods and service for the state. It has brought some sanity, discipline, and accountability into the procurement process. The harmonization of the procurement process through the implementation of the PPA has made the system more transparent leading to a reduction in the misappropriation of state resources. Nevertheless, Ghana can achieve more in the fight against corrupt by supporting institutional frameworks to function effectively in order that procurement violations and corrupt practices are successfully prosecuted and punished. Accordingly, we recommend that Parliament: legislate to prevent the government of the day from indiscriminate abrogation of legitimate procurement contracts entered into by previous governments; and be

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objective in their assessment of government policy regarding the procurement of goods and services taking the public interest to heart rather than partisan interests. Furthermore, the Auditor General’s oversight responsibility should not stop at simply reporting and exposing procurement violations but must be empowered to recommend the prosecution of those found culpable as well as follow-up on their recommendations; the Office of the Special Prosecutor (OSP) must be well resourced and supported to deliver on its mandate; and, finally, the National Communication Authority should ensure freedom of the press from political intimidation, victimization and political interference and the media itself should endeavor to be objective in exposing and reporting on corruption.

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Osei-Tutu, E., Badu, E., & Owusu-Manu, D. (2010). Exploring Corruption Practices in Public Procurement of Infrastructural Projects in Ghana. International Journal of Managing Projects in Business, 3(2), 236–256. Oquaye, M. (2013). Addressing the Imbalance of Power Between the Arms of Government-a Search for Countervailing Authority. Presutti, W. D., Jr. (2003). Supply Management and E-Procurement: Creating Value Added in the Supply Chain. Industrial Marketing Management, 32, 219–226. Price Water House Coopers. (2007). E-procurement the Golden Book for Good Practice Procurement. Available from http://pwcglobal.com/eprocgold enbook. Rose-Ackerman, S. (2010). Corruption: Greed, Culture and the State. The Yale Law Journal, 120. Seglah, H. (2014). Assessing the Level of Compliance of the Public Procurement Act 2003 (Act 663) in Public Institutions: A Case Study of Koforidua Polytechnic. Dissertation submitted to the Department of Building Technology, College of Architecture and Planning, KNUST. Singh, G., Pathak, R. D., & Naz, R. (2010). E-Governance for Improved Public Sector Service Delivery in India, Ethiopia and Fiji. Available at: www.emeral dinsight.com/0951-3558.htm. Accessed 10 November, 2013. https://doi. org/10.1108/09513551011032473. Thornhill, C. (2012). Improving Local Government Transformation in South Africa. Administratio Publica, 20(3), 128–143. Transparency International Report. (2009). https://www.transparency.org/en/ publications/transparency-internationals-annual-report-2009. Wangwe, C. K., Eloff, M. M., & Venter, L. (2012). A Sustainable Information Security Framework for Government–Case of Tanzania. Technological and Economic Development of Economy, 18(1), 117–131. World Bank. (2003). Ghana: Country Procurement Assessment Report, Vol. 5. Annex 9. Washington, DC. © World Bank. https://openknowledge.worldb ank.org/handle/10986/15642. License: CC BY 3.0 IGO. Webb, W. (2010). Public Management Reform and the Management of Ethics: Incompatible Ideals for the Developing State? International Journal of Public Sector Management, 23(7), 669–684. Woodrow, W. (1887). The Study of Administration. Political Science Quarterly, 2(2), 197–222. Wyld. D. (2006). Constraints to Effective Implementation of E-Procurement in the Public. Management Research News, 5, 45.www.ghanabusinessnews.com/ 2018/ppa-unveils.

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Zubcic, J., & Sims, R. (2011). Examining the Link Between Enforcement Activity and Corporate Compliance by Australian Companies and the Implications Forregulators. International Journal of Law and Management, 53(4), 299–308.

CHAPTER 9

Public Procurement Law, Due Process, and Public Sector Corruption in Nigeria: A Review Omololu Fagbadebo and Kikelomo Aboyowa Mbada

Introduction In the year 2000, the World Bank attributed the poor state of economic performance in Nigeria to mismanagement and pervasive corruption in an oil-dependent economy. The unregulated procurement system of the country provided the avenues for actors to perpetrate various acts of corruption (World Bank 2000). The World Bank noted that the essential elements of good governance require sound procurement policies, which were hitherto, non-existent in Nigeria. From all indications, public procurement management has remained a draining pipe in public

O. Fagbadebo (B) Department of Public Management and Economics, Durban University of Technology, Durban, South Africa e-mail: [email protected] K. A. Mbada Department of Political Science, Obafemi Awolowo University, Ile-Ife, Nigeria © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_9

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financial interactions. Furthermore, inadequate “legal frameworks and policy guidelines to check financial leakages in the management of public finance” characterize the procurement sector for the funding of public projects (Onwubiko 2018). Indeed, the anti-corruption agencies in Nigeria, the Independent Corrupt Practices, and Allied offences Commission (ICPC) and the Economic and Financial Crime Commission (EFCC) disclosed that procurement-related fraud constituted 75% of the various cases of corruption in the country (Onwubiko 2018). Allegations of violation of the relevant procurement laws are rampant in most cases of public utilities that have failed to deliver. This explains why most of the infrastructural facilities and establishments designed for the provision of essential utilities such as health care delivery, water, environmental, among others, have remained ineffective. Public officials see procurement as the veritable avenue to access state resources by a reckless violation of the necessary statutes and rules designed to safeguard fraudulent practices. Hence, there is a prevalence of reports on financial recklessness in the public sector in Nigeria. Williams-Elegbe (2018) has identified some corruption schemes associated with procurement system management in Nigeria. These are bribes and kickbacks, political pressure, conflicts of interest and fronting, bidrigging, illegal assignment of government contracts or what actors popularly call sales of contract papers, contract splitting, contractual variations and price increases, deliberately poor contract management and poor planning. The execution of these schemes took different forms. In some instances, service providers and contractors, would have to provide gifts of various kinds as well as unofficial payments to government officials directly involved in the procurement process, for them to secure government contracts (Enterprise Surveys 2014). In other instances, there were irregular payments for services provided by contractors in the procurement procedures, despite the approval and certification of the projects (World Economic Forum 2015; US Department of State 2016). This was to enable officials to demand for bribe to facilitate such payments. Another common feature of the schemes is the practice of favoritism, with the diversion of public funds to firms and companies and individual service providers, connected with top government officials (World Economic Forum 2016). There was a widespread of favoritism and nepotism in the award of contracts. This led to the irregular award of contracts to companies and individuals with records of fraudulent practices in the procurement process (Sayne et al. 2015).

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These schemes are the major determinants of the activities of actors in Nigeria’s procurement system. In other words, they together define Nigeria’s systemic corruption, which pervades all institutions of government with active collaboration with the private sector. Thus, with the absence of effective statutory legislative frameworks to regulate procurement activities in a country characterized by systemic corruption , public service delivery provides the avenues for networks of corrupt practices while provision of basic needs to the public becomes a rarity. Hence, the unending cycle of the crisis of governance in a country with abundant resources. In realization of this anomaly, the regime of President Olusegun Obasanjo sought to get “public procurement systems on the right footing, at both federal and state levels. This was one of the highest priorities for a new government seeking to control corruption and get value for money in public procurement” (World Bank 2000). To accomplish this, the government embarked upon a series of legislative reforms to provide the necessary statutory instruments for a regulated procurement system management. The central aim of this chapter is to present an historical analysis of public procurement and the functionality of relevant legislative frameworks in Nigeria.

History of Due Process in Government Activities in Nigeria Until 2007, there was no statutory legal framework to regulate public procurement in Nigeria. In other words, public procurement did not feature as an important activity of the government that required serious attention in order to promote transparency and accountability in public service delivery. Graft and kickbacks were the major characteristics of government activities as bureaucrats and other top government officials collude with contractors and other service providers in massive corrupt practices in public transactions. The culture of impunity that characterized military rule and which has dominated the Nigerian political system since 1966, contributes immensely to the pervasive corrupt activities that have crippled public sector service delivery. The Finance (Control and Management) Act, 1958 was the postindependent statute, used along with the financial regulations policy, to guide procurement and award of contracts in government expenditure spending (Ekpenkhio 2003). The Financial Regulations (FR) often issued

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by the Ministry of Finance, was the instrument used for the regulation and delegation of procurement responsibilities in the public financial management. The FR contained internal rules and regulations, used to guide financial/economic control and composition of the Tender Board (The World Bank 2000). It defined the procurement process and the limits of the jurisdictions of the actors involved in the procurement system management. Nevertheless, the law lacked the requisite mechanisms to monitor the implementation of regulations and procedures to ensure compliance with the set objectives. The absence of permanent arrangements to ensure effective control and surveillance, gave rise to the system of kickbacks where contractors paid mandatory but unofficial 10% or more, of contract sum to government officials (Frank 2016). This network of corruption in public procurement has characterized the Nigerian government and defined the operation of government since independence. Indeed, successive military coup planners often cited rampant corruption in procurement activities to justify their actions. However, this malaise is not limited to civilian regimes alone. Aside this, the deficient expenditure procedure created wide opportunities for government officials to manipulate the procurement system since there was ineffective oversight and monitoring of the public purchasing activities (Olatunji et al. 2016). Hence, the pervasive price inflation of contract sums by the members of the tender committee to cater for their personal rewards in terms of monetary shares of the projects. Most often, the authorizing units, the permanent secretaries as well as the political head of the ministries and departments, wielded enormous powers that usually override the approval of the tender committees. The permanent secretaries and ministers had the de facto approval power, a practice characterized by manipulative frauds (Eze 2015). The lack of staff with adequate training on supply chain management compounded this problem, in a system characterized by nepotism and patrimonial practices. The consequence of this deficient procurement system was the institutionalization of corruption in the Nigeria’s public sector. The political and bureaucratic elites privatized institutions of governance and the opportunities therein. With impunity and subversion of due process in the public sector, all institutions of checks and balances, such as the judiciary, the legislature, and other ombudsman agencies, lost their relevance as independent statutory structural accountability mechanisms

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(Fagbadebo 2016). Wanton manipulation of laws and procedures for personalized purposes, characteristic of military system, became rampant with the suffocation of every opposition voices. As Eze (2015, p. 325) has noted, political leaders exercised power as an instrument of “accumulation and subversion as productive initiatives were abandoned for purely administrative and transactional activities.” Consequent upon this, with persistence practice and erosion of freedom, corruption in the public sector became a challenge to the legitimacy of the government and the stability of the country. With a compromised purpose of government in effective public service delivery, circumvention of rules and procedures became the popular means of survival, while public utilities and infrastructural facilities became inadequate to cope with the demands and needs of the citizens. Corruption in the public sector, therefore, replaced probity and accountability.

The Budget Monitoring and Price Intelligence Unit (BMPIU) The advent of civilian rule in 1999 did not change the deficiency in the procurement management system. In the absence of comprehensive statutory legal frameworks, successive governments relied on the general administrative instruments (rules, financial regulations and ethics) in the public service as guide for public procurement (Eze 2015). These rules were, in practice, mere decorations, rather than statutory instruments that required compliance in the procurement management system, as government officials circumvented and manipulated the requisite regulations with impunity. The World Bank in its Country Procurement Assessment Report (CPAR) disclosed that the total revenues that Nigeria lost annually to procurement corruptionamounted to an average of US$10 Billion. This amount constituted money paid as bribes and kickbacks by contractors and service providers to government officials. In view of the inefficiency of these rules, the administration of President Obasanjo issued Circular F. 15,775 on June 27, 2001, indicating a new policy guideline that set out the regulations for the award of contract and general procurement in the public sector. The essence of the policy circular was to introduce probity and transparency into the existing rules on public procurement, characterized by inflation of contract sums and process of goods and services. The policy sought to eradicate the avalanche of dishonest practices associated with public procurement and

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contracts. This policy circular led to the establishment of the Budget Monitoring and Price Intelligence Unit (BMPIU), in the Office of the president, under the pioneer leadership of Dr Obiageli Ezekwesili, the Senior Special Assistant to the president. Known as the Due Process Office, the BMPIU was an independent body, charged to ensure “strict compliance with the openness, competition and cost accuracy rules and procedures that should guide contract award within the Federal Government of Nigeria” (BMPIU publication 2005/2006, p. 1). The BMPIU had the responsibility of performing due process review of government budget expenditures and serving as the regulatory body in the pricing of items in the public sector. In other words, all government procurement processes have to follow the prescribed process of the unit. The establishment of the BMPIU, according to Ezekwesili (2002), was to rectify the systemic flaws in public procurement management system, which had facilitated and entrenched a series of corrupt practices in the financial activities of government. The essence of ensuring adherence to due process in public procurement in Nigeria is to ensure a system of openness, transparency, and economic considerations, without nepotism and corruption . The implication is that government was determined to exterminate the popular “Nigerian factor,” or “business as usual,” syndrome, the euphemism to explain the Nigerian kind of corruption, where government officials circumvent rules and procedures to negotiate procurement activities (Joseph 1991; Skalr et al. 2006). Richard Joseph describes this as prebendal practices, where public office holders see their position as an instrument of exploitation of state resources through manipulation of rules and procedures with a view to generating material gains and benefits for personal advantages (Joseph 1991). Thus, the elites in power, political and bureaucratic, working in concert, circumvent the procedural rules and processes that govern the activities of government, especially transactions relating to public service delivery. Public officials, in an ethnically differentiated polity, characterized by patrimonialism, see their office as an entitlement, and thus, an instrument to facilitate access to national resources for private benefits and those of their ethnic group, friends and family (Frank 2016; Fagbadebo 2016). With a high sense of primitive accumulation, public officials have disregard for statutory regulations because of an assurance of protection against punishment for violation. The development of this culture of impunity jeopardizes probity in government activities and compromises

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adherence to due process in procurement system and management. As Frank (2016, p. 73) has noted, public officials, political, and bureaucratic, as well as “other power wielders, feel it is their chance to evoke primitive accumulation (pillage) of the public wealth for personal and group advantage, outside the established processes and procedures for acquiring wealth.” By implication, corruption in the procurement system and management compromised national growth and development because the officials ignored the concept of planning economic development for the benefits of the members of the public in order to promote their pecuniary interests and benefits. This background motivated the establishment of the BMPIU, with the intention of ensuring national growth and development through a due process-guided procurement system and management. Essentially, due process aimed at ensuring and promoting the culture of adherence to transparent procedural rules in the public procurement. In other words, government intended to institutionalize implementable and enforceable procurement rules and procedures. Thus, the government conceived due process in public procurement activities as a necessary mechanism to certify the compliance of public-funded projects with the requisite implementation procedures, which included adherence to the stringent and competitive international bidding approach in the award of contracts in the public sector (Obasanjo 2003).

The Objectives of BMPIU As a mark of commitment to the reform in the country’s procurement system and management, the government set out specific objectives of the newly established due process unit in the presidency. These objectives, as contained in the operation manual of the Budget Monitoring and Price Intelligence Unit (BMPIU), otherwise known as the Due Process, were the driving force against the deficient procurement system (BMPIU 2005, 2006). The 6 objectives of the BMPIU include the harmonization of policies relating to procurement practices at all levels of government and strict enforcement of the principles of due process, such as competitive and transparent bidding process, efficient performance to enhance value-for-money in the procurement system. Other objectives include efficient monitoring and implementation of projects, in compliance with the due process principles, ensuring synergy between the conceptualization

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of projects and the appropriated defined priorities, prevention of extrabudgetary expenditures and prevention of fraudulent practices of inflation of contract sums (BMPIU 2005/2006). In order to accomplish these objectives, the BPMIU was responsible for the regulating and setting standards with a view to harmonizing the bidding and tender process in all government contracts, formulation of public procurement guidelines, promotion of ethical conduct in the procurement process, and monitoring of prices of goods and establishing price database, as well as conducting procurement audits. The BMPIU was also responsible for documentation and monitoring of all government projects from conception to completion and coordination of staff training with a view to promoting capacity building in the procurement system (BMPIU 2005/2006). In addition, the BMPIU was to function in ensuring sensitization of the public with the procurement system and management, provide expert advice on procurement in the annual appropriation activities and provision of necessary information relating to procurement performance to institutions and agencies of government. Indeed, no implementation of any government projects is to be allowed without certification by the BMPIU which requires due consideration of the principles of transparency, competition, merits, and costs (BMPIU 2005/2006). In other words, the BMPIU was responsible for the oversight of all government procurement activities. The commitment of government to the implementation of the due process principles in public procurement enjoyed commendation, with its initial progress. Adherence to the principles of transparency and competition in the award of contracts, for instance, led to the reduction of public expenditures, with many savings, which President Olusegun Obasanjo confirmed to be close to $500 million (Obasanjo 2003). Indeed, President Obasanjo disclosed that the application of the principles of due process in public procurement in the first two years of its implementation, saved Nigeria a sum of N102 billion, that previously was typically lost to over-bloated and inflated contract sums. Similarly, the head of the BMPIU, Obiageli Ezekwesili, revealed that the unit was able to intercept a sum of N672.4 million that would have been lost to fraudulent procurement process when the Ministry of Health was implementing the procurement for the supply of equipment to tertiary institutions (Ezekwesili 2003). Aside from this, the activities of the BMPIU instilled the culture of compliance with and adherence to the principles of due process in the

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procurement system and management. It also created an atmosphere of fairness and equal access of contractors, irrespective of background, to public sector procurement bidding and award of contracts. It discouraged, to an extent, nepotism and reduced the hitherto corrupt practices, associated with procurement in the public sector. Ekpenkhio (2003) notes that the efficient management of government resources and adherence to due process principles increased the revenues accrued to government with the reduction in the rampant wastages and leaking of the public treasury. Indeed, the government had to cancel projects that failed to comply with the principles of due process (Eze 2015). With the strict enforcement of due process along with the anti-corruption stance of the government, the pervasive culture of inflation of contract sums and other fraudulent practices reduced and the fear of the BMPIU officials became the beginning of wisdom for those in the sector. In particular, Dr. Ezekwesili, by virtue of her position and closeness to the president, was a dogged anti-corruption fighter and advocate of due process in all government procurement. Nevertheless, as lofty as the aforementioned objectives and functions, procurement corruption did not stop in Nigeria. A major challenge to the effectiveness of the due process principle, according to Ezekwesili, was the attitudinal dispositions of government officials to the required compliance with the rules and regulations associated with its implementation. While the BMPIU recorded certain progress in its implementation, the dearth of the political will for the institutionalization of the culture of adherence to due process principles, constituted a challenge. This challenge manifested more in the conceptualization of the various projects of the government, with inadequate definition of the scope, as most of the government agencies and institutions did not comply with the importance of professional expertise in the conceptualization and monitoring of public projects. Some departments of government still shrouded their projects with inadequate documentation of the process and information required for effective monitoring and evaluation. In its Country Procurement Assessment Report (CPAR) on Nigeria in 2000, the World Bank identified inherent weaknesses in the legislative frameworks in the nation’s procurement system. In view of this, President Obasanjo approached the World Bank for assistance, in the determination of his regime to clear the rots, institutionalize a sustainable culture of probity in the procurement system and management in the public sector (The World Bank 2000). The recommendations of the World Bank gave rise to the series of reforms in the public procurement system, starting

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with the establishment of the BMPIU. In 2003, the president presented a bill, for the promulgation of the Public Procurement Act (PPA).

The Public Procurement Act 2007 After almost four years of legislative deliberations, the Nigeria’s National Assembly passed into law, the PPA in June 2007 (Olatunji et al. 2016). The enactment of this law was in the pursuit of the determination of the government to instil the culture of transparency and accountability in the regulation of the procurement process. To make this effective, the Act provided the legal instrument for the establishment of the National Council on Public Procurement (NCPP) and the Bureau of Public Procurement (BPP). By the design of the responsibility, the NCPP and the BPP were to serve as the regulatory authorities, to monitor and exercise oversight of public procurement and harmonize the existing public procurement policies and management practices (Federal Republic of Nigeria 2007). As well, responsibilities included regulation and setting of professional standards, in addition to developing the necessary statutory frameworks to strengthen the public procurement process and management in Nigeria.

The Vision and Purposes of the Public Procurement Act 2007 One of the fundamental objectives and directive principles of state policy, provided in Section 15(5) of the Nigerian Constitution is the mandate that “the State shall abolish all corrupt practices and abuse of power” (Constitution of the Federal Republic of Nigeria 1999, as amended). The purpose of this statute is the need for the capacity of the Nigeria state to “harness the resources of the nation and promote national prosperity and an efficient, dynamic and self-reliant economy” (Section 16(a), Constitution of the Federal Republic of Nigeria 1999, as amended). By this, it would be easier for the government to ensure control of the national economy in a way that secures “the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity” (Section 16(b), Constitution of the Federal Republic of Nigeria 1999, as amended). The BPP, at inception, had the vision to build a standardized sustainable and efficient public procurement system and practice. The objectives

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of the BPP, according to the Act are to professionalize the procurement system and management of the country. Section 4(a–d) of the Act, lists the objectives of the BPP. These are, among other things, to ensure the “harmonization of existing government policies and practices on public procurement and ensuring probity, accountability, and transparency in the procurement process” (Federal Republic of Nigeria 2007). It also sets to establish pricing and standard benchmarks, application of fair competition and transparent process, with a view to ensuring the “attainment of transparency, competitiveness, cost effectiveness, and professionalism in the public sector procurement system” (Federal Republic of Nigeria 2007). Section 16(1 b–g) of the PPA sets out the principles that guide procurement system and management, to include competitive open bidding, accompanied by a transparent, timely, equitable, and accountable process. In this wise, every procurement in the public sector should promote competition, economy, and efficiency. Above all, “no procurement proceeding shall be formalized until the procuring entity has ensured that funds are available to meet the obligations and subject to the threshold in the regulations made by the Bureau, has obtained a “Certificate of ‘No Objection’ to Contract Award” from the Bureau” (Section 16(1b), PPA 2007). The section also prescribes all the requisite steps, procedures, and processes involved in the procurement system. In a bid to depersonalize the approving authority in procurement process, Section 17 of the Act prescribes the Tenders Boards of Parastatals and Ministerial Tenders Boards as the approving authorities in government agencies and a government ministry, respectively. This provision is a devise to reduce the incidents of favoritism associated with the previous procurement frameworks. Sections 18–23 of the PPA prescribe the other procurement activities such as planning and implementation, indicating the procedural stages to ensure transparency and accountability. In a bid to ensure appropriate, transparent bidding, and tender activities, Section 24–38 of PPA prescribe the necessary procedures including scrutiny of the bids and tenders, monitoring and inspection of services provided and the payments for the certified products supplied by the service providers. The PPA does not give room for contractors and service providers to collect payments without delivery of services. Sections 36, in particular, prescribes that service providers should present a Performance Guarantee, as “a precondition for the award of any procurement contract upon which

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any mobilization fee is to be paid”; in addition, such fee “shall not be less than 10% of the contract value.” Aside from this, the Act discouraged irregular payments to service providers. Section 37 prescribes prompt and diligent payment for the procurement of goods, works, and services provided by the service providers. Section 37 (2–4) states, (2) Any payment due after more than sixty days from the date of the submission of the invoice, valuation certificate and confirmation or authentication by the Ministry, Extra-Ministerial Office, Government Agency, Parastatal or Corporation shall be deem a delayed payment. (3) All delayed payments shall attract interest at the rate specified in the contract document. (4) All contracts shall include terms, specifying the interest for late payment of more than sixty days. (Federal Republic of Nigeria 2007)

In anticipation of situations and circumstances when there exists only one supplier, or procurement activities during emergencies, Sections 42 and 43 prescribe the procedures for direct and emergency procurements, respectively. In addition, cognizance of the possibility of misconduct by public officials and service providers, the PPA sets out the appropriate code of conduct that guides the activities of suppliers and government officials. Section 57(2) prescribes that “the conduct of all persons involved with public procurement, whether as official of the Bureau, a procuring entity, supplier, contractor or service provider shall at all times be governed by principles of honesty, accountability, transparency, fairness and equity” (Federal Republic of Nigeria 2007). Moreover, Section 57(9) prescribes that every government official involved in procurement activities, in whatever form, should “divest himself of any interest or relationships which are actually or potentially inimical or detrimental to the best interest of government” (Federal Republic of Nigeria 2007). The PPA also indicates offences and prescribes appropriate sanctions and punishments for the violation of the prescribed code of conduct and the procurement rules and regulations. Section 58 prescribes a minimum of 5, and maximum of 10 years jail term for the contravention in Section 58 (4a–h), are, (a) entering or attempting to enter into a collusive agreement, whether enforceable or not, with a supplier, contractor or consultant where the prices quoted in their respective tenders tender , proposals or quotations are or would be higher than would have been the case has there

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not been collusion between the persons concerned; ( b ) conducting or attempting to conduct procurement fraud by means of fraudulent and corrupt acts, unlawful influence, undue interest, favor, agreement, bribery bribery/bribes or corruption; ( c ) directly, indirectly or attempting to influence in any manner the procurement process procurement process to obtain an un fair advantage in the award of a procurement contract; ( d ) splitting of tenders to enable the evasion of monetary thresholds set; ( e ) bid-rigging; ( f ) altering any procurement document with intent to influence the outcome of a tender proceeding; ( g ) uttering or using fake documents or encouraging their use; and ( h ) willful refusal to allow the Bureau or its officers to have access to any procurement records. (Federal Republic of Nigeria 2007)

For government official found guilty of contravening the law, the Section 58 (5) prescribes a punishment of five years imprisonment without any option of fine, in addition to summary dismissal from government service. Section 58(6–7) prescribes debarment from all public procurements for a period not less than five years and a fine equivalent to 25% of the value of the procurement in issue for any legal entity found guilty of contravening any of the provisions of the PPA. In addition, directors of such entity would be liable to a minimum of three and a maximum of five years imprisonment without any option of fine. This law is the first comprehensive statute that addresses the daunting problem of procurement corruption, which has negatively affected public service delivery in the country. With an elaborate process and procedures, the intendment of the drafters of the law was to discourage any act of corruption in the procurement system, because of its debilitating consequences on the provisions of public goods. Indeed, the application of this law sent a former governor of Adamawa, Bala Ngilari, to a five-year prison term. The court found him guilty of breaches of the procurement law, by his failure to adhere to the procedures for the award of contracts in respect of the supply of 25 vehicles for the use of the government (Jannah 2017). Nevertheless, as comprehensive as the law is, the fundamental corruption culture in the public sectors has made it ineffective, contrary to the intendment of the drafters.

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Appraisal of Procurement Corruption in Nigeria The PPA has sufficient provisions, which regulate procurement processes and management with a view to achieving the desired purpose of government’s intention on effective public service delivery. Nevertheless, the corruption pandemic in the procurement process increases daily, not because of the weakness of the statutes, but the proclivity of the political and bureaucratic actors to the circumvention of its implementation. A commentator has noted that successive heads of the Nigerian government, as well as other government officials, often devises innovative ways of circumventing and breaching the provisions of the procurement Act. They often do this, “so viciously to an extent that government official will claim to have spent several billions for specific projects but such projects exist only in the criminal imagination of such a false claimant” (Onwubiko 2018). A number of cases attest to this claim. For instance, in 2018, the Minister of Health ordered the suspension of the Executive Secretary of the National Health Insurance Scheme (NHIS), Dr. Usman Yusuf, over allegations of financial recklessness and violation of the requisite provisions of the procurement law (The Punch 08/02/2018). The government appointed Dr. Yusuf in 2016, but controversies of financial mismanagement characterized his tenure of Yusuf, to the extent that the Minister of Health had to set up a panel to investigate all the allegations. Aside from this, the EFCC and the ICPC also stepped in for further investigations on the allegations. These allegations against the Executive Secretary include the purchase of a Sport Utility Vehicle for N58 million, mismanagement of N919 million of the contributions of the subscribers to the health scheme, nepotism in the award of contract amounted to N1 billion for his cronies (The Punch 08/02/2018). Above all, the Nigerian Senate discovered in its investigation that the Executive Secretary spent a sum of N292 million without any approval by the appropriate supervisory body. Nevertheless, the president recalled Yusuf from suspension, without the knowledge of the Minister and reinstated him. It took the combined protest by the staff of the NHIS before the president finally removed him in June 2019 (Owoseye 2019). Public service delivery in the Nigerian health sector is a disaster. This manifests in the construction of ill-equipped healthcare facilities at prohibitive costs, with lower quality of health care services delivery (Onwujekwe et al. 2018). With more than 40,000 registered medical

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doctors, as well as numerous other health care professionals working abroad, Nigeria is facing a dearth of medical personnel in its health care delivery system. As against the prescription of the World Health Organization (WHO) of at least 10 medical doctors per 10,000 people, Nigeria has 3.8 medical personnel per 10,000 people (Mail & Guardian 2020). Beside this, basic medical equipment and materials are lacking in the various health care centers across the country, even though there were sufficient expended budgetary allocations claimed to cater for their provisions. Most of the teaching hospitals in the country are mosquitoinfested, with inadequate electricity and water supply, and even with medical doctors performing surgery with candlelight, torchlights, and lamps. Corruption in the electricity supply sector in Nigeria is in different dimensions. The government had expended UD$16 billion on the National Integrated Power Project (NIPP) with the aim of boosting electricity generation and supply in the country. Yet, epileptic power supply characterizes the energy sector. Most of the contracts associated with the NIPP were in contravention of the procurement policy and guidelines (Ibrahim and Ngbokai 2019). Aside from this, the companies involved were unknown to the Corporate Affairs Commission (CAC), the government agency responsible for the registration of companies and other corporate organizations. The PPA prescribes that every company transacting business with government should be properly registered in the database of the CAC. Even though the PPA was in force at the time of this project, contracts were awarded to non-existing companies, thereby violating the due process prescribed by the PPA. In the oil sector, allegations of corruption often trail the activities of the Nigeria National Petroleum Corporation (NNPC). The NNPC lacks the basic oversight of its activities; no checks and balances because of weak audit functions (Sayne et al. 2015). No publication of its reports of activities for scrutiny, while its activities are often shielded from the routine investigation radar with regard to compliance. For instance, in 2012, the NNPC sold crude oil worth US$5.9 billion from the daily 144,101 barrels production routed through Duke and Calson, its two subsidiaries. “Neither the NNPC nor the subsidiaries themselves disclose how much they earn nor how they distribute their earnings” (Sayne et al. 2015, p. 5). This non-transparent activity characterizes the operations of the NNPC. As Sayne et al. (2015), have noted, “the sale of oil in Nigeria carries high corruption risks, stemming from a reliance on oil traders,

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unqualified ‘middleman’ companies, and a general lack of transparency.” There were reports that NNPC retained revenues accrued from sales of crude oil worth 110 million barrels, worth US$12.3 billion, for 10 years without remittance to the national treasury (Sayne et al. 2015, p. 5). In 2016, the NNPC failed to remit US$16 billion crude oil revenues (BBC News 15/03/2016). In 2017, the Minister of State in the petroleum Ministry had alleged that the leadership of the NNPC flouted due process in the US$24 billion oil deals (Bala-Egbogbo 2017). This unethical public procurement practices characterize the Nigeria’s public sector.

Conclusion Nigeria loses 70% of its annual budgetary spending to procurement corruption (The Punch 2017). According to a former Minister, Alhaji Bala Kaoje, procurement corruption impinges on the public service deliverycapacity of the Nigerian state. This is to show the extent of the ineffective implementation of the PPA in the public sector. Noncompliance with the requisite regulations prescribed by the legislative framework characterizes the procurement in government establishments in the country. This usually has its foundation in the fraudulent budgetary estimation, often characterized by contract inflation, illegal virements, inclusion of fictitious and frivolous items in the budget, as sources to siphon money, and wasteful expenditures. To compound this problem, the Bureau of Public Procurement (BPP) is also corrupt, with collusion with agencies of government to perpetrate fraudulent practices. For instance, officials of BPP are susceptible to receiving bribes from officials of ministries and government departments “to obtain fraudulent exemption and/or approval certificates of jobs that they never intended to do” (Onwubiko 2018). This has promoted the inclusion of fictitious items in the budgetary allocations, as in the case of the Nigerian Civil Defence Corp (NCDC) that sought for N5 billion allocation for the procurement of nuclear weaponry (Onwubiko 2018). Williams-Elegbe (2018) has noted the complexity associated with corruption in the Nigerian procurement system. According to her, the nature of composite corruption schemes in Nigeria was a set back to the detection of its practices in procurement activities, noting that most often, fraudulent acts in the documentation of contracts was a means to cover up bribery in bid-rigging. Aside from this, bid-rigging and other associated anti-competitive schemes were the products of “demands or offers

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for illegal payments” (Williams-Elegbe 2018, p. 3). The complexity of these schemes is in its crafted networks of collaboration between actors in the public and private sectors in the procurement system management. This complexity weakens the potency of the PPA, making it difficult to enforce the provisions of the legislative frameworks for its intended purposes. Hence, the bourgeoning cases of procurement corruption in the public sector with its attendant consequences on the capacity of the Nigerian state to harness its resources judiciously for effective public service delivery. Ministries and government departments, with active collaboration of oversight agents, circumvent the regulatory laws at the expense of service delivery.

References Bala-Gbogbo, E. (2017, October 5). Nigerian Minister Questions $24 Billion Oil Deals. Bloomberg. Available at, https://www.bloomberg.com/news/articles/ 2017-10-04/nigeria-s-kachikwu-is-said-to-question-24-billion-oil-contracts. BBC News 15/03/2016. Nigeria’s NNPC ‘failed to pay’ $16bn in oil revenues. Available at, https://www.bbc.com/news/world-africa-35810599. BMPIU. (2005/2006). The ABC of the Contract of the Due Process Policy: A Manual of Public Procurement Reform Programme in Nigeria (1st and 2ndedn.). Abuja: BMPIU. Constitution of the Federal Republic of Nigeria. (1999). Lagos: Federal Government Printer. Ekpenkhio, S. A. (2003). Public Sector Procurement Reforms: The Nigerian Experience. A Paper presented to the Government of the Federation at the Regional Workshop on Procurement Reforms and Transparency in Government Procurement for Anglophone African Countries in Tanzania. Enterprise Surveys—Nigeria: Country profile. (2014). Available at, https:// www.enterprisesurveys.org/content/dam/enterprisesurveys/documents/cou ntry-profiles/Nigeria-2014.pdf. Eze, N. M. (2015). Due Process in the Procurement System: The Nigeria Experience. International Journal of Engineering Sciences & Research Technology, 4(7), 234–243. Ezekwesili, O. (2002). Due Process Guidelines and Budget 2002 Implementation. Paper Presented at Abuja and Discussion on the Due Process by Office of the Secretary to the Government of the Federation. Ezekwesili, O. (2003). Budget Monitoring and Price Intelligence Unit. www.nig eriaafirst.org. Fagbadebo, O. M. (2016). Exploring the Politics of Impeachment in Nigeria’s Presidential SYSTEM: Insights from Selected States in the Fourth Republic,

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1999–2007 . PhD dissertation submitted to the University of KwaZulu-Natal, April 2016. Federal Republic of Nigeria. (2007). Official Gazette No. 65 Lagos—19 June 2007, Vol. 94. Government Notice No.44. Lagos: Federal Government Printer. Frank, E. O. (2016). The Underdevelopment of Nigeria and Africa: The MO Ibrahim Paradigm. Mediterranean Journal of Social Sciences, 7(2 S1), 70–78. Ibrahim, T., & Ngbokai, R. P. (2019, September 8). How Solar Plant Will Light up BUK. Daily Trust. Available at, https://www.dailytrust.com.ng/ how-solar-plant-will-light-up-buk.html. Jannah, C. (2017, March 6). Former Governor, Bala James Ngilari Sentenced to 5 Years in Prison. Daily Post. Available at, https://dailypost.ng/2017/03/ 06/breaking-efcc-secures-conviction-former-adamawa-governor-bala-ngilari/. Joseph, R. A. (1991). Democracy and Prebendal Politics in Nigeria: The Rise and Fall of the Second Republic. Ibadan, Nigeria: Spectrum Books Limited. Mail & Guardian. (2020, April 7). Covid-19 Grounds Nigeria’s Medical Tourists. Available at, https://mg.co.za/article/2020-04-07-covid-19-gro unds-nigerias-medical-tourists/ Obasanjo, O. (2003). Nigeria: From Pond of Corruption to Island of Integrity. Lecture Delivered at the 10th Anniversary Celebration of Transparency International Berlin. Olatunji, S. O., Olawumi, T. O., & Odeyinka, H. A. (2016). Nigeria’s Public Procurement Law- Puissant Issues and Projected Amendments. Public Policy and Administration Research, 6(6), 73–85. Onwubiko, E. (2018, Mach 7). Weak Public Procurement Breeds Corruption. The Guardian. Available at, https://guardian.ng/issue/weak-public-procur ement-breeds-corruption/. Onwujekwe, O., Agwu, P., Orjiakor, C., Mbachu, C., Hutchinson, E., Odili, A. … Balabanova, D. (2018, September). Corruption in the Health Sector in Anglophone West Africa: Common Forms of Corruption and Mitigation Strategies. Working Paper 005. London: Anti-Corruption Evidence (ACE), School of Oriental and Studies (SOAS). Owoseye, A. (2019, July 1). Buhari finally sacks embattled NHIS boss, appoints replacement. Premium Times. Available at, https://www.premiumtimesng. com/news/headlines/338283-buhari-finally-sacks-embattled-nhis-boss-app oints-replacement.html Sayne, A., Gillies, A., & Katsouris, C. (2015). Inside NNPC Oil Sales: A Case for Reform in Nigeria. Natural Resources Governance Institute. Available at, https://www.resourcegovernance.org/sites/default/files/NRGI_Insi deNNPCOilSales_CompleteReport.pdf. Sklar, R. L., Onwudiwe, E., & Kew, D. (2006). Nigeria: Completing Obasanjo’s legacy. Journal of Democracy, 17 (3), 100–115.

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The Punch. (2017, August 26). Corruption in Procurement Accounts for 70% of Govt. Budget—Kaoje. Available at, https://punchng.com/corruption-inprocurement-accounts-for-70-of-govt-budget-kaoje/. The Punch. (2018, February 8). Buhari’s Scandalous Recall of NHIS Boss. Available at, https://punchng.com/buharis-scandalous-recall-of-nhis-boss/. US Department of State. (2016). Investment Climate Statement 2016. Available at, https://www.state.gov/e/eb/rls/othr/ics/investmentclimatestateme nts/index.htm Williams-Elegbe, S. (2018). Systemic Corruption and Public Procurement in Developing Countries: Are There Any Solutions? Journal of Public Procurement,18(2), 131–147. World Bank. (2000). Nigeria: Country Procurement Assessment Report Volume I. Summary of Findings and Recommendations. Lagos: The World Bank, Nigeria Country Department Africa Region. World Economic Forum. (2015). The Global Competitiveness Report 2016–2017 . Available at, www.weforum.org/gcr. World Economic Forum. (2016). The Global Competitiveness Report 2016–2017 . Available at, www.weforum.org/gcr.

CHAPTER 10

Public Procurement Reforms in Tanzania: Dispersion of Corruption and Governance John Samuel Kihamba

Introduction Public procurement reform has been a core focus of the Tanzanian government from early 1960s. From independence till today, public procurement has been given high premium because it is directly linked to economic development as well as poverty reduction (URT 2012). From the 1960s to the early 1990s, public procurement system in Tanzania was highly centralized as almost of goods and services were procured and supplied by government agencies. These agencies include medical stores, Veterinary stores, Maji store, government press printers, and others (Nkinga 2003). These government stores were expected to procure and deliver quality goods and services to ministries, departments and agencies, and prevent extravagance (Report of the Presidential Commission on Corruption 1996). However, despite this fact, public procurement is

J. S. Kihamba (B) Dar es Salaam University College of Education, University of Dar es Salaam, Dar es Salaam, Tanzania e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_10

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one of the government activities most vulnerable to corruption (OECD 2016). In addition, to the volume of transactions and financial interests at stake, corruption risks are exacerbated by the complexity of the process, the closer the interaction between public officials and businesses, and the multitude of stakeholders (OECD 2016). Various types of corrupt acts may exploit these vulnerabilities, such as embezzlement, undue influence in the needs assessment, bribery of public officials involved in the award process, or fraud in bid evaluation, invoices or contract obligations (OECD 2016). This state of affairs was evident in Tanzania due to the fact that, the procurement procedures were characterized by a number of deficiencies which created loopholes for corruption and financial misappropriations (Report of the Presidential Commission on Corruption 1996). In a similar vein, accountability on the part of office holders was nearly non-existed (Mallya 2006), laxity in enforcing discipline at work, erosion of public service ethics, corruption, abuse and misuse of authority (Mutahaba et al. 2017; Mukandala 1993; Baguma and Shelukindo 1993). Furthermore, poor procurement of goods and services by the central government stores manifested itself in the failure of leadership to fulfill assigned responsibilities (Kihamba 2015). Also, there was scarcity of essential commodities due to poor record keeping, lengthy bureaucratic processes of collecting goods; bad procurement systems and financial constraints (Report of the Presidential Commission on Corruption 1996). Also, poor quality goods were procured at exorbitant prices through collusion and without the approval of relevant authorities (Report of the Presidential Commission on Corruption 1996). The net result was an acute deterioration of public services in quality and quantity and, dismal performance at all levels of government (Kihamba 2015). In this regard, public procurement institutions became more of a liability than an asset to the public, political leadership, and to the other stakeholders. It was evident that the public procurement system in Tanzania had serious weaknesses and thus was in urgent need for reform (Nkinga 2003). It is against this background that this chapter sets out to trace the history and explore relationships between reformed public procurement structures and dispersion of corruption and how it affects public administration and service delivery in Tanzania. It also has specific focus on the extent to which the established governance structures have improved

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public procurement and to what extent have reduced or dispersed corruption.

The History of Public Procurement System in Tanzania from 1960s to Early 2000s The objective behind establishing procurement procedures in government is to enable ministries and government departments secure good quality goods and services at competitive price (Report of the Presidential Commission on Corruption 1996). In Tanzania, procurement of goods and services dates back to early 1960s. During the 1960s, procurement by ministry or government department of goods and services or construction works must be in line with Financial Orders Part. III of 1965, these orders were established by the Exchequer and Audit Ordinance (Cap. 439) of 1961 (Report of the Presidential Commission on Corruption 1996). Financial orders were amended whenever necessary through Treasury Circulars issued by the principal secretary in the ministry of finance (ibid.). The financial orders stressed that: whenever necessary, procurement must be from government stores. These include Medical Stores, Veterinary Stores, Water Stores, Government Press and Printer; Electrical and Mechanical Division of Communication and Works (URT 2012). Also, procurement can be made from parastatal organizations or companies nominated by tender boards and that procurement from suppliers other than the specified ones be made only in emergency cases and quantities and quality standards must be observed (Report of the Presidential Commission on Corruption 1996). Moreover, the financial orders also specified that whenever, it became necessary for procurement to be made from supplier other than the specified ones, there must be price competition between suppliers. Any procurement of items of value in excess of Tshs 80,000.00 shall be made only with the approval of the procurement committee of the ministry or department (ibid.). The committee chairperson was the accounting officer while its secretary was the supplies officer (URT 2012). As stipulated in the financial orders, all government procurement could only be conducted using: (i) direct purchase, (ii) quotation, and (iii) tendering. The objective of government to establishing these procedures was to prevent extravagant spending and to ensure procurement of high-quality goods at reasonable price (Report of the Presidential Commission on

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Corruption 1996). However, government procurement through government stores was relatively reliable in terms of delivering quality goods, it had also a number of weaknesses which undermined efficiency and effectiveness of procuring stores. According to Report of the Presidential Commission on Corruption (1996), government stores suffered from poor top leadership, poor record keeping and planning, procurement without regard to actual requirements, and many others. In connection to the deficiencies noted above, the financial orders of 1965, gave mandate to the minister of finance to control public finance and other properties of government. However, the same financial orders did not establish bases or criteria to enable the minister to prepare rules and regulations. Also, it did not establish procedures which would be followed by all responsible institutions for procurement and entering into contracts with suppliers or contractors (Report of the Presidential Commission on Corruption 1996). On a critical note, it did not specify steps to be taken on or punishment to be instituted to any servant contravened procedures established by the financial orders (Nkinga 2003; Report of the Presidential Commission on Corruption 1996). As a result, public servants who contravened or neglected to follow financial orders were not disciplined (Nkinga 2003). The financial orders stressed that, whenever necessary procurement must be from government stores, the government printers, parastatal organizations or companies nominated by tender boards and, procurement from suppliers other than the specified ones be made only on emergency cases and quantity and quality standards must be observed (Nkinga 2003). These institutional deficiencies were among the constraints which undermined effectiveness in procuring goods and services by government stores. Despite the fact that public procurement was carried out by government institutions, yet scarcity of essential commodities due to poor record keeping, length bureaucratic processes of collecting goods; bad procurement systems and financial constraints were common (Report of the Presidential Commission on Corruption 1996). At the same times, poor quality goods were procured at exorbitant prices through collusion and without the approval of relevant authorities (Report of the Presidential Commission on Corruption 1996). This was due to the fact, the procurement system was fragmented, and there was no uniform system to procure public goods and services (ibid.). In connection to that, the procurement system had little or no room for active private sector participation; and

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in case of competition between public and private institutions, preference was always given to public institutions (URT 2012). In principle, efficient management of public procurement enables government to manage its affairs efficiently by having all the necessary materials and services. It also reduces government spending bearing that procurement of supplies and services costs government a lot of money. However, contrary to expectations, government procurement in Tanzania had been inefficient (Report of the Presidential Commission on Corruption 1996). Procurement regulations had been deliberately flouted for personal benefits by officers concerned. Non-compliance had been rampant because of the existence of avenues for corruption (Report of the Presidential Commission on Corruption 1996). Government had lost millions of shillings in claims for goods which were never delivered. The report of the controller and auditor general for the accounts 1991/1992 show that Tshs 1,5 billion was paid for goods which were never delivered. During 1993/1994, a total of Tshs 474.9 million was spent similarly while a total of Tshs 683.7 million was spent without authorization by relevant authorities. The noted deficiencies some were associated with the weaknesses in terms of structural and institutional frameworks which guided procurement process. The end results are poor public service delivery, misallocation of public resources as well as slow pace of economic growth and development. Therefore, the need for reforming of the procurement systems through enactment of law, policies, and regulations as well as restructuring of procurement/supplies units was necessary.

Reform of Public Procurement Structures and Dispersion of Corruption Government’s effort to undertake public procurement reform in Tanzania Mainland started in 1992 in the response to the recommendations made by the commissioned consultants undertook impact assessment of Public Procurement and Supply Management in Tanzania (Nkinga 2003). The reform also aimed at making procurement process more efficient and transparent in line with requisite and basic procurement guidelines and best practices (URT 2012). One of the driving forces to this initiative was the urgent need for strengthening institutions involved in public procurement, as these institutions lacked technical and human resources capabilities (Mutahaba et al. 2017; URT 2012). The reform also focused

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on improving the procurement systems which were extremely compartmentalized with multiple authorities such as Government Stores, Medical Stores, Veterinary Stores, Water Stores, Government Press and Printer, and Electrical and Mechanical Division of Communication and Works (URT 2012). In light of the foregoing, public procurement reform initiatives in Tanzania also aimed at improving institutional and governance frameworks to enhance competition, accountability, and transparent procurement system that engenders and secure confidence of both political leadership and the community at large (URT 2012). As a response to that need, the government, in the mid of 1990s, has initiated a number of procurement reforms in its public procurement system with the aim of making it more efficient and transparent in line with requisite and basic procurement guidelines and best practices. One among the driving forces to public procurement reform initiative was the urgent need for strengthening institutions involved in public procurement and addressing critical shortage of human resources with technical capacities (Mutahaba et al. 2017). In addition, public procurement reforms also among others aimed at establishing new structures, decentralizing procurement process to make it more efficient and transparent in line with requisites and basic procurement guidelines and best practices (URT 2012). In Tanzania today, public procurement is mostly decentralized, though it is based on a rigid traditional competitive tendering principle, centralized most of the decision making authorities to committees and establishing a multi-functions central regulatory body (Maliganya 2016). However, despite the implementation of new reform initiatives, public procurement system is still faced with: (i) existence of rampant corruption and weak integrity on part of the procurement leadership, (ii) poor enforcement of public procurement monitoring and evaluation mechanisms, (iii) inadequate skill in contract management and weak enforcement mechanisms for the signed contract at both central and local government levels, and (iv) misuse of authority across MDAs as evidenced by CAG reports (2010–2017). In a critical note, (v) Poor quality goods are procured at exorbitant prices through collusion with private dealers awarded contract to procure goods for government offices despite of a number institutions and Tender boards established to oversee public procurement in government (CAG annual reports, 2010–2017).

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State of Corruption and Weak Integrity Corruption emerged as a criminal offense for the first time in the 1930 when the colonial administration amended the penal code to include a section which stated that to demand, to solicit, to give and receive bribe is a criminal offense (Report of the Presidential Commission on Corruption 1996). When Tanzania became independent, it inherited this law and the administrative structures which were established by the colonial administration. The evidences show that in early 1960s most incidents of corruption involved lower and middle level officers, especially those who were involved in the delivery of services direct to the people (Report of the Presidential Commission on Corruption 1996). At the time, integrity was the cornerstone of public service while presents and commissions were non-existent, and the procuring stores were corruption frees (Report of the Presidential Commission on Corruption 1996). In this period the government procurement was carried out by store officials who had high integrity, procured and delivered quality goods and services and they were trusted by the public (Lumbanga 1998). The public administration, and, in particular, procurement of goods and services was efficient and effectively managed (Lumbanga 1998). However, from late 1960s the situation changed, due to the expansion of the public service as a result of nationalization of private companies (Mutahaba et al. 2017; Mukandala 1993; Mallya 2006; Baguma and Shelukindo 1993). Integrity also began to disappear as did discipline (Kihamba 2015; Mallya 2006; Report of the Presidential Commission on Corruption 1996). Many public servants betrayed the trust bestowed on them by the Nation (Lumbanga 1998; Baguma and Shelukindo 1993). They started using their offices for personal/private economic gain and corruption spread across public sector in the country (Report of the Presidential Commission on Corruption 1996). By the early 1990s, Tanzania government realized that her procurement systems and processes had proved failure as far socio-economic development was concerned. An inefficient, ineffective, and unmotivated civil service was also an outcome whereby accountability on part of the office holders was nearly non-existed (Mallya 2006). Also there was laxity in enforcing discipline at work, erosion of public service ethics, corruption, abuse and misuse of authority, and un-precedented bloated bureaucracy (Mutahaba et al. 2017; Mukandala 1993; Baguma and Shelukindo 1993).

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In early 2000s the government also realized that its efforts to improve procurement process for economic development were marred with incidents of corruption and centralization. Therefore, reform initiatives to decentralize the procurement functions to procuring entities started through enactment of the Public Procurement Act, 2001 and its amendment of 2004 and 2011. In connection to that, governance of procurement of goods and services in local government in Tanzania is characterized by decentralization. Procurement of goods and services in the Local Government Authorities (LGAs) is guided by the regulations made under section 65 of the Local Government Finance Act 1982, the Local Government (Selection and Employment of Consultants) Regulations 2003 Government Notice No. 48 and the Local Government (Procurement of Goods and Works) Regulations 2003 Government Notice No. 49 both Published on 21st March, 2003. In addition, the Public Procurement Act of 2001; 2004; 2011 which establish public procurement appeal authority (PPAA) is also applied. The Act, 2004, provided for the establishment of Public Procurement Appeal Authority (PPAA) to deal with resolution of complaints and disputes arising from the government procurement process (PPRA 2007). The procurement law provides for establishment of a decentralized procurement system in which government ministries, independent departments, government agencies/authorities, local government authorities (LGAs), regional administrative secretaries, and parastatal organizations can carry out their procurement without any financial thresholds or intervention from the ministry of finance (Matto 2017). This is one among the good reform initiatives which focuses on enhancing transparency and accountability in the procurement process. It also aims at providing space for the private to compete for government tenders and supply of quality goods and services. For the government institutions, the reform of the procurement expected to improve the capacity of the procurement management unit staff through training and sharing experiences from other jurisdictions. More importantly, procurement reform was expected to increase competition, quality goods and services, reduce corruption as a number of institutions are established to monitor, evaluate and assess the goods procured by the procuring entities. In addition, since the adoption of procurement reform initiatives in early 2000s, performance of the public procuring entities in service delivery has been a problem due to failure to comply with the procurement regulations, lack of adherence to procurement procedures, lack of

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professionalism in undertaking procurement activities and lack of transparency in tendering process (Matto 2017). Furthermore, corruption and misuse of power and authority affected procurement process (Matto 2017; NACSAP 2010). Good public procurement is a prerequisite for economic growth and effective public investment, and poor governance of public procurement systems can turn public investment into major political and economic liabilities, hinder development goals and outcome, and result in additional costs and waste public funds (World Bank 2013). Experiences in Tanzania indicate that, public procurement is an area most vulnerable to corrupt manipulation and malpractice (CAG 2019). In addition, compliance levels continued to be low in procuring entities due to deliberate neglect or intention to circumvent procurement procedures (Mutahaba et al. 2017). Thus, observance to procurement laws and regulations has been a challenge to some of the procuring entities. This situation can be attributed to conflict of interests of the procuring staff and their political leadership, corruption, negligence, incompetence of staff and un-institutionalized monitoring and evaluation of procured goods and services. These have been evidenced every year by the annually reports of the controller and auditor general (CAG 2018). For example, the CAG report of 2017/2018 revealed that ten Ministries and Region Secretariats procured goods and Services worth of TZS 4.6154 billion without satisfying the minimum quotation from three suppliers as required by procurement law and public procurement regulations 163 and 164 of 2013. The reason for not abiding to the law and regulations is known to the procuring entities. This is the misuse of authority and power vest in these procuring entities. It can also be associated with undue influences by the suppliers for personal/private gains. The same scenario was observed in the local government authorities. In this regard, decentralization of procurement process is also associated with spread of corruption and government spending on procurement has increased due to non-compliance to the law and regulations. The performance of LGAs in procuring goods and services in the financial year 2014/2015 and 2015/2016 stood at 62 and 70% instead of the expected 69 and 78%, respectively (CAG 2015, 2016). Furthermore, the CAG audit report for the year ended June 30 2013 revealed that six Councils procured goods worth Tanzania Shillings 125,681,000/though were never delivered. In addition to that, the CAG audit report for the year ended June 30 2012 discovered that twenty-four Councils

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Table 10.1 Level of procurement compliance to LGAs for two years Level of compliance

Non compliance Compliance Total

2016/2017

2017/2018

No. of LGAs

%

No. of LGAs

%

34 151 185

18 82 100

41 144 185

22 78 100

Source CAG (2018)

made procurements worth Tanzania Shillings 541,013,405/= without obtaining approval from the relevant Tender Boards, contrary to the requirement of procurement legislations (Matto 2017). This state of affairs can also be associated with corruption, abuse and misuse of authority and power, or undue influence from the businessmen/women. The CAG report (2019) also shows that 82% (151) of the LGAs complied with the requirement of the Act, while 18% (34 LGAs) did not comply with the requirement of the law as shown in the Table 10.1. The law stipulates that procurement of goods and services has to be approved by the tender board of each PEs. This requirement provided for by the regulation, rule 55(2) and 185(1). Violation of the rules and regulations guiding procurement process can be termed as a misuse of power and authority by the PEs. For example, in the financial year 2017/2018 eight procuring entities (central government) procured goods and services worth TZS 5.3734 billion without prior approval of their established Tender Boards. This is contrary to law and procurement regulations. There is a possibility that these PEs did this because of undue influences from selected suppliers/contractors. In a similar vein, a total of TZS 9,047,221,353 was used by LGAs to procure goods and services without the approval of tender boards, which is contrary to rules 55 (2), 163 (4) and 185 (1) of PPR 2013. The approval of procurement is important in order to increase accountability, and ensure value for money. Since this amount of spent without approval, possibility of procuring goods of low quality is very high, and some of the money could be misallocated to private businesses. Table 10.2 shows the trend of procuring of goods and services for the period of three years’ financial years. The data on the Table above also show that there is no improvement as procurements that were not approved by Tender Boards increased by

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Table 10.2 Trend of procurement of goods and services without Tender Board approval in three years

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Year

2017/2018 2016/2017 2015/2016

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No. of LGAs involved

Absence of Competitive bids (TZS)

32 25 17

9,047,221,353 2,703,509,121 907,898,325

Source CAG (2018)

TZS 1,795,610,796 equivalent to 198%, implying that there increase in terms of the amount and number of LGAs involved in the procurement without obtaining Tender Board’s approval. For the year 2016/2017 seven procuring entities procured goods and services worth TZS 2.997 billion without prior approval of their Tender Board. Awarding contracts without prior approval of the established tender boards is contrary to the procurement regulations 35 (3) of 2011 and Regulation 55 of 2013 which give power to tender board to approve all contracts. The action of the PEs awarding tenders and contracts without prior approval of established tender boards undermine efficient and effective governance of public procurement. In a similar vein, the CAG report 2018, observed thirteen (MDAs) PEs paid TZS 5.356 billion for goods, works, and services which were never delivered. In addition, 15 LGAs ordered and paid TZS 573,039,278 for goods, but the same were not delivered by suppliers (CAG 2018). This situation is contrary to the contractual obligations between the contractors and PEs as stipulated by the PPR. In addition, CAG report observed uncompetitive procurements without proper justifications worth of TZS 3,936,238,236 were undertaken without competitive bidding as required by the law. This is contrary to the PPR, 2013 rule 164 (1) which requires quotation to be obtained from at least three suppliers and may include qualified agents of foreign suppliers in Tanzania. A three year’s comparison of procurements without competitive bidding is presented in turn. The data on Table 10.3 show that, there is no improvement in complying with competitive procurement as the number of LGAs involved in procuring goods and services without competitive bidding increased. This evidence that procurement of public goods and services

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in Tanzania is still inclined to centralization, with limited participation of suppliers/contractors. Limited participation undermines effective procurement. It is also prone to corruption, abuse and misuse of power and authority for awarding tender to unqualified suppliers/contractors. Procurement of goods and services has to be undertaken from approved suppliers, as stipulated by the PPR, 2013, rule 131 (4) (b) and its amendments of 2016. The state of procuring goods and services from unapproved suppliers persisted despite the adoption of reform initiatives which among other things requires procuring entities to procure goods and services from approved suppliers/contractors. Since the procuring entities are still procuring goods from unapproved suppliers, the likelihood of having conflict of interests is very high. Also corruption related issues including favoritism are attributed to this state of affairs. Table 10.4 shows the trend of procurement of goods and services and costs involved from unapproved sources for the period of four years. Table 10.3 Trend of procurements made without competitive bidding in three years’ period

Year

2017/2018 2016/2017 2015/2016

No. of LGAs involved

Absence of Competitive bids (TZS)

48 32 36

3,936,238,236 1,413,388,622 2,120,374,651

No. of LGAs involved

Absence of Competitive bids (TZS)

18 27 27 28

923,836,408 936,775,623 1,182,526,122 672,423,123

Source CAG (2018)

Table 10.4 Trend of procurement of goods and services from unapproved suppliers for the period of four years

Year

2017/2018 2016/2017 2015/2016 2014/2015 Source CAG (2018)

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Goods and Services Received But Not Inspected According to PPR, 2013, rules 244 and 245 require all accounting officers to institute goods inspection committee as a way of increasing transparency and accountability on part of the procuring units. Inspection also ensures delivery of quality goods and services. Inspection of goods also reduces corruption and misuse of power, favoritism because inspection determines quality of goods, and the Inspection and Acceptance Committee rejected substandard procured items. However, the role of the inspection and acceptance committee is yet to be institutionalized across local government authorities. The PPR states that payment shall not be made for work done, goods supplied, or services rendered, unless certified that the work has been performed. To the contrary goods are been procured and delivered without inspection and accepted. As revealed by the CAG report 2018 that procured goods and services costing TZS 432, 737 billion from unapproved suppliers were delivered. In addition, goods and services costing TZS 628, 364,144.05 without being inspected and accepted by Goods and Inspection and Acceptance committee were delivered to some of PEs. This is against the public procurement regulation 245 of 2013 which requires the procuring entity on procured goods and services to be inspected, sampled and tested to confirm whether they meet the standards stipulated in the contract. Also it was observed that procurement of works, goods, and services costing TZS. 1.1741 billion without valid contract agreements with suppliers/contractors was undertaken by PEs, this is contrary to regulation 10 (4) of PPR, 2013 which states procuring entity shall ensure that payments due to tenderers are made properly and promptly in accordance with the terms and conditions of each procurement contract entered into. The same trends were revealed in the local government authorities see Table 10.5. Table 10.5 Trend of procured goods received without inspection

Year

2017/2018 2016/2017 2015/2016 Source CAG (2018)

No. of LGAs involved

Absence of Competitive bids (TZS)

31 25 25

1,412,005,295 644,312,449 789,824,270

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The number of local councils procuring goods without inspection is increasing as shown in Table 10.5. It is evident that the factors undermined efficiency and effective procurement of quality goods and services at competitive prices still exist to some of procuring entities. Procuring entities are still affected by incidences of corruption and conflict of interests. In addition, some procuring entities had been paying public money to undelivered goods or unrendered services as well as purchasing of goods of low quality/standard (CAG 2017, 2018).

Governance Structures and Public Procurement in Tanzania Public procurement is a crucial pillar of strategic governance and service delivery for government (CAG 2008). Public procurement governance requires that structures and systems of procuring entities are democratic, participatory, representative, accountable, and inclusive. In Tanzania for example, governance of public procurement process is outlined within public procurement Act, 2004 (PPRA). PPRA, 2004 provides for establishment of institutions and units as well as committees to manage procurement function. The procurement institutions established by the law include (i) Accounting Officer (AO), (ii) Tender Board (TB), and (iii) Procurement Management Unit (PMU). In addition, the national audit office (NAO) is charged with responsibilities of undertaking external financial and performance audit of all government entities, public authorities, and other bodies at least once a year. NAO is required under section 33 of the PFA 2001 to carry out Performance Audit and report to the Parliament on the economy, efficiency and effectiveness in the use of public money, and other resources (PPRA 2007). Until the early 2000s, the procurement function in Tanzania was typically confined to the government stores and parastatal organizations for purchasing of goods, services, and works. These procurement stores/units were housed in individual ministries, and individual parastatal organizations worked in isolation, with responsibilities limited to the processing of purchase orders, or administering of competitive bids (African Development Bank, 2014). This procurement arrangement was not transparent as only procurement/supplies units were involved in the process with an approval of the high authorities.

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The issues of lack of transparency, frequent corruption scandals, and substandard quality of goods and services and construction attracted need a total overhaul of the procurement process. In 2001, the government enacted a new procurement law, the Public Procurement Act, 2001, which was amended in 2004. The PPA of 2004 provides the procedures on how the procurement functions should be handled in the procuring entities using the organs established within the procuring entities (PPRA 2007). The PPA 2004 provides set up of procurement functions in the PEs by established organs such AO, TB, UD, EC, and PMU. All these organs are required to undertake procurement functions independently and be accountable. Furthermore, there is an Internal Audit Unit in each PE intended to serve as a tool of checking the efficiency and effectiveness of financial management and internal control systems. It is designed to add value and improve the procuring entities operations in spending public funds. The unit is responsible for ensuring that procurement procedures are followed by the entity in the procurement of both goods and services (PPRA 2007). The law also provides for mechanism for handling disagreements/disputes arising between PEs and bidders in the process (PPRA 2007). In order to enhance transparency, efficiency procurement process the accounting officer (AO) is mandated by the public procurement Act, 2004 to oversee procurement activities in his/her institution are conducted according to procedures established by the law (PPRA 2007). Other duties and responsibilities of the AO are detailed in Section 33 of the same Act, 2004 which include establishment of procurement management unit (PMU). The AO is also conferred power to establish the tender board (TB) as per the Second Schedule of the Act, 2004. The head of PMU is also a secretary to the tender board and he/she reports direct to the AO on all matters related to procurement. The PMU is also charged with the responsibility of management of all procurement activities and disposal of items. Under that section the AO is conferred with the power to establish the TB as per the Second Schedule of the Act. The members of TB shall be appointed with regard to their technical competence and skills required for discharge of their functions (PPRA 2007). The law, section 37 (2) also provides for establishment of an evaluation committee, charged with the responsibility of evaluation of biddings and recommend to the PMU on the suitability of bidders and approved by the AO. The

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PMU after reviewing the report of the evaluation committee, it submits recommendations to TB for approval. The main objective of establishing institutions and systems to undertake and regulate procurement process is to enhance transparent and accountability, democratic procurement process, and inclusive bidding. This arrangement by and large increases accountability of all parties involved in the procurement process. However, the established procurement units (PMUs) are still under resourced in terms of having qualified human and financial resources which undermine their efficiency and effectiveness in procuring of goods and services. Because of their limited competence sometimes have been procuring substandard goods and services, failing to manage contracts and contractors, hence affect service delivery and nation’s economic growth and development. In addition, establishment of public procurement regulatory authority (PPRA), as an oversight body, for the procurement function in the country enhanced governance of public procurement in Tanzania. PPRA is also mandated by the law to regulate and monitor procurement activities undertaken by all PEs. The main objective of monitoring procurement activities is to ensure that the funds disbursed by the government for procurement of goods, non-consultancy service, disposal of public assets by tender and consultancy services are utilized in accordance with procedures laid down in the Act and its regulations (PPRA 2007). The PPRA is also charged with the responsibility of ensuring that there is application of fair, competitive, transparent, non-discriminatory, and value for money procurement standards and practices in public procurement system (PPRA 2007). The PPRA as an oversight body has mandate to ensure that public entities are adhering to PPA 2004 and its Regulations of 2005. The PPA 2004 is giving equal opportunity to all prospective suppliers, contractors, consultants, and service providers. It ensures fairness of treatment to all parties in order to obtain the value for money in the procurement process. The Act applies to all Government institutions which use public funds. The Defense and National Security Organs are obliged to comply with the Act in managing their procurement and disposal of public assets. They are required to prepare dual list i.e., items for open tendering and list for restricted items. They are required to agree annually with the PPRA on the restricted list and the methods of procurement for the restricted items (PPRA, ibid.). However, PPRA has not been effective in overseen all procurement processes and goods, due to its inadequate capacity. It

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has very few staff, located in headquarters of the region, while at the local government level is left without official from PPRA. This indicates that procurements of goods and services and works at local government level are been carried out without being monitored. This state of affairs affects can lead to spread of corruption at local government level, as procurement of goods and service is done without an oversight body. The government through the PPA, 2004, established the Public Procurement Appeals Authority (PPAA) charged with the responsibilities of providing mechanisms for handling of complaints and appeals arising in the public procurement process (ibid.). PPAA is also responsible for providing clarification on disputes among parties as well as providing advice to the Public Procurement Regulatory Authority on areas requiring improvement within the public procurement process (PPRA 2007). However, the established PPA lacks adequate staff to handle complaints across MDAs and LGAs. The National Audit Office of the United Republic of Tanzania (NAO) is established under Article 143 of the Constitution of the United Republic of Tanzania. The statutory duties and responsibilities of the Controller and Auditor General (CAG) are provided for in the Public Finance Act (PFA) No. 6 of 2001 and the Local Government Finance Act No. 9 of 1982. The NAO has responsibilities of undertaking external financial and performance audit of all government entities, public authorities, and other bodies at least once a year. In addition, NAO is required under section 33 of the PFA 2001 to carry out Performance Audit and report to the Parliament on the economy, efficiency and effectiveness in the use of public money, and other resources (PPRA 2007). The Prevention of Corruption Act No. 3 of 1971 has been repealed by the government and enacted the Prevention and Combating of Corruption Act, 2007 which provides the overall legal framework for prevention and combating corruptions in Tanzania. The enacted Act has provision of corrupt transactions in contracts (Section 16) and corrupt transactions in procurement (Section 17) which state the penalties for person convicted of such offenses. The Act also provides extensive protection to informers (whistleblowers) Section (51) as well as protection of witnesses, experts and victims (Section 52). This is a step ahead in detecting and fighting corrupt practices in procurement process. It is expected that the implementation of the provisions in the Act will ensure that procurement will be done in fair and transparency manner as stipulated in the PPA 2004 (PPRA 2007). However, despite of the good reform initiatives which

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enhanced governance of procurement system in Tanzania, there are still a number of challenges which undermine efficient and effective public procurement in almost all institutions.

Conclusion The adoption of the public procurement reform in Tanzania brought up achievements in terms legislation of new procurement laws, policies, rules and regulations as well as created new avenue for handling complaints and disputes. In addition, the reform has enhanced governance by establishing new structures responsible for managing, approving, evaluating, overseeing, and inspection and acceptance of goods and services rendered to the procuring entities. However, despite of these good efforts, procurement reform initiatives have not been effectively addressing some of the constraining factors that have continued to undermine efficiency and effectiveness of procurement process. The procurement function has attracted corruption practices across MDAs and LGAs, misuse of power and authority as some government officials are using their power to procure goods and services from unapproved sources, awarding contracts without competitive tendering. Also, there is an increase of purchase of goods without approval of the tender boards and an increase of payment for goods and services which never delivered to PEs.

References Baguma, R., & Shellukindo, W. N. (1993). Ethical Standards and Behaviour in African Public Services. United Nations Economic Foundation for Africa and Africa Association for Public Administration and Management. CAG. (2008). Annual General Report of the Controller and Auditor General on the Financial Statements of Local Government Authorities for the Financial Year 2007/2008. CAG. (2015). The Annual General Report of the Controller and Auditor General on the Financial Statements for the Year Ended 30th June, 2015 Central Government. CAG. (2016). The Annual General Report of the Controller and Auditor General on the Financial Statements for the Year Ended 30th June, 2016. CAG. (2018). Report of the Controller and Auditor General on the Audit of Financial Statements of the Strengthening Primary Health Care for Results Program for the Financial Year Ended 30th June, 2017.

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Controller and Auditor General (CAG). (2019). Annual General Audit Report on the Audit of the Public Authorities and other bodies for 2018/19 financial year. Dar es Salaam: National Audit Office. Kihamba, J. (2015) Administrative Governance and Executive Agencies’ Service Delivery in Tanzania (Unpublished PhD Thesis). University of Dar es Salaam. Kiragu, K., & Mutahaba, G. (Eds.). (2006). Public Service Reform in Eastern and Southern Africa: Issues and Challenges. Mkuki na Nyota: Dar es Salaam. Lumbanga, M. (1998). Report on the Inaugural Speech on Civil Service Reform Programme, President’s Office Public Service Management, University of Dar es Salaam. Maliganya, E. (2016). The Next Age of Public Procurement Reforms in Tanzania: Looking for the Best Value for Money. The George Washington University Law School. www.google.com. Accessed on 5 May 2019. Mallya, E. T. (2006). Civil Society and the Land Question in Tanzania. In A. Kiondo & J. Nyang’olo (Eds.), Civil Society and Development in Tanzania. Harare: MWENGO. Matto, M. C. (2017, July). Analysis of Factors Contributing to Poor Performance of Procurement Functions in Local Government Authorities: Empirical Evidence from Audit Reports. European Journal of Logistics, Purchasing and Supply Chain Management, 5(3), 41–52. Mukandala, R. S. (1993). To Be or Not to Be: The Paradoxes of African Bureaucracy in 1990s. International Review of Administrative Science, 58, 555–576. Mutahaba, G., Bana, B., & Mallya, E. T. (2017). Reforming Tanzania’s Public Sector: Assessment and Future Direction. Dar es salam: Mkuki na Nyota Publishhers Ltd. NACSAP II. (2010). Progress Report for a Period of Six Months. Dar es salaam: President’s Office. Nkinga, N. S. D. (2003, January 14–17). Public Procurement Reform—The Tanzanian Experience. Paper presented at the Joint WTO – World Bank Regional Workshop on Procurement Reforms and Public Procurement for the English – Speaking African Countries held at the Royal Palm Hotel, Dar Es Salaam, Tanzania. OECD. (2016). Preventing Corruption in Public Procurement. Shutterstock.com/andyrogers 23. www.google.com. Accessed on 5 May 2019. PPRA. (2007). Final Report, Assessment of the Country’s Procurement System. Dar es Salaam, Tanzania: Government Printers. Report of the Presidential Commission on Corruption. (1996). United Republic of Tanzania, Ref. No. SHC/TKR/320/48/16, December 7, 1996. URT. (1961). The Exchequer and Audit Ordinance (Cap. 439) of 1961. Dar es Salaam: Government Printers.

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URT. (1965). Financial Orders Part III (Store Regulations) (5th ed.). Dar es Salaam: Government Printers. URT. (2001). Public Procurement Act No. 3 of 2001. Dar es Salaam: Government Printers. URT. (2012). The National Public Procurement Policy (Draft). Dar es Salaam, Tanzania: Government Printers. URT. (2016). Annual General Report of the Controller and Auditor General. Dar es Salaam: National Audit Office. URT. (2017). Annual General Report of the Controller and Auditor General. Dar es Salaam: National Audit Office. URT. (2018a). Annual General Audit Report on the Audit of the Local Government Authorities. Dar es Salaam: National Audit Office. URT. (2018b). Annual General Report of the Controller and Auditor General. Dar es Salaam: National Audit Office. World Bank. (2013). Enterprise Surveys – Tanzania. Retrieved June 23, 2019, from www.enterprisesurveys.org/data/exploreeconomies/2013/tanzania.

CHAPTER 11

Political Polarisation, Compromised Procurement and Poor Service Delivery in the Kingdom of Lesotho Teboho J. Lebakeng

Introduction Lesotho as a country whose economy is based on textiles manufacturing, agriculture, precious minerals and the export of water to South Africa, cannot afford or sustain the levels of petty and grand corruption in the procurement process without compromising the ability of the state to provide services to Basotho. This is more so because public service sector in Lesotho is generally considered to lack the necessary resources and requisite capacity to deliver services in an efficient and effective manner. Lesotho has also had a long and arduous history of political instability and security challenges (Pherudi 2016). As a result, Basotho have suffered various forms of misery ranging from tragic political, social and economic consequences.

T. J. Lebakeng (B) Department of Sociology, University of Limpopo, Polokwane, South Africa © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_11

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The country’s democratic project aspirations have experienced a number of setbacks due to periods of fragile democracy, one-party dominance, a turbulent political landscape, sporadic political violence, three military coups de tat and military rule and, more recently, two collapsed coalition governments and an ongoing unsustainable coalition government. The result has been a climate of what strategic forecasters and planners acronym as vuca which stands for volatility, uncertainty, complexity and ambiguity (Berinato 2014; Bennett and Lemoine 2014). Such an environment has, at times, manifested in lawlessness, violations of human rights, inefficiencies in government operations and retrogression in socioeconomic development. Crucially, these elements also run counter to principles of democratic governance and effective accountability.

Contextualising Governance in Lesotho The instability in Lesotho has been occasioned by several factors, including a weak state and governance institutions, elite dominance of the political space, continuous splintering of leader-centred political parties and weak internal democracy, as well as politicisation of the security establishment (Weisfelder 1974; Thabane 2017; Lesotho We Want, n.d.). Since the attainment of independence on 4 October 1966, Lesotho has overall confronted a variety of problems that have made effective, stable and accountable government untenable and good governance difficult. The situation has been exacerbated by what Ajulu (1995) observes as the post-colonial state in Lesotho having inherited neither a manufacturing, commercial nor secure agricultural base. In this regard, Lesotho is a dependent state par excellence. This dependent nature, which made the country a major aid recipient, placed restrictions on what the state was capable of achieving (Lundahl and Petersson 1991; Matlosa 1995). It was in this context that Lesotho was coerced in 1989 to implement the structural adjustment programmes prescribed by the World Bank and the International Monetary Fund (IMF). This was one of the programmes which were imposed and inundated the African continent as more than thirty African countries implemented it (Mafeje 2008). In line with such prescriptions, government subsidies were withdrawn and wages depressed and consequently poverty escalated. Of critical importance was that Lesotho was not immune from the effects of democratisation of the 1990s within the SADC region (Matlosa 1997, 2000). As such, although there was an authoritarian government

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and poverty and suffering continued for many Basotho, in 1993 a significant development occurred with the end of “constitutional limbo” and the re-establishment of constitutionalism (Mahao 1997) and democracy was established based on a first-past-the-post electoral system. This political development of electoral system inevitably created duality, whereby governments in Lesotho won with overwhelming majorities and where opposition parties were usually relegated to the fringes. Subsequently, electoral reforms in 2002 established a proportionalrepresentation electoral system, which permitted more political space for opposition parties (Venter 2003). Within the context of this new operational environment by the political parties, the 2002 parliamentary elections were characterised by a split in every one of the main political parties as a result of intra-party squabbles. While it is generally agreed that unfettered existence of political parties is good for democracy and good governance, in Lesotho this has created a milieu of patron-client politics where those in power have unrestrained access to public funds for personal gain, nepotism and cronyism (Shale and Kapa 2011). Weisfelder (1992) also observed that “a highly politicised population exists in an environment of abject poverty and negligible potential for satisfying popular aspirations…fully mobilised with nowhere to go, the Basotho employ their energies in political battles”. It is within this context that the proliferation of political parties and political polarisation should be understood. For instance, whereas in 1964 there were only three political parties namely the Basutoland Congress Party (BCP) in 1952, Basotho National Party (BNP) in 1959 and Marematlou Freedom Party (MFP) in 1962, by the beginning of the 3 June 2017 elections there were twenty-six political parties and four parties where in a coalition government. It can be observed that electoral and parliamentary reforms in Lesotho have not enhanced the prospects for inter-party collaboration and cooperation to generate genuine debates and exchanges in parliament. Rather, inter-party relations remain adversarial, with the ruling party using its majority to win parliamentary debates rather than creating the basis for cooperation and consensual decisions. Precisely because of this development, floor crossing is commonplace and this affects party system and representative democracy (Matlosa and Shale 2006) and the advent of coalition politics is leading to fresh crisis and challenges of constitutionalism in the country (Nyane 2017). This was clear in the first two coalition governments.

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Given the weak economic base characterising Lesotho, the state is unable to “accumulate” (Sekatle 1997) sufficient resources for distribution among its population which makes it difficult for entrepreneurial spirit to come to fruition. When coupled with the rapidly increasing cost of living, the stagnant salaries in the public service provide strong incentives for public officials to continue tendering for government. This atmosphere of political polarisation has also weakened legislative oversight which is supposed to promote checks and balances, install fiscal discipline, promote good governance, instil accountability and transparency in how public spending is made. Other functions are also weakened such as improving efficiencies in the economy and effectiveness of government operations; evaluating programmes and performance; detecting and preventing poor administration, waste, abuse, arbitrary and capricious behaviour of illegal and unconstitutional conduct; informing the general public and ensuring that executive policies reflect the public interest, ensuring administrative compliance with legislative authority and prerogatives. Although the purpose of the legislative oversight is at the core of democracy and socio-economic development through ensuring that the resources of government are not wasted through corruption, wasteful, irregular and unauthorised expenditure, the legislature in Lesotho is not only weak, ineffective but also dysfunctional. World Bank Group President Jim Yong Kim speaking at an event hosted by the World Bank’s anti-corruption investigative arm, the Integrity Vice Presidency declared corruption to be public enemy number one in developing countries (2013). Given that corruption does not discriminate and has no respect for any country, the factors discussed above have inevitably predispose Lesotho to such a scourge of rampant corruption. According to the Directorate on Corruption and Economic Offices (DCEO), public procurement in Lesotho is the most vulnerable area to corruption. For instance, public procurement cases form 99% of corruption cases handled by the DCEO in 2016.

The Nature and Characteristics of Procurement Approach Public sector is the pulse or heartbeat of service delivery in that the entire governance system revolves around the sourcing of materials, goods and services, mostly from the private sector, in order to achieve its social/public policy intents. It is this sector that is actively involved in the

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design, planning, execution, control and monitoring of the supply chain acitites in the delivery of goods and services. In this respect, the process is an intergral part of prudent financial management which is supposed to create net value and provide oversight and coordination. According to the new Lesotho Public Procurement Policy (2018), goods means objects of every kind and description, including commodities; raw materials; products; equipment; and objects in solid, liquid, or gaseous form and all kinds of livestock. As such, public procurement is widely used to promote objectives of an economic, environmental and social nature, such as the economic development of disadvantaged social groups (Arrowsmith 2010). According to the DCEO, Lesotho’s public servants receive low wages and the public service has a high staff turnover rate (Directorate on Corruption and Economic Offences 2013). In this regard, some public servants take advantage of their positions to demand or accept bribes from users. As Monyake (2017) opines, it will be difficult to get most civil servants, including chief accounting officers, to support whatever measures are put in place to address these tender irregularities and other practices that compromise the integrity of Lesotho’s procurement system. In practice, public procurement involves the administrative transaction of huge quantities of commodities and the high volumes of money. This is more so when governments are involved in massive infrastructural developments such as construction work of a new international airport, main roads and bridges or other key procurements such as buying of heavy weaponry or trains. The importance of infrastructure to growth has been shown in various cross-country studies (Easterly and Levine 1996; Heller 1991). During such periods, the financial interests at stake tend to be high, the volume of transactions massive, the interaction between the public and private sectors close thus making the procurement processes particularly vulnerable to corruption (Rose-Ackerman 1996). In this respect, the use of the term procurement applies to all kinds of acquisition of public goods and services. However, the problem of corruption is more common in certain categories of public procurement than others. Rose-Ackerman (1999) divides procurement into four categories: i. Purchases that require specialised research and development, such as newly designed military aircraft.

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ii. Purchases of complex, special purpose projects, such as dams or port facilities, that do not involve advances in technology but require managerial and organisational skills. iii. Purchases of standard products sold in open markets, such as motor vehicles or medical supplies (off-the shelf purchase). iv. Customised versions of products otherwise available in open markets, such as special purpose computer systems or fleets of police cars. It may also be useful to distinguish between two categories namely, political or high level and administrative or bureaucratic corruption. This is important because the tender procedures usually include several steps, from designing the tender to evaluating the bids. Both the procedures and the opportunities for corruption vary significantly among the categories of procurement. For instance, Tanzi (1998) explains that corrupt behaviour taking place during the budget preparation phase, a time when political decisions are made, reflects political corruption and corrupt behaviour during the budget execution phase reflects mostly bureaucratic corruption. Amundsen (1999) extends the definition of political corruption to include all the corrupt transactions performed by political decision-makers. Premised on the United Nations Convention against Corruption (UNCAC) recommendations, one way of preventing corruption is through the establishment of appropriate and effective systems of procurement based on the fundamental principles of transparency, competition and objective criteria in decision-making. In order to give expression to such recommendations, Lesotho undertook a reform process in 2007 to decentralise public procurement functions. The new Public Procurement Regulations of 2007 was brought in thus repealing chapter 21 of the old Financial Regulation of 1973 followed by a total repeal of the mentioned Financial Regulations in 2014 by enactment of Treasury the Public Procurement Regulations (PP Regulations) in 2007. However, this was at the same time that the investigative institutions such as auditors, police and anti-corruption agencies acquiesced to kickbecks, opaque and irregular procurements and conflict of interests were used by the political elite to fund themselves and, in this, they were in complicity with several corporations (Mothibe 2017).

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Manifestations and Key Fault-Lines in Procurement in Lesotho Prior to 2007 reforms, the procurement system of Lesotho had been a centralised function based at the Ministry of Finance through the department of the Central Stores led by Central Tender Board. The Ministry of Finance was procuring for all Government Ministries, Districts and Agencies (MDAs) using, Financial Regulation of 1973 and Stores Regulation of 1967. Structurally, the PP Regulations introduced two important institutions to forward the provisions of UNCAC, which is the only legally binding international anti-corruption multilateral treaty which was adopted by the United Nations General Assembly (UNGA) in October 2003 and entered into force in December 2005. The PP Regulations established the Procurement Unit to deal with the thresholds for the use of procurement methods, bid evaluation procedures and contract management. In addition, it created a Procurement Policy Advice Division (PPAD) whose goal is to guide procurement units through the procurement process and offer legal advice. Both were introduced at respective line Ministries, Districts and Government Agencies with their respective Tender Panels. The Procurement Unit envisages and assigns public procurement to an individual or a group of individuals to carry out public procurement. This is clearly spelled out in Reg 3(1) of the PP Regulations (2007). Rather than being a permanent office, the Procurement Unit is an ad hoc body duly sanctioned to carry out public procurement. In terms of reach, this covers ministries, district councils, legal state-owned enterprises, any other institutions under public law as well as projects implementing authorisation to perform duties of public procurement. According to Reg 4(1) of the PP Regulations (2007), this is the body that places advertisements for procurements and awards of contracts in Lesotho Government Contracts Bulletin. Procurement Regulations in Lesotho adopted a four-pronged sourcing strategy or bidding method namely, (i) the open procedure or sealed bidding, (ii) the restricted procedure, (iii) the negotiated procurement and (iv) the single-source procurement. Appropos the first method, the tendering process is open to all prospective bidders and there is no pre-determination of who can bid; This method requires extensive advertisement of the tender, thus allowing for optimal transparency, a larger cess-pool from which competitors can be identified and tends to

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leave little room for negotiation of the tender. In the second method, prospective qualified bidders are pre-identified under the restricted procedure for bidding. Pre-identification may be the direct result of a public advertisement or disclosed minimum and/or selection criteria. The third method is often applied in situations where comprehensive technical specifications and contractual terms cannot be easily formulated such that it becomes necessary to enter into negotiations with the bidder to come to an agreement regarding the contract. According to UNDOC (2003), a negotiated procedure is also often used to determine terms of reference of in a failed tendering procedure, for instance, where there are no tenders to bid or only disqualified tenders were submitted. The fourth method is a special procurement process which departs almost entirely from the general requirements of a tendering process. In effect, it allows the procuring body to select a supplier or service provider without compliance to any form of transparency or competition. Structurally, the PPAD is a department within the Ministry of Finance and Public Planning which is established, in line with UNCAC’s proscriptions, to ensure legality, accountability, efficiency, transparency and overall value for money in the implementation of public procurement. Among its key functions is to monitor compliance with procurement procedures, deviation from which would ordinarily constitute offences under the mandate of the DCEO. While the regulations make the PPDA accountable to the Principal Secretary (PS) of the Ministry of Finance and Planning, the Procurement Unit has no identifiable and ascertainable office. The fact that there is no legislation from which the Regulations gleans power and direction means it’s even harder to identify accountability structures for the Procurement Unit. The PPDA on the other hand has broad functions that extend to other structures within government. The challenge though is that there is no mention of the relationship between these structures and the PPDA. By virtue of its functions, the PPDA is an oversight body for the Procurement Unit, thus it monitors and evaluates a range of public officials including ministries and state owned enterprises. However, such institutions are not necessarily under the authority and reach of the Ministry of Finance and Planning. Another of the inhibitions of the PPDA is its inability, at the operational level, to detect and deal with corruption in district administration because it is centralised primarily to national government. This more so because the Public Procurement Regulations, 2007 provide for

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procurement methods and procedures to be followed, but the procurement methods are not organised hierarchically and precedence is not clearly established (The Public Procurement of 2018). This creates major fault-lines and imposes serious limitations in the public procurement institutions. The consequences are dire as corruption in the country has been felt particularly in the process of procurement of goods and services by the government in order to sustain the daily operations of the state. What emerges in the case of Lesotho is that notwithstanding the regulations on the procedures of procurement, the country is faced with rampant corruption scandals and these are attributable to many factors including the manipulation of these procedures. Toeba (2017, 2018) attributes the prevalence of corruption in procurement to the architecture of public procurement policy in Africa which is anchored, historically and etymologically, in neo-liberalism which emerged as the dominant economic theory globally after the end of World War II. The lifeblood of the rampant corruption is the capitulation wage. According to Besley and McLaren (1993), capitulation wage refers to a situation where the government “capitulates” because corruption is endemic and monitoring does not function. The 2013/2014 Global Competitiveness Survey claims that bribery and irregular payments are commonplace in Lesotho.

Cases of Corruption in Lesotho In the past few years Lesotho has witnessed several low and high profile scandals which fit into Appolloni and Mushagalusa (2013) identification of the three stages in which corruption can manifest in a public procurement process such as in the planning and budgeting of procurement, solicitation of procurement and award of contract and performance. In addition, Søreide (2002) breaks the process into various sub-stages including the structuring of the tender and evaluation and controls of performance. Of the high profile scandals is one involving an infrastructure project in 1998 which ended in a bribery and embezzlement trial. This scandal related to the Lesotho Highlands Water Project (LHWP). It is noteworthy that as alluded earlier, water is a highly important resource within Lesotho as it provides both drinking water and irrigation for the country’s agriculture sector. In addition, through a series of dams it provides

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electricity to the country’s industries. Apart from internal usage, Lesotho exports water to South Africa as part of the LHWP and plans are underway to export to both Botswana and Namibia. Subsequent to this highly publicised trial of officials involved with the LHWP in 1998, several laws were passed by the government to establish anti-corruption specific regulation in the country, including the Lesotho’s first anti-corruption law, passed in 1999. But the fact that public procurement legal regime in the country is regulated through regulations which comprise soft law rather than an act of parliament is disconcerting. In order to demonstrate zero tolerance towards corruption, the World Bank barred the three companies from any of the organisation’s projects following their conviction and fine (Earl and Tunton 2005). Another mega-scandal was revealed in June 2013 by the Lesotho Times involving an Israeli company Nikuv which was enlisted to produce identification documents and passports in Lesotho. According to the revelations, Nikuv had initially billed the government for R231.3 million for the entire project. However, before the contract was signed some senior government officials were alleged to have told the company to bill R261.9 million, overcharging the government by an extra R30 million. Among those implicated in the scandal was former Home Affairs Principal Secretary (chief accounting officer) Retšelisitsoe Khetsi (Toeba 2017). An Israeli court later found this company guilty of bribing a foreign official, and fined it $1.15 million (Monyake 2017). By the end of 2014, charges had been brought against two more high profile public officials in the persons of the then Deputy Prime Minister Mothejoa Metsing (now opposition leader and President of LCD) and the then Minister of Police Monyane Moleleki (now Deputy Prime Minister in the coalition government). In the same year of 2013, Dr Timothy Thahane, the Minister of Energy, Meteorology and Water Affairs, Timothy Thahane was charged with conflict of interest and fraud related to a block farming programme established to grant loans to farmers when he served as Minister of Finance and Development Planning (Ralengau 2013). The above-cited mega-scandals in Lesotho are a result of procurement fraud wherein rules are systematically bent and broken and involves key political figures and senior managers of state-owned enterprises. This led to the DCEO Director-General, Advocate Borotho Matsoso to decry the fact that while public procurement remained the most vulnerable area to corruption, procurement regulations and processes are silent about the

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ministries, yet they are the worst culprits who interfered procedurally with the procurement process (Mpaki 2016). With regard to corrupt behaviour during the budget execution phase, which reflects mostly bureaucratic corruption, excessive and complicated regulations (what in common parlance is referred to as red tape) are a significant potential source of corruption in Lesotho. This is so because the “red tape’’ allows for serious manipulations by, among other methods, public officials deliberately slowing down processes so that potential clients are frustrated and ready to engage in unlawful activities such as offering bribes to speed up processes. Not only are businesses frustrated but can also be unnecessarily expensive. Precisely because it is difficult for the system to function independently in fighting procurement-related corruption and all the steps in a procurement process are separately predisposed to corruption in its many different forms (Toeba 2017), various other means are thus employed to corrupt the procurement process. These include failing to solicit proposals or tenders from the competitors of a favoured supplier, wrongfully restricting the tender pool, soliciting offers known to be inferior to a favoured supplier, simply misrepresenting tender documents, accepting late proposals or rejecting legitimate proposals. Selection of the best bid is based on the “best briber” rather than on the bidder who presents as close as possible the terms of reference of the tender. Consequently, project cost escalates resulting in the quality of the project being compromised. The reduced cess-pool from which the ultimate service provider or supplier is selected is restricted thus preventing best value for money, rational allocation of resources and obviated international interest in both trade and foreign direct investment lowering the GDP of a country. Thus, dynamically understood, the effects of the corrupt interface between the demand and supply sides perverts the procurement process. The reality is that corruption affects the allocation of public spending as investment decisions are influenced by the opportunity to obtain bribes. Large construction projects (e.g. big dams) are given priority to health and education projects, while spending on operation and maintenance is neglected (Tanzi and Davoodi 1997; Mauro 1997). Clearly, the institutional weaknesses in the procurement process create weak or lack of checks and balances mechanism and thus render the public procurement systems in Lesotho to be highly vulnerable. A vulnerability which has left the public procurement processes in the country to be woefully unable to

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cope with the many instances of political and bureaucratic corruption in public procurement.

Challenges of Strengthening Procurements and Implications of Corruption for Service Delivery In Lesotho, politicised and polarised bureaucracy has created challenges for service delivery and effective government operations. Instead of the institution of bureaucracy being a mechanism for efficiency in the Weberian sense, it has become a major impediment. However, in the absence of diverse avenues for economic activity, politics is at the same time big and petty business and a major preoccupation in Lesotho. One result has been that despite some noted progress (African Peer Review Mechanism 2011), public service in Lesotho is generally considered to lack the resources or capacity to deliver services in an efficient and timely manner. Hence public service does not competently and professionally carry out its mandate (Khasoane 2017). Because corruption diverts public aid and state revenue to private pockets and retards socio-development efforts, this leads to poor public service delivery at a hefty cost to the tax payers. An amendment to the act was adopted by parliament in 2006 in order to improve the effectiveness of the DCEO. It broadened the scope of the investigative powers of the DCEO by including private bodies and not limiting such powers to public bodies. The amendment also introduced the requirement for officials to hand in asset disclosure forms and to adhere to a code of conduct regarding the acceptance of gifts. But this intervention proved ineffective as it did not address the first line of preventing corruption which is in the process itself. In 2018, the Procurement Policy document introduced as the first step in the establishment of an effective public procurement system. Of importance is the new institutional framework which set the functions and responsibilities to be organised in a manner that allows segregation of duties between established institutions as follows: (a) the Public Procurement Authority shall be an oversight body responsible for monitoring, regulating procurement activities and harmonising the processes of public procurement, formulate, promote support and implement capacity-building programmes in public procurement; (b) procuring entity shall be responsible for conducting the

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procurement and disposal processes; (c) procurement committee shall be maintained by every procuring entity responsible for approving of procurement plans, methods of procurement, tender award and overseeing the open competitive tender’s processes; (d) evaluation committee shall be constituted at ad hoc bases for evaluation of tenders or proposals and (e) the procurement tribunal shall be charged with the responsibility to hear appeals against decisions made by the Procuring Entity. But as Tanzi (1998) warns, the fight against corruption may not be cheap and cannot be independent from the reform of the state. If certain reforms are not made, corruption is likely to continue to be a problem regardless of actions directly aimed at curtailing it. Luckily for Lesotho, in the past few years there has been a growing recognition that the country needs to undertake far-reaching reforms to ensure stability and prosperity. In 2017 preparations were underway for reforms in four key areas: (a) reforms relating to the functioning of the political system and constitutional arrangements, (b) reforms in the security sector, (c) reforms in the justice sector and (d) reforms in the public service. Such reforms could be critical for the new institutional framework and efficient public financial management which is fundamental to the promotion of economic development, good governance and a rising standard of living in Lesotho. Unless such reforms are fast-tracked, corruption in the procurement space in Lesotho will continue to impede economic growth as it discourages foreign and domestic investment, dampen entrepreneurship, lowers the quality of public infrastructure, decreases tax revenues, diverts public talent into rent-seeking and distorts the composition of public expenditure. Even funds that are allocated by international donors will continue to be openly embezzled and siphoned by the corrupt political elite.

Concluding Remarks and Recommendations Although the jury is still out in terms of the efficacy and effectiveness of the new policy in preventing procurement corruption, what emerges from the case of Lesotho is clearly that public procurement is not a mere administrative process as is illustrated by the number of cases emerging with regard to flouting of public procurement regulations. Rather, and importantly, it is a highly susceptible process that warrants good institutional arrangements to be complemented by independent legal protection. Corruption in purchasing goods and services by government can be counteracted by strong law enforcement, government commitment

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and private sector support. Therefore, public procurement law should be closely tied to pressing policy issues, that is, from development plans to donor aid and international lending, to anti-corruption agendas and capacity challenges, to public finance management, enforceable remedies under the rule of law, and human rights. But the existence of laws is not sufficient in and by itself because corruption is rarely a one-sector phenomenon that occurs only in one institution of the state, or at one level of the bureaucratic hierarchy. Rather, where it exists as a problem, it tends to pervade large parts of the state administration. In this regard, stringent rules of process and legal guidelines informing procurement procedures will be instrumental in ensuring integrity and accountability in public procurement transactions. Despite having a plethora of anti-corruption laws and having achieved some highly publicised victories over corruption, Lesotho still has significant room for improvement in the fight against corruption. As Socrates argued, politics is inherently ethical and, in fact, politics is the creature of ethics and ought to serve the good prescribed by politics. But political will only is not enough to tackle endemic corruption. This is more especially where it performs the basic function of artificially giving a semblance of political stability and is key to winning an election. The new government’s efforts to tackle systemic corruption will be severely hamstrung by current economic and political conditions (Moletsane 2017). What is required are political will, ethical leadership and professionalised public service. Political parties are public institutions because they secure power through elections, vote in public representatives and appoint officials to the public sector. Through the authority entrusted to them by the people, they are expected to craft appropriate policies, determine how public resources will be spent and introduce new laws. If these leaders are corrupt, it is very likely that corruption will be tolerated by many, especially those in ruling party or parties. In light of the preceding, the following are recommended • Lesotho needs to sensitise and capacitate the public sector to be professional. The government needs to fund the pursue a public sector capacitation and improvement and reform programme which aims at professionalising public administration and increasing the capacity of the civil service in the country. This area is a major arena for bureaucratic corruption.

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• It is prudent for the public procurement unit to function independently. • The institutional framework of the regulations must define and clearly delineate the relationship between the Procurement Unit, PPDA and other institutions of integrity tasked with tackling corruption. • The fact that public procurement legal regime in Lesotho is regulated through regulations which comprise soft law rather than an act of parliament which would afford it some legal certainty is in itself concerning. There is a need to adopt legislation that comprehensively puts public procurement laws within the broader scope of anti-corruption legal framework. • It is critical for the government to identify and know about the main sources and forms of corruption so as to focus on anti-corruption efforts and disburse resources to establish effective countermeasures. • There is a need to entrench a culture of an efficient and transparent public service since public service is the springboard of sustainable development and stability. This can be achieved through depoliticising the bureaucracy and strengthening the procurement regulations.

References African Peer Review Mechanism. (2011, June). The Kingdom of Lesotho (Country Review Report. No. 12). Ajulu, R. (1995). From Collaboration to Dilemma: A Historical Background to Lesotho’s Election of 1993. In S. Southall & T. Petlane (Eds.), Democratisation and Demilitarisation in Lesotho: The General Election of 1993 and Its Aftermath. Pretoria: Africa Institute of South Africa. Amundsen, I. (1999). Political Corruption: An Introduction to Issues. Bergen: Chr. Michelsen Institute. Appolloni, J., & Mushagalusa, M. (2013, April/June). Public Procurement and Corruption in Africa: A Literature Review. Rivista di Politica Economica, 1– 24. Arrowsmith, S. (2010). Horizontal Policies in Public Procurement: A Taxonomy. Journal of Public Procurement, 10(2), 149–186. Bennett, N., & Lemoine, G. J. (2014, January–February). What VUCA Really Means for You. Harvard Business Review. https://hbr.org/2014/01/whatvuca-really-means-for-you. Accessed on 23 August 2019.

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Berinato, S. (2014, September 5). A Framework for Understanding VUCA. Harvard Business Review. Besley, T., & McLaren, J. (1993). Taxes and Bribery: The Role of Wage Incentives. The Economic Journal, 103, 119–141. Constitution of the Kingdom of Lesotho. (1993). Earl, A., & Tunton, A. (2005). No Duck No Dinner: How Sole Sourcing Triggered Lesotho’s Struggle Against Corruption. African Water Issues Research Unit (AWIRU) Paper. Pretoria: University of Pretoria, CiPS. Available at www. acwr.co.za/pdf_files/07. Accessed on 20 April 2019. Easterly, W., & Levine, R. (1996). Africa’s Growth Tragedy. Mimeo. The World Bank. Government of the Kingdom of Lesotho. (n.d.). The Lesotho We Want: Dialogue and Reforms for National Transformation: Vision, Overview and Roadmap. Epic Printers. Government of the Kingdom of Lesotho the Public Procurement Policy. (2018, April 7). Heller, P. S. (1991). Operations and Maintenance: Public Expenditure Handbook (K. Chu & R. Hemming, Eds.). International Monetary Fund (IMF). Khasoane, N. C. (2017). Towards Sustainable and Efficient Governance: Imperatives of Professionalising Public Service in Lesotho. In M. Thabane (Ed.), Towards an Anatomy of Persistent Political Instability in Lesotho, 1966–2016 (pp. 315–331). National University of Lesotho & Open Society Initiative for Southern Africa. Lesotho Times. (2011, December 1). Corruption Is a Threat to Our Democracy. http://lestimes.com/corruption-is-a-threat-to-ourdemocracy/. Accessed on 26 April 2019. Lundahl, M., & Petersson, L. (1991). The Dependent Economy: Lesotho and the Southern African Customs Union. Boulder, CO: Westview Press. Mafeje, A. (2008). African Alternative Framework to Structural Adjustment Programmes: An African Recovery in Thought. CODESRIA Bulletin (3 & 4), 62–65. Mahao, N. (1997). The 1993 Election and the Challenges for the Development for Constitutionalism in Lesotho. Lesotho Social Science Review, 3(2), 1–13. Matlosa, K. (1995). Aid to Lesotho: Dilemmas of State Survival and Development (Doctoral thesis). University of the Western Cape, Cape Town. Matlosa, K. (1997). Political Instability and Elections: A Case Study of Lesotho. Lesotho Social Science Review, 3(2), 93–107. Matlosa, K. (2000, September 18–22). Electoral Systems and Political Instability in Southern Africa. Paper Presented at the Training Workshop on Election Observation Organised by the SADC Parliamentary Forum, Windhoek, Namibia.

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Matlosa, K., & Shale, V. (2006, November 15). Impact of Floor Crossing on Party Systems and Representative Democracy: The Case of Lesotho. Paper prepared for a workshop on Impact of Crossing on Party Systems and Representative Democracy in Southern Africa, Co-hosted by EISA and KAS, The Vineyard Hotel, Cape Town. Mauro, P. (1997). The Effects of Corruption on Growth, Investment, and Government Expenditure: A Cross-Country Analysis. In A. E. Kimberly (Ed.), Corruption and the Global Economy. Washington, DC: The Institute for International Economics. Monyake, M. (2017, July 27). Lesotho Government’s New-Found Political Will Is Welcome, but It Will Not Solve Endemic Corruption. Pambazuka News. https://www.pambazuka.org/democracy-governance/lesotho-gov ernment%E2%80%99s-new-found-political-will-welcome-it-will-not-solve-end emic. Accessed on 12 April 2019. Mothibe, T. H. (2017). Political Leadership Challenge in Lesotho—A Cause of Political Instability? In M. Thabane (Ed.), Towards an Anatomy of Persistent Political Instability in Lesotho, 1966–2016 (pp. 47–73). National University of Lesotho & Open Society Initiative for Southern Africa. Mpaki, B. (2016, December 10). Spotlight on Public Procurement. Lesotho Times. http://lestimes.com/spotlight-on-public-procurement/. Accessed on 15 March 2019. Nyane, H. (2017). The Advent of Coalition Politics and the Crisis of Constitutionalism in Lesotho. In M. Thabane (Ed.), Towards an Anatomy of Persistent Political Instability in Lesotho, 1966–2016 (pp. 75–100). National University of Lesotho & Open Society Initiative for Southern Africa. Pherudi, M. (2016). Governance and Democracy in Lesotho: Challenges Faced by SADC Intervention, 2007–2015. Pretoria: Preflight Book. Prevention of Corruption and Economic Offences Act No. 5 of 1999. Public Procurement Regulations, no. 1. (2007). Available at https://www.lesoth olii.org/legislation/sl/1-0. Accessed on 20 March 2019. Ralengau, M. (2013, November 5). Lesotho Water Minister Dismissed After Being Charged with Fraud. Bloomberg (web). http://www.bloomberg.com/ news/2013-11-05/lesothowater-minister-dismissed-after-being-charged-wit hfraud.html. Accessed on 11 April 2019. Rose-Ackerman, S. (1996). When Is Corruption Harmful? Background Paper for the 1997 World Development Report. Rose-Ackerman, S. (1999). Corruption and Government: Causes, Consequences and Reform. Cambridge: Cambridge University Press. Sekatle, P. (1997). The Formation of the Lesotho Congress for Democracy: Implications for the 1998 Elections. Lesotho Social Science Review, 3(2), 69– 92.

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Shale, V., & Kapa, M. (2011). The Impact of Proliferation of Political Parties on Democracy in Lesotho. Maseru: TRC/UNDP. Søreide, T. (2002, January). Corruption in Public Procurement: Causes, Consequences and Cures (pp. 1–43). Report - Chr. Michelsen Institute. Development Studies and Human Right. Tanzi, V. (1998). Corruption around the World: Causes, Consequences, Scope, and Cures. International Monetary Fund Staff Papers, 45(4), 559–594. Tanzi, V., & Davoodi, H. (1997). Corruption, Public Investment and Growth (IMF Working Paper WP/93/139). Washington, DC: International Monetary Fund. Thabane, M. (2017). Towards an Identification of Historical Roots of Lesotho’s Political Instability. In M. Thabane (Ed.), Towards an Anatomy of Persistent Political Instability in Lesotho, 1966–2016 (pp. 1–22). National University of Lesotho & Open Society Initiative for Southern Africa. Toeba, T. (2017, September). Corruption in Public Procurement in Lesotho. Law and Development Conference. Cape Town: South Africa. Toeba, T. (2018). Corruption in Public Procurement in Lesotho. Law and Development Review, 11(2), 397–431. United Nations Convention Against Corruption. (2013). Guidebook on AntiCorruption in Public Procurement and the Management of Public Finances, Good Practices in Ensuring Compliance with Article 9 of the UNCAC. United Nations, Vienna. United Nations General Assembly (UNGA) Resolution 58/4 of 31 Resolution. (2003). United Nations Convention Against Corruption. Venter, D. (2003). Multiparty Politics and Elections in Southern Africa: Realities and Imageries. In M. A. Mohamed Salih (Ed.), African Political Parties Evolution, Institutionalisation and Governance. London: Pluto Press. Weisfelder, R. (1974). Defining National Purpose: The Roots of Factionalism in Lesotho (Unpublished PhD thesis). Cambridge: Harvard University. Weisfelder, R. (1992). Lesotho and the Inner Periphery in the New South Africa. Journal of Modern African Studies, 304, 643–668. World Bank. (2013). Corruption Is “Public Enemy Number One” in Developing Countries. http://www.worldbank.org/en/news/press-release/2013/ 12/19/. Accessed on 24 May 2019.

CHAPTER 12

Public Procurement Oversight and the Scourge of Corruption in the Public Sector: A Comparative Analysis of South Africa and Kenya Msuthukazi Makiva

Introduction Public procurement practises in rendering public goods, is world-wide practised by governments. Similarly, in both South Africa and Kenya, public procurement has a very long history pre-dating the eighteenth century, with specific objectives that suited government regimes of the time. Public sector reforms, which came through the introduction New Public Management (NPM) paradigm around the 1980s influenced the trajectory of procuring goods and services in countries around the globe. For example, NPM paradigm embodied market-centred principles which

M. Makiva (B) School of Government, University of the Western Cape, Cape Town, Republic of South Africa e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_12

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were settled around procuring public goods and services, in collaboration with the private sector. Central to this was a notion ‘of doing more with less’, while infringing less on quality of service delivery. This means that there are diverse interest groups that are actively involved in public procurement. According to Thai (2016), individuals, groups and organisations in the private sector, including trade associations, among many stakeholders, are actively involved in public procurement environment. This collaboration is dubbed as public-private-partnerships (PPPs). PPPs furthermore usually work hand-in-hand with the executive branch or the policy implementing arm of government. These alliances are grounded on principles of transparency and accountability. In Kenya and the Republic of South Africa, public procurement practices have been evolving and driven by eras. Bolton (2006) cited in Ambe and Badenhorst-Weiss (2012) infer that public procurement operates in an environment driven by technology and socio-political epoch, among other things. As such, both countries gradually modernised institutional arrangements, so that they were at par with the emerging technologies. Moreover, the need to modernise procurement processes was aimed at enhancing transparency. This was to ensure that corruption and maladministration, as vices prevalent in the region of public procurement, are curbed. For example, both Kenya and the Republic of South Africa, currently use e-procurement to procure public goods and services. But in both countries, the evolution of procurement has brought rather unintended results, pointing to gross maladministration, opaqueness and governance crisis. Thus, the PPPs in Africa, instead, appear to be vehicles to facilitate corruption and bribes, rather than promotion of transparency and accountability for good governance. Consequently, both countries witnessed decaying moral compass increasing, with nothing significant to show on the ground for the utilised funds of the state. South Africa in particular, the economy was downgraded to junk status in 2017, and the spate of service delivery protests intensified as the country’s debt enlarged (Donnelley 2017). The government of Kenya threatened to remove all procurement officials from office as ninety-eight percent of state funds could not be accounted for in the 2013/2014 financial year, by all its ministries (Nsehe 2015). This points to massive attack on governance as this means that only two percent of state funds, actually benefited Kenyan citizens.

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Alemann (1989) argued that corruption is a system of measurable perceptions. This line of reasoning permitted the research to use secondary qualitative and quantitative data sourced from Transparency International, Corruption Watch, Auditor General’s Reports, among many other devices. This study used these institutional frameworks to unveil oversight robustness and the scourge of corruption in both countries chiefly, that which is conducted during public procurement of goods and services.

Literature Review: Theoretical Paradigm Oversight in the Public Sector The concept of oversight has its origins from Russia, where it was known as kontrol ’ (McGrath 2013). Kontrol ’ is known as an exercise of political control over the bureaucracy, by which different structures were devised to monitor the actions of the agents towards ensuring effective delivery of public policy objectives (McGrath 2013). Similarly, Morgenstern and Manzetti (2007, p. 132) understand the concept of oversight as based on the view that, it is necessary for government, its institutions and the people who are staffed in these institutions, to be accountable for their actions. Then effective oversight would imply the principal’s ability to both verify actions and sanction wrongdoers (Morgenstern and Manzetti 2007). The notion to ponder is: one may have appropriate oversight institutional value-chain and staffed people to effect these, but still oversight would still not yield the intended results. In this regard, the OECD (2016) brings forth the concept of ‘adequate oversight’. According to OECD (2016) adequate oversight has control systems that are able to detect and analyse risks as they emerge within the government processes. This kind of oversight in turn benefits in providing alarm on red flags. It further allows strengthening of existing oversight and control systems (OECD 2016). In this sense, adequate oversight appears as a ‘live process’ that which, is up-to-scratch in its method. It is paramount to discuss the two forms of oversight in the public sector, especially in the context of public procurement. As Kaufmann et al. (2015) explain, oversight in the public sector is both ex post (external) and ex ante (internal). The ex post or police patrol oversight entails ‘permanent oversight of agency behaviour and looking at how it implements, in practice, the conferred powers’ (Fox 2003, p. 218). Ex post oversight

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is dogmatic and vigilant in nature, especially in monitoring procurement process. Smith (2003, p. 47) describes this kind of oversight imply that, ‘any deviation from the legislature or confines of law, may end up in sanctioning of the agency’. According to McCubbins and Schwartz (2007, p. 86), police patrol oversight entails that, the principal micromanages the agent. Ex post oversight falls into two broad categories, first: it is the ‘imposing of sanctions’ by principals, whereby agents are controlled through budgetary restrictions, appointments or revising the agent’s mandate through legislative or regulatory means (Pollack 1997). The second category explained by Pollack (1997, p. 99) entailed ‘monitoring’ by which, an attempt is made to rebalance the asymmetry of information by scrutinising agent’s behaviour. According to Stapenhurst et al. (2019), independent bodies such as public protector and audit institutions who checks how government spend the revenue, legal compliance to procurement laws and value for money, are essential part of ex post oversight. The problem about ex post oversight is that it is costly, especially if it is applied for prolonged period. In South Africa, for example, the Judicial Commission of Inquiry into allegations of State Capture, that which was initiated in 2018 as a result of deeply entrenched corruption driven through public procurement, thus far cost tax payers an amount of R356. 127 million (Maqhina 2019). As Balla and Deering (2013, p. 29) argue that, ex post oversight is induced by exogenous and endogenous shocks, some of which may be war-related, among other things. However, a major weakness of this approach to oversight is that it is not preventive since an event occurs in order to be ignited. Ex ante oversight is known, instead to be ‘fire-alarm’ (McCubbin and Schwatrz 2007) According to Gerber et al. (2005, p. 4), the purpose of ex ante oversight is to ‘constrain choices of government and enable legislator to hardwire agencies to make certain types of decisions in favour of particular interests’. This means that this oversight is rather the internal controls and for this reason, may be seen in the light of complementing that which is ex post. OECD (2016, p. 24) stated that the purpose of internal controls, especially in public procurement, was to check compliance to laws, proper administration of the process, including financial controls, internal audit and management controls. Ex ante oversight appears to be proactive oriented in prevention of malfeasances beforehand. This, for example requires development of procedures, regulations and internal controls frameworks, that which have a biting-teeth. Therefore, as public

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procurement process is prone to high corruption risk, both adequate oversight (ex-ante) and ex post, are in extreme demand.

Corruption in the Context of Public Procurement It is true that various scholars, from ancient, medieval and postmodernism epoch, all over the world, ‘grappled with the problem of corruption’ (Wallis 2006, p. 23). Corruption as a concept is traced from ancient ages where democracy hardly happened. Genaux (2004, p. 20) traces ‘corruption’ as a word and activity from the Holy Bible, where it is viewed in the light of ‘Man’s separateness from divinity, as a result of deviation or disobedient to the Creator’. Collier and Hoeffler (2004) was of the view that the concept of corruption gained prominence after the Cold War, whereby its venomous effect was noticed, and as such, was made a foreign policy issue to constrain it. The inference is that, the understanding of the concept of corruption is broad and, as such, it has gained various phenomenology that, at times may affect its measurability. However, as von Alemann (1989) describes corruption as ‘logic of exchange’ between two or more people, it is rife where tendering through public procurement, is concerned. Major risks described by The World Bank Group (2018) are that, regardless of forms of corruption, it ‘might unfairly determine the winners of government contracts, with awards favoring friends or relatives of government officials’, predominantly, in public procurement.

Governance in Public Procurement According to Graham et al. (2003), governance is about how government and other social organisations interact and promptly respond to complex citizen’s needs, while considering the environment influenced by ethos, technology, history and culture. The World Bank (2014) defined governance as ‘epitomized by predictable, open, and enlightened policymaking (that is, transparent processes); a bureaucracy imbued with a professional ethos; an executive arm of government accountable for its actions; and a strong civil society participating in public affairs; and all behaving under the rule of law’. This explanation of governance in public procurement involves a range of players which are, but not limited to state, citizens, government systems and social environment. According to Graham et al. (2003, p. 2) citizens at large, business, the institutions

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of civil society, government and the media, contribute significantly to the concept of governance. Notably, governance is both supply-driven and demand-driven. Thus, as much as government delivers governance, squarely, active citizenry, at large ought to do the same. Kaufmann’s (2019) understanding of governance appear to ascribe to the definition presented the World Bank (2014), although it does not put strong emphasis on citizen participation in public affairs. For example, Kaufman (2019) argues that governance consists of the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them. (Kaufmann 2019)

Whichever way, however, the variables in the definition of governance suggest that it is a measurable phenomenon. In this regard, Graham et al. (2003) identify five good governance indicators as ‘legitimacy and voice, direction, performance accountability and fairness’, as they are specific to public procurement. These scholars exclude one critical indicator, which is ‘corruption management’. Kaufmann (2019) put forth ‘Control of Corruption’ in six indicators of governance, which become: ‘voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law and control corruption’.

Public Procurement in South Africa Rules and regulations in public procurement process in South Africa are based on country’s historical, political and socio-economic specific context. Pre-1994 for example, public procurement had no fairness in business opportunities, as there was only one race that benefitted in state coffers. Procurement and tendering was also done under secrecy as the country was undemocratic, and aimed at economically empowering a selected few. Bolton (2006, p. 194) adds further that prior to 1994, the focus of government procurement system was leaned towards large and established contractors. This, for instance excluded the marginalised groups as it was very difficult for small and newly established businesses to enter the procurement system. The face of public procurement changed

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drastically, its focus, post 1994, to be more inclusive, economically. This required absolute overhaul of legislative framework and regulations. The Republic of South African (RSA) Constitution (1996), the supreme law of the country, embarked on a number of redress that which ensured fairness in public procurement. In Section 217 (1) of the South African Constitution, it is stated that when an organ of state in the national, provincial or local sphere of government or any other institution identified in national legislation, contracts for goods or services, it must do so in accordance with a system which is fair, equitable, transparent, competitive and cost-effective. Section 217 (2) of the South African Constitution refers specifically to public procurement stating that, ‘the organs of state may implement a procurement policy providing for categories of preference in the allocation of contracts and the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination’. The RSA Public Finance Management Act (PFMA) of 1999, especially Treasury Regulation of 2005, 16A section, particularly 16A3.2 amplified the Constitution when it stated that all organs of state involved in public procurement must ensure ‘fairness, equity, transparency, competitiveness and cost effectiveness’. The RSA Local Government Municipal Finance Management Act (LGMFMA) of 2003 compels each municipality in South Africa to have a policy on supply chain management. Chapter 11 Sec 112 (a) of the LGMFMA of (2003) states that the supply chain management policy of a municipality must be fair, equitable, transparent, competitive and cost-effective. LGMFMA of (2003) allows the municipalities to use tenders, quotations, auctions and other types of competitive bidding (National Treasury Regulations 2005). A pillar to ‘right to equality’, especially in the case of South Africa is a policy tool to redress past inequality wherein, procurement awards were not distributed fairly among all the race groups (Bolton 2006). Equity, as mentioned earlier is one of governance pillars. The Constitution of the Republic of South African 1996, Sec. 217, emphasises that all public procurement must be done fair and equitable. Munzhedzi (2016, p. 1) purports that SA Government took this path so that an objective of addressing past discriminatory practices and policies by empowering the previously disadvantaged majority. Ambe and Badenhorst-Weiss (2012) indicated that the procurement process was granted constitutional status in South Africa and has been used to address past inequitable policies and practices.

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The RSA Broad-Based Black Economic Empowerment Act of (2003) amplifies the inferences made in the SA Constitution, PFMA of (1999) and LGMFMA of (2003) with the aim of ensuring that the previously disenfranchised groups (prescribed in South African Competition Act No. 89 of 1998 as Indian, Black people and Mixed Colour people), equally benefit in public procurement activities. As such, the RSA Preferential Procurement Policy Framework Act, No. 5 of (2000) was a necessary statute to develop in order to redress past iniquities in public procurement. This Act achieve this through the point system. Thus, the Procurement Policy Schedule (80/20) and (90/10) preferential rule, cited in the Preferential Procurement Policy Framework Act No. 5 of 2000 and the Preferential Procurement Regulations, outlined the process of awarding tenders. These laws prescribed that when awarding a tender, using the 80/20 rule, the acquisition of goods or services must be based on the Rand value of ‘equal to, or above R30 million to R50 million’ (RSA Preferential Procurement Regulations 2017). If therefore the tender is above R50 million threshold value, the 90/10-point allocation would be applied (RSA Preferential Procurement Regulations 2017). As the statutes discussed above allude to competition in tendering process, this space is regulated through the RSA Competition Act, No. 89 (1998) so that there is fairness. This particular Act for example, ‘provide all South Africans equal opportunity to participate fairly in the national economy’. The Act further permits for the creation of independent institutions that will monitor fairness in economic competition, including compliance to international laws. The tender system assists in supplying goods at a fixed price in order to avoid price variances. Hence, this zone requires active monitoring. The inference is that, independent institutions may be unable to monitor economic competition without having laws that promote transparency and access to information, especially in public procurement. Thus, the Promotion of Access to Information Act of (2000) was designed to serve this purpose as it gives effect to transparency principle, strongly emphasised in the constitution. For example, Sec. 32 (1) (a) of the South African Constitution (1996), ‘provides that everyone has the right of access to any information held by the State’. As earlier mentioned, public procurement processes evolve with times and epochs. As such, due to high-level corruption in public procurement processes, the South African government overhauled its systems. The SA government in 2015 reformed public procurement through the adoption of e-procurement system, driven intensely, by technology.

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The aim was to improve transparency in public procurement so that corruption is extinguished. Adebiyi et al. (2010) were of the view that e-procurement system increases transparency in works and services and improves better interaction between suppliers, vendors and citizens, through online system. Pathak et al. (2006) were in support of this claim as argued that online bidding system automatically reduces the cartel, collusion and rigging among the bidders. As such, the e-procurement system further includes e-Tender Publication Portal and the Central Supplier Database (CSD) for Government, with National Treasury Department providing both ex post and ex ante oversight. Thus, National Treasury laws govern all government ministries internal and external controls, chiefly, where public procurement is concerned. E-tender, according to Kramer (2016), is an online portal that publishes government notices, advertisements of bids and awards, whereas, the CSD only digitalises supplier information. The e-procurement system is aligned with the spirit of doing more with less (value for money), as its benefits included the reduction of both costs and opportunities for corruption (Kramer 2016). To verify accuracy of this claim, it is imperative to examine the extent to which costs and corruption is reduced since the introduction of the e-procurement initiative in South Africa, in 2015. It is imperative to examine the extent costs and corruption is reduced since the introduction of the e-procurement in South Africa, in 2015. Table 12.1, which sought to determine correctness of e-procurement accessions, as an assumption is that it prevents wasteful expenditure and maladministration, demonstrate rather worrisome findings. For instance, Table 12.1 Level of corruption and maladministration perception: SA (2015– 2018) Public Sector Irregular, Fruitless and Wasteful Expenditure

Public sector international corruption perception index rank

Year

R46-billion R46-billion R51.1 billion R51 billion

61/186 64/176 71/180 73/180

2015 2016 2017 2018

Source Compiled by the Author from different reports Transparency International (2015/2016, 2016/2017, 2017/2018), Steenhuisen (2017) and Writer (2018)

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during 2015/2016 financial year, when e-procurement systems were introduced in South Africa, Fourty-six billion on irregular, fruitless and wasteful expenditure was incurred, whereas public sector international corruption perception index ranked the country to sixty-one, out of 186 countries. In 2016/2017 financial year, the country maintained its rank, where corruption perception is concerned, even though irregular, fruitless and wasteful expenditure, at R51.1 billion, increased. During 2017/2018 financial year, corruption perception index rank increased significantly to 73 out of 180, while irregular, fruitless and wasteful expenditure incurred, stood at R51 billion exactly. This means that a total of R1471 billion, in the past four years was misappropriated through public procurement regardless of technological innovations introduced to allow procurement processes to be transparent. This is an indication that, while the implementation of the e-procurement system is still at its infancy stages, it instead provides great loopholes for poor governance to occur. R1471 billion wasted over the years could have contributed to curb significant level of poverty rate, unemployment and housing for the poor. The South African Constitution alludes to ‘value for money’ governance principle. Waste of multiple billion rand, as shown in Table 12.1 is an indication that the ‘value for money’ is not taken seriously. However, there could be reasons for this poor management of public purse. Thus, extrapolation is that, misalignment between transparency governance pillar and government policy dictates is to be blamed. For example, the Promotion of Access to Information Act 2 of 2000 gives effect to the 1996 SA constitutional provisions pertaining to transparency. While this is commendable, the issue about this Act is that it contradicts itself when it promotes secrecy, especially where commercial information is concerned. Sec. 36 of Promotion of Access to Information Act (PAIA) 2 of (2000), ‘mandates protection of commercial information of third party. It dictates that the information officer of a public body must refuse a request for access to a record of the body if the record contains: (a) trade secrets of a third party; (b) financial, commercial, scientific or technical information’. The inference is that public procurement is conducted in a competitive environment, by which public-private-partnerships are involved, as bullet three in Table 12.2 displays. This secrecy clause therefore would appear to be a deliberate attempt to beat the system, that which encourages transparency as good governance. It further stifles both ex ante and ex post

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Table 12.2 Level of corruption and maladministration perception: Kenya (2015–2018) Public Sector Irregular, Fruitless and Wasteful Expenditure

Public sector international corruption Year perception index rank

Ksh 7 billion Ksh 215 billion Ksh. 2.9 billion Ksh.34.7 billion KES 350,000,000 KES 90,000,000 KES 27,840,000 KES 150,000,000 KES 3,269,040,600

139/186 145/176

2014/2015 2015/2016

143/180

2016/2017

73/180

2017/2018

Source Compiled by the Author from different reports Transparency International (2015, 2016, 2017, 2018), Ethics and Anti-Corruption Commission Annual Report (2017/2018)

oversight mechanisms to take place. Thus, there is little likely hood of fire-alarm to raise alarm to ensure prompt response and or patrol policing to take effect because of opacity. Hence that there is wasteful expenditure of this magnitude as displayed in Table 12.2. In South Africa, there is even The Prevention and Combating of Corruption and Corrupt Practices Act of (2004), which should act swiftly, immediately as maleficence are detected. Nevertheless, the secrecy clause may stifle the effectiveness of this Act. Thus, if what Panda, Sahu and Gupta (2010) assert is deemed true, as they argue that bureaucrats/politicians can influence the procurements/award of contracts, for their personal gains. It is highly likely that private service providers partnering with government may use Section 36 of PAIA (2000) as barrier to conceal any kind of incriminating information chiefly, where public procurement processes, is concerned. The implication is that, by-passing tenets personified in the Constitution, in the PAIA and other related statutes, is tantamount to deep violation of governance pillars. Public procurement environment is vulnerable to corruption, which (Hope 2014) rebukes, due to its dire effect on governance and effective service delivery. For example, Hope (2014, p. 494) states ‘corruption represents a governance ill’. It redirects state resources for the beneficiation of a selected egotistical few. However, Kaufmann (1997, pp. 2–3) states that the argument that is brought in by so-called ‘corruption apologists’, who argue that bribery

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can enhance efficiency through by-passing set processes and procedures required in procurement facilitation. This bordered on presumption that both the corrupter and the corruptee will actually stick with the deal, and there will be no further demands for bribe. The inference is that; those who form alliances with corruption may land themselves in addiction to it as it is based on speed money that comes with little effort as bureaucratic laws are by-passed. Ambe and Badenhorst-Weiss (2012) sported other challenges affecting the tender process as lack of knowledge of and non-compliance with, the national treasury policies and regulations. The SA National Treasury Report (2015) accent to this as highlights inconsistencies in the actual use of the preference points system. Failure to use competitive processes for quotations and bid is highlighted in the (SA National Treasury Report 2015). SA Auditor General Report (2014/2015) mentions incorrect procurement processes in relation to threshold values for quotations and competitive bidding. These misdemeanours may have contributed to wasteful expenditure demonstrated in Table 12.1, respectively.

Public Procurement in Kenya Public procurement in Kenya comes a long way where it dates back to the pre-independence period; wherein legislative framework was sketchy. Public procurement during colonial era served the purpose of the colonial master with no interest to economically develop the Kenyan citizens. From 1955 to early 1970s the so-called Crown Agents assumed the role of implementing public procurement processes, especially overseas purchases. The public procurement governance in Kenya has been trying to find its balancing feet until 2001, whereby The Exchequer and Audit (Public Procurement) Regulatory 2001, was legalised into law to govern public procurement. In 2010, the Republic of Kenya Constitution borrowed many clauses from the South African Constitution especially those that relate to public procurement and its objectives (see Table 12.2). Importantly, numerous institutions were created in Kenya with an attempt to avert corruption in all its forms. The question to ponder, however remains: with the evolution of legislative framework, to what extent does this curb the scourge of corruption in public procurement and attack on governance, in Kenya? Similarly, to SA, Kenyan government does promote ‘transparency’ as governance pillar in executing public procurement. For example, in the

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Code of Ethics for Suppliers the Public Procurement and Disposal Act No. 3 of (2005) Sec. 4 (d), empowered by Republic of Kenya Constitution (2010, Article 10), emphasise ‘public procurement and disposal activities to be undertaken with the objective of meeting the closest public scrutiny’. The Public Procurement and Disposal Regulations (2006) further emphasise the importance of transparency in all stages of public procurement process. However, it is paramount to note that the same Code of Ethics, stifles the ‘transparency’ pillar for Suppliers in the Public Procurement and Disposal Act (2005), as confidentiality is encouraged. For example, the said clause discourages dissemination of information to the third party, pre- and post-procurement contract is awarded (Code of Ethics for Suppliers in the Public Procurement and Disposal Act No. 3 of 2005 Sec. 10). Therefore, the implication of this clause is that it may cause barrier to exercise fully, ex ante oversight. Wakhungu (2013) was of the view that indeed rules exist to guide the public procurement process, but a great deal of lack of transparency in some instances during the tendering processes, suggests otherwise. The Republic of Kenya Open Government Partnership National Action Plan (RKOGPNAP) II (2016–2018) stated that major datasets available in the portal (e-procurement), mainly those that encourage transparency in public procurement are malfunctioning. The results were that, several companies continued to receive government contracts awards repetitively regardless of not meeting contractual obligations. Table 12.2 demonstrate some of the figures pertaining to maladministration and the level of corruption perception in Kenya, since the adoption of e-procurement, aiming to enhance transparency in public procurement. Nsehe (2015) argued that in the 2013/2014 financial year 98% of the money spent by Kenya’s ministries was unaccounted for. The inference is that 2% accounted for, may have benefitted a small proportion of citizens. According to Africa Centre for Open Governance AfriCO (2014), 80% of all corruption cases before the Kenyan Ethics and AntiCorruption Commission, had a procurement element. This picture did not change as KSh 7 billion and its expenditure, could not be traced in the 2014/2015 financial-year chiefly, in Government ministries, departments and commission (Kenya Auditor General Report 2015/2016; Pslrmoi 2016). Furthermore, KSh 215 billion Kenya’s Eurobond funds and its expenditure could not be traced in 2015/2016 financial year, this is despite government’s claim to have dispersed the funds to other

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ministries, as (Wafula 2016) indicates. In the same financial year, Ksh.2.9 billion and Ksh.34. 7 billion was misappropriated (Institute of Economic Affairs 2019). This is a demonstration that government is attacking its governance, and this may impose desperate predicament to the citizens on the ground. Thus, when the Global Economic Crime Survey (2016, p. 6) was conducted in Kenya, 77% of respondents highlighted procurement fraud occurrences that were done through vendor selection. Common anomalies to this type of procurement fraud is bribery and corruption. Most importantly, people who take this route attempt to by-pass the institutionalised laws. Kagume and Wamalwa (2018, p. 14) were of the view that ‘corruption in public procurement covers an array of irregularities and illegal acts characterised by intentional deception’. Therefore, it is safe to argue that logic appears to be applied with intention to embezzle state coffers to benefit the few greedy. In the year 2016/2017, Kenya obtained 143, out of 180 corruption perception (Corruption Perception Index 2017). This corruption perception is increased from the one acquired in the year 2015/2016. As Table 12.2 indicates, in the 2016/2017 financial year, governance was under siege, misappropriated by County Government of Mombasa, Laikipia County Assembly and County Government of Kitui (Ethics and Anti-Corruption Commission Annual Report 2017/2018). In 2017/2018 financial year, corruption perception of Kenya dropped as it was ranked 73 out of 180 countries. Government’s strong stance may have caused this drop to stem out corruption. For instance, in 2017, government ordered ‘all its public procurement and accounting officers to step down and allow scrutiny of their personal wealth and service record’, even though this decision was later suspended by the labour court (Malalo 2018). However, procurement corruption and bribes continued to upsurge, as Table 12.2 demonstrates the 2017/2018 financial year. The main protagonists in this instance were the County Government of Nairobi City, the National Land Commission and Ministry of Education (Ethics and Anti-Corruption Commission Annual Report 2017/2018). It is safe, therefore, to argue that both South Africa and Kenya have similar governance tools to guide public procurement as portrayed in Table 12.3. Indeed, transparency is at the centre of good governance in public procurement so that corruption is starved. But both ex ante and ex post oversight are throttled by the same statues designed by these

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Table 12.3 Governance pillars of public procurement: SA and Kenya

South Africa

Kenya

• • • •

• • • •

Transparency Right to Equality/wealth distribution Competitive Value for money/Cost effective

237

Transparency Fairness Competitive Cost effective

Source Author’s configuration

countries. It is paramount to understand how ‘right to equality/Fairness, competitiveness and value for money’ is deployed in both countries.

Corruption in Procurement and Governance Crisis in SA and Kenya The Kenya Auditor’s Report on the Financial Statements of National Government (2018) was convinced that legal frameworks such as Public Procurement and Assets Disposal Act of (2015) and the Public Procurement and Disposal Regulations (2015), were effective enough to regulate public procurement, exclusively in ensuring fairness. These statutes supported the Republic of Kenya Constitution (2010). Thus, similar to South African public procurement institutional arrangements, one of the principles guiding the procurement process, espoused in Article 227 of Kenyan Constitution (2010), is competitiveness, cost-effectiveness and value for money. The Kenya constitution promotes recognition of disenfranchised groups, which includes women and people with disabilities. The inference is that, even though Kenya did not suffer discriminatory laws along racial lines, as a result of apartheid, she saw the values that deliver fair public procurement espoused in South African constitution as good to adopt in order to achieve economic equality. Kuloba (2015, p. 36) for example agrees that some of the ‘provisions in the Constitution of Kenya were borrowed from the Constitution of the Republic of South Africa’. It is no doubt that both countries discussed in this chapter do have policies and procedures to govern public procurement. It would appear as though that both these countries developed these policies to gain international legitimacy only to tick a box, instead of enhancing good

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governance. The activity of procuring public goods and services, furthermore, even though regulated by institutions such as the RSA Constitution of (1996 sec. 127), RSA Preferential Procurement Policy Framework Act, No. 5 of (2000), RSA Public Finance Management Act of (1999), among many other statutes, was not always conducted in a transparent manner. Furthermore, SA has stringent mechanisms to curb the scourge of corruption. The RSA Prevention and Combating of Corruption Act, No. 12 of (2004) criminalises corruption in both public and private sector. To ensure compliance with international players in fighting corruption, the South African government endorsed the United Nations Convention against Corruption, the African Union Convention on Preventing and Combating Corruption and the OECD Anti-Bribery Convention (South Africa Corruption Report 2018). Nevertheless, in the case of South Africa for instance, corruption reported cases increased from 3223 in 2012, to a staggering 5334 in 2017 (Corruption Watch Annual Report 2017), whereas the country ranked 73 out of 180 countries, on Corruption Perception Index (CPI) (2018). This, for instance, is the case regardless of established sophisticated centralised e-procurement systems, devised by government with intent to disable public procurement drivencorruption. The unintended consequent for Broad-Based Black Economic Empowerment policies, were instead a creation of extremely rich Black elite, enabled by awarded government contracts that favoured the same individuals. This led to increased levels of corruption in public procurement (South Africa Corruption Report 2018), while the majority of South Africans intensified service delivery protests. Additionally, South African image to the world dealt a huge blow in 2017, subsequent to certain staff members of a prominent accounting firm, KPMG South Africa, who signed off fraudulent financial statements with senior executives of Steinhoff Chief Executive Officer, the Gupta family company, Vhembe Burial Society (VBS) Mutual Bank and Vele Investments (Niselow 2018). Fraudulent financial statements involved rendering deceitful audit result so that these wealthy clients, who benefited hugely in government procurements contracts, evade and avoid paying the tax. This, for instance amounted to multi-billion-dollar criminal tax frauds (Anti-intimidation and Ethical Practices Forum: Ethical Practices Survey 2018). The implications that this came with are that, the working class in these organisations were not paid their monthly salaries, this led to distress and ultimately, loss of income, contributing to unemployment rate, overburdening the social

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grant system, poverty and high rate of crime, one way or the other. Hence, that corruption is seen as evil vile that ought to be dislodged from society. Furthermore, mechanisms to fight corruption, such as: Public Procurement Oversight Authority, Public Procurement Oversight Advisory Board and Public Procurement Administrative Review Board, Anti-Corruption and Economic Crimes Act, among many others, which all had a common goal to put corruption to a complete halt, did not do much to salvage Kenya from the claws of corruption. The Ethics and Anti-Corruption Commission had a role to render oversight services over institutions in the Kenyan government and to give recommendations and actions on malfeasances reported. The e-procurement platform was further devised to promote transparency and accountability so that corruption is restrained. Regardless of this, Kenya ranked 144 out of 180 countries, on (Corruption Perception Index CPI 2018). The modus operandi, as stated in the Republic of Kenya Auditor’s Report (2018, p. 25) was that, various procurement violations led to the failure to complete the projects. This is a governance crisis as it purports that goods and services do not eventually reach the intended beneficiaries, whom in this case, are poorest of the poor. Perpetuating this uncivilised behaviour further is lack of accountability. The government’s intention to design the above fragmented and decentralised legislative framework was to provide measures that will close any loopholes in policy, which would give an opportunity for corruption to occur. It appears that governments of both these countries does not provide a stream-lined approach to deal with the white elephant (corruption), but rather a bunch of archives intended only to tick a box, are devised. Hope (2014, p. 493) agrees as suggesting that institutional architecture designed to regulate relations between the State and its citizens, appear to be used for the personal enrichment of principal-agent and corrupt private individuals and groups. Wrong (2014) was of the view that everyone, especially in Kenya is corrupt, including grandmothers. This implies that governance is under utmost siege as corruption has reached the stage of normalcy. Thus, the fundamental phenomenon that requires to be fixed is the paradigm of governance. Lack of governance paralyses institutional mechanism, cripples the economy, damages the country’s reputation, may give less investor appetite and may ditch the majority of people to dire poverty.

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However, if corruption is broadly described as it is here, it means that the principal may not carry-out fire-alarm oversight effectively, alone because corruption happen discretely, out of the public eye. The inference is that principals may rely heavily on third parties to alert them about procurement transgressions. Balla and Deering (2013, p. 9) place emphasis on the importance of outsiders in fire-alarm oversight since the initiation of legislative oversight relies on it. This oversight allows citizens to be active participants in raising the alarm whenever there is violation or diversion in statutory (McCubbin and Schwartz 2007). However, transparency is a critical enabler.

Governance Crisis, Poor Service Delivery Protests and Violence in South Africa and Kenya From the preceding discussion, an indication is that public procurement objectives and processes have been evolving towards addressing the countries’ socio-economic needs, including addressing historic imbalances. However, if procurement processes progression were an intent aimed at addressing socio-economic imbalances of the past, there shall not be huge incidents of service delivery protests in SA as they often flare-up. For example, since 2015 in South Africa, there was a huge increase in the number of community protests because of poor service delivery, at around, 14,740 of these reported (Matebesi and Botes 2017). Among many reasons mentioned for these protests is government corruption (Matebesi and Botes 2017, p. 82). As such, according to (Tong and Lei 2010) South Africa was viewed as the service delivery protest capital of the world, as protest trends appeared to deepen since pre-1994. Corruption-related protests increased during former South African president, Jacob Zuma’s era as the needs of the citizens were significantly neglected. According to Fakir (2017), corruption, which resulted in African National Congress alliance parties to stage protests, became endemic during the Zuma era with no accountability measures enforced. According to Bildfel (2018), corruption appears to be rife in the construction sector due to large size and fragmented nature of construction projects, which often involve multiple contractors and sub-contractors. In 2014, in South Africa, human settlement department for social housing delivery, shoddy work done by contractors billed government two billion on ‘fix and repairs’ (Corruption Watch 2014). There was no evidence that

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shows contractors taking accountability for poor workmanship. Predominantly, building contractors built houses of a lesser standard than that required by the department with extravagant prices. This exercise was against ‘value for money’ notion espoused in the SA constitution. In Kenya, specifically in 2015, the Ministerial Tender Committee awarded a contract for the delivery of portable medical clinics, to an investment company to supply one hundred portable medical clinics at KSh 10 million each, bringing the total cost to KShs.1 billion. According to the Republic of Kenya Auditor-General’s Report (2019, p. 23), in 2016 the contract with the investor lapsed without the practical execution of work. This was despite the amount of Ksh 0.8 billion (80%) already paid to the contractor. Kagume and Wamalwa (2018) argued that in health ministry of Kenya alone, the prevalent cases of procurement violation happen during post awarding stage of tendering to the contractor, with a staggering 82% of these corruption cases. There is grounds therefore, for Corruption Perception Index (2015) to indicate that Kenya obtained 139 out of 186 countries, in corruption perception. This is a clear indication that poor governance and maleficence are rampant, and appear to be normalised and accepted in Kenya, as there are hardly accountability measures taken against the offenders. Moreover, while both countries appear to have adopted international standards and norms that govern public procurement, delinquent behaviour is a sub-culture adopted. All governance principles prescribed by international bodies are captured in lawful documents and are adopted by both countries as discussed in the chapter. The tender system in both countries was designed to measure and effect the good governance principles. Section 34 of the South African Constitution 1996, of which Kenya also is not silent, nailed the coffin when it singled out ‘transparency’. The emphasis is that, ‘everyone has the right to access information held by the state’. Transparency in public procurement was at the apex in both countries as its aim was to improve access to information, curtail corruption, prevent conflict of interests and disable undue influence on bureaucrats. Kagume and Wamalwa (2018, p. 9) stated that transparency in contracting out government services involved the full value-chain of government, from procurement of goods, works and services for citizens, to concessions of natural resources. Moreover, lack of active citizen participatory (demand-driven oversight) thus, institutional framework of both countries lacked incorporating the role communities must play in

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supplying ex ante oversight or fire-alarm oversight. The most suffering are people on the ground. This means that demand-driven oversight must be encouraged.

Conclusion The chapter concludes on the premise that SA and Kenya are countries with deficient ex ante oversight mechanisms to detect malfeasance especially when in process of facilitating public procurement. The increased levels of corruption during the process of procuring public goods and services, year-on-year on both countries, was an indication that extant institutional arrangements lacked biting-teeth. This had a bearing on good governance as communities at grassroots level, by which the public goods are intended, wrestled with negative consequences, some of which are governance-related. Delinquency during the process of procuring goods and services is rife around the Globe. For example, when it was evident that there was a great deal of corruption facilitated through procurement, the European Union Member States (EUMS) joined effort with the civil society, businesses and governments to increase transparency. As such, EUMS in 2016 designed Transparency Integrity Pacts. This, for instance was a joint effort between citizens, their governments and companies procuring goods and services, aimed at promoting transparency in procuring goods and services. Political regimes, socio-economic and technological environmental issues played a critical role in shaping public procurement systems in both South Africa and Kenya. These were to ensure that public procurement corruption-related was crushed. Instead, loopholes and blurred lines of transparency dictates as provided for by public policy, presented an opportunity for corruption to occur on both countries. It would be best if both ex ante and ex post oversight are concurrently applied and strengthened to have significant impact in uprooting corruption driven through public procurement. As the World Bank described governance, it will be implausible to realise its real application without citizen participation at large.

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Matebesi, S., & Botes, L. (2017). Party identification and service delivery protests in the Eastern Cape and Northern Cape, South Africa. African Sociological Review / Revue Africaine de Sociologie, 21(2), 81–99. McCubbins, M. D., & Schwartz, T. (2007). Congressional Oversight Overlooked: Police Patrols Versus Fire Alarms. American Journal of Political Science, 28(1), 165–179. McGrath, R. J. (2013). Congressional Oversight Hearings and Policy Control. Comparative Legislative Research Centre of the University of Iowa: George Mason University. Morgenstern, S., & Manzetti, L. (2007). Legislative Oversight: Interests and Institutions in the United States and Latin America. Paper prepared for delivery at Notre Dame Conference on Horizontal Accountability in New Democracies. Online available (7 April 2019). http://www.pitt.edu/~smorgens/pap ers/Morgenstern_and_Manzetti.pdf. Munzhedzi, P. H. (2016). South African Public Sector Procurement and Corruption: Inseparable Twins? Journal of Transport and Supply Chain Management, 10(1), 1–8. Accessed 23 April 2019. https://doi.org/10.4102/jtscm.v10 i1.197. Niselow, T. (2018). The Big Read: Saica on SA’s Accounting Scandals and Why Chartered Accountants Are Still in High Demand. Accessed 5 April 2019. https://www.fin24.com/Economy/the-big-read-saica-on-sas-accounting-sca ndals-and-why-chartered-accountants-are-still-in-high-demand-20181028. Nsehe, M. (2015). Corruption and ‘Tenderpreneurs’ Bring Kenya’s Economy to Its Knees. Accessed 10 May 2019. https://www.forbes.com/sites/mfonob ongnsehe/2015/12/01/corruption-and-tenderpreneurs-bring-kenyas-eco nomy-to-its-knees/#48fd11afabea. OECD. (2016). Preventing Corruption in Public Procurement. Better Policies for Better Lives. OECD. Accessed 24 May 2019. http://www.oecd.org/gov/eth ics/Corruption-Public-Procurement-Brochure.pdf. Panda, P., Sahu, G. P., & Gupta, P. (2010). Promoting Transparency and Efficiency in Public Procurement: E-Procurement Initiatives by Government of India. In 7th International Conference on E-Government (ICEG) 2010, 22–24 Apr 2010, IIM Bangalore, India. Pathak, R., Prasad, R., Singh, G., Naz, R., & Smith, R. (2006). Exploring the Potential of e-Governance Applications for Reducing Corruption: The Case of the Indian Public Sector. Accessed 25 April 2019. http://www.napsipag.org/ PDF/Reducing_Corruption.pdf. Pollack, M. A. (1997). Delegation, Agency and Agenda Setting in the European Community. International Organisation Journal, 4(51), 99–134. Prevention and Combating of Corrupt Activities Act No. 12. No. 26311. (2004). Government Gazette, No. 26311. 28 April 2004. Pretoria: South Africa.

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CHAPTER 13

Public Procurement Corruption and Service Delivery in Nigeria and South Africa Tunde A. Abioro

Introduction Arising from the overwhelmed state of social service needs, especially in developing countries, the adoption of standard variables in line with international best practices to improve the quality of government and make provision of services available have rendered efficiency a necessity in policy output (Omotosho 2010). Of note, the government at international and national levels, due to increasing population and responsibility, engage in a drastic and large volume of spending on procurement. According to Abioro (2017) and the United Nations Development Programme (2006), sound public procurement policies and practices are among the essential elements of good government, which involves transparency, accountability, participation, and rule of law. The Organisation for Economic Cooperation and Development (OECD) (2009) recorded that the mandate of the Public Governance

T. A. Abioro (B) Department of Local Government and Development Studies, Obafemi Awolowo University, Ile-Ife, Nigeria © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_13

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Committee is to assist members and non-members in building and strengthening capacity for designing, implementing, and assessing adaptive, innovative, anticipatory, and citizen-focused public policies, institutions, and services where government procurement remains a crucial pillar of strategic service delivery to the citizens. More so, as government procurement amounts to a large chunk of gross domestic product especially in developing countries. However, Komakech (2016) expressed that public procurement reform centers on a higher strategic priority to improve the effectiveness of the approaches and techniques used to develop procurement system capacity; and for aid-funded procurement, moving toward greater reliance on national systems that conform to international best practices were the major and urgent areas for action. According to (OECD 2005), since the 2004 Johannesburg Declaration by the multilateral and bilateral development institutions and another participant in the OECD or Development Assistance Committee (DAC) and World Bank joint round table initiative on strengthening procurement capacities in developing countries met, attempts to reform public procurement systems to conform to recommendations have either been initiated or reformed. Though governments in developing countries are significant purchasers of goods and services, public procurement is as important in developing countries as it is in advanced economies. These markets represent huge opportunities to enhance competition and development. Notably, lowincome countries have the highest share of public procurement in their economies, at 14.5% of GDP, followed by upper-middle income countries at 13.6% (World Bank Group 2016; Auriol, Emmanuelle, Flochel and Straub 2015). Despite the importance of the public procurement market, little effort has been made to examine critical dimensions systematically and consistently in developing countries. Unfortunately, unregulated procurement has plagued service delivery not only in Nigeria but also in South Africa and there exist loopholes through which meager public resources and donor agencies fund are misappropriated. It is, however, to be noted that the legislative framework for public procurement is decentralized between the national and municipalities-local government in South Africa while it is centrally empowered in Nigeria. Sparse attempts have been made to collect comparable statistics on the performance of the reforms viz-a-viz the size of public procurement corruption in the economies of Nigeria and South Africa; and

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efforts to improve on service delivery. This chapter thus examined how public procurement corruption has affected service delivery especially through public fund wastage in the countries. It, however, contains review on procurement and existing laws in Nigeria and South Africa, service delivery, governance, and corruption as well as the impact on the countries and concludes with recommendations.

Conceptualizing Public Procurement Transparency International (2014) defined public procurement as the acquisition by the government department or any government-owned institution of goods or services, while the United Nations Development Programme (2007) defined it as overall process of acquiring goods, civil works, and services which includes all functions from the identification of needs, selection, and solicitation of sources, preparation and award of contract, and all phases of contract administration through the end of a services’ contract or the useful life of an asset. Lloyd and McCue (2004) see public procurement as government administrative activities that concern the purchasing of goods and services that the government needs from the private sector. These range from basic stationery requirements and other consumables to mainframe computer systems, military weaponry, and large public buildings. Bolton (2007) expresses that when government contract with outside bodies to provide goods and services in order to be able to perform its functions, public or government procurement has occurred. Mantzaris (2014) using the South African public service system classified procurement into day-today purchases; middle range purchases of a higher value which are subject to particular rules of the competition; and higher value range purchases for which complex and stringent rules applied (competitive tendering). Bolton (2016) further asserts that value for money or procurement on the best possible terms is usually considered of primary importance in the purchasing exercise, but for many years the purchasing power of governments has been used to achieve secondary, collateral, or horizontal policies as well. Arguably, (Mutava 2012) opines that the identifiable principles of procurement are: competition; transparency; non-discrimination, and special support principle. The World Bank (2012b) however identified three pillars of effective and successful governance as increasing value for money, improving public service delivery, and creating an enabling environment for private

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sector-led growth. The full cycle of a procurement process includes initiation, preliminary design, and development, detailed design, contracts and procurement, manufacture and construction, commissioning, operation and maintenance (McCaffer 2001). Schooner (2002) listed the hallmarks of a good procurement system to include fair competition, integrity, transparency, efficiency, customer satisfaction, best value wealth distribution, risk avoidance, and uniformity. Woods and Mantzaris (2012) identified poor transparency, weak systems, incompetent officials, conflicts of interest, urgent tenders, weak accountability arrangements, and weak internal controls leading to specifics such as bribery, extortion, embezzlement, nepotism, patronage systems, fraud, kickback schemes, false invoices, overpaying, fronting in Black Economic Empowerment companies, inflated prices, unnecessary purchases, payments made for goods or services not received, ghost suppliers on the “preferred suppliers list,” the use of shell companies, and “facilitation fees” among others as current reality. Really, public procurement is a business process with the political system and due to its strategic relevance; overtime across countries, it has been vulnerable to various manipulations stately and administratively. Succinctly expressed, it is central to service delivery system and responsible for promoting among others social, economic, industrial, and environmental policies. Evidently, it seems, however, that in many countries, especially developing countries, corruption is found in the realm of procurement transactions more than anywhere else, because this is where the opportunities to engage in corrupt practices are greatest and where the rewards of corruption can be very high. Hui, Othman, Norman, Rahman, and Haron (2011) expressed that due to the huge amount of money involved in government procurement and the fact that such money comes from the public; and there is the need for accountability and transparency, consequently, developed and developing nations’ developed laws and regulations to ensure procurement with effective, efficient, and adequate budgetary spending. Unfortunately, weak monitoring mechanisms in developing countries like Nigeria, Kenya, South Africa, India, Sri Lanka among others as well as continuing political control of the process, non-compliance with rule and regulation stipulated by laws, poor record management and lack of data collection and records by states constitute major impediment to effective monitoring targeted at transparency in the procurement process.

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The basic principle of public procurement reforms involves the whole process of acquiring property and/or services. Jibrin, Ejura and Augustine (2014) and Hui et al. (2011), notwithstanding noted that public finance management in the last two–three decades has entered a new phase in many developing countries resulting into critical approach to procurement policy and practice as a result of the underperformance of previous/preceding decades despite documented rules targeted at administrative routine for reasonable economic and honest procurement transactions (McCue 2001; WHO 2011).

Public Procurement Acts in Nigeria There is the widening gap in service delivery and depth of corruption in the procurement system as well as its effects on the struggling economy in the country. Thus, the Federal Government commissioned the World Bank in 1999; in collaboration with some private sector specialists reviewed the public procurement structure including the existing legal framework, organizational responsibilities, capabilities and present procedures and practices, including how these may differ from the formal rules and procedures. The World Bank Report expressed that: … about 50% of projects in Nigeria are dead even before they commence…the projects are designed to fail because the objective is not to implement them but to use them as vehicles for looting public treasury … instead of adding value, they become economic drain pipes.

Prior to 2007, there was no statutory provision that directly regulated the award of public contracts in Nigeria. Rather, the Budget Monitoring and Price Intelligence Unit (BMPIU) in the presidency held sway until June 4, 2007, when President Umaru Musa Yar’Adua signed the Public Procurement Act (PPA) into law. The purpose was to ensure transparency, competitiveness, value for money and professionalism in the public procurement system. The Act thus provides for the establishment of the National Council on Public Procurement (NCPP) and the Bureau of Public Procurement (BPP) as regulatory authorities responsible for oversight, management, and monitoring of public procurement practices and system. Part III Section 15 provided the Act shall apply to all procurement of goods, works, and services carried out by the federal government of Nigeria and all procurement entities. Part XI Section 57 enumerated

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the code of conduct; while Part IV Section 16 listed the fundamental principles for procurement to include competitive bidding in a manner which is transparent, timely, equitable for ensuring accountability with the aim of achieving value for money and fitness for purpose in a manner which promotes competition, economy, and efficiency among others. Of note, procurement laws in Nigeria are fashioned along the United Nations Commission on International Trade Law (UNCITRAL) (2014) Model Law on Public Procurement (MLPP) designed as a tool for modernizing and reforming procurement systems and assisting countries in implementing legislation where none is in place. The objectives include: achieving economy and efficiency; wide participation by suppliers and contractors, with procurement open to international participation as a general rule; maximizing competition; ensuring fair, equal and equitable treatment; assuring integrity, fairness and public confidence in the procurement process; and promoting transparency. However, the document (framework law) stated minimum requirements and essential principles for effective procurement legislation but does not include the necessary regulations for implementation.

Public Procurement Laws in South Africa Nationally, and most prominent, is the Section 217 (1) of the Constitution of the Republic of South Africa of 1996 that provides the mandate for the procurement system to be fair, equitable, transparent, competitive, and cost-effective. Sub-Section (3) also requires that national legislation on the national sphere of government prescribe a framework within which the Preferential Procurement Policy Framework must be implemented. Section 38 of the Public Finance Management Act 1999 also encourages transparency through auditing. Section 76 mandates the National Treasury to develop regulations or issue instructions on the determination of a framework for an appropriate procurement system. At the municipal sphere, Municipal Finance Management Act, 2003 (Act 56 of 2003) states the regulatory framework for procurement at municipalities and municipal entities in South Africa. Effort toward curbing corruption during public procurement in South Africa has led to the Public Service Act, 1994 (Proclamation 103 of 1994) which addresses inefficiency and misconduct in the public service including and specifically corruption through public procurement. Also, Sections 21–26 states the disciplinary procedure as well as penalties in

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cases of successful convictions. The Public Service Regulation of 2001 in its second chapter also addressed services’ code of conduct (conduct of public officials’ relationship with the executive and the legislature, the public, other employees as well as performance of official duties and the conduct of private interest). The regulations therein control unethical, improper, criminal, fraudulent, and corrupt practices by the officials. The Prevention and Combating of Corrupt Activities Act, 2004 (Act 12 of 2004) makes corruption and related activities an offense; establishes a register in order to place restrictions on persons and enterprises convicted of corrupt activities relating to tenders and contracts; and places a duty on certain persons holding a position of authority to report certain corrupt transactions. Recently, Gordhan (2014) listed that the establishment of the office of the chief procurement officer at the National Treasury was created to address challenges in public procurement. Though there exist national legislative framework on procurement, national departments and provincial and local governments are allowed to extend and develop their own individual policies, systems, and structures within it. Evidently, as countries appreciated their vulnerability to mismanagement and corruptions that have negatively affected the capacity to deliver services, interventions were initiated to curb the menace. Meanwhile, lack of proper knowledge, skills, and capacity, non-compliance to policies and regulations, inadequate planning and budget, accountability fraud and corruption, and inadequate measures for monitoring and evaluation of Supply Chain Management as well as unethical behavior among others have been identified as albatross to effective public procurement. Even as Munzhedzi (2016) and, Horn & Raga (2012) listed value for money, open and effective competition, ethics and fair dealings, accountability and reporting and equity as Supply Chain Management policy of government.

Service Delivery and Governance Service delivery and governance can be understood as the set of incentives, accountability arrangements and rules that affect the way key actors including policymakers, providers, and organizations are held accountable for their behaviors and ability to deliver high quality services with efficiency and responsiveness (World Bank 2012b). Muhwezi (2009) expressed that collaborative and responsible purchasing is vital for service

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delivery as it does not only cater for efficiency but also effectiveness. Similarly, Akpan-Obong (2010) opines that service delivery entails a well-functioning public sector which is thought to be responsive to the citizenry and to be reasonably efficient in the delivery of public service. These parameters thus include transparency and predictability of the decision making process as well as oversight mechanisms to guard against arbitrariness and ensure accountability in the use of the public fund in delivering services to the citizenry. However, there exists a gap between service delivery and governance; Jibrin, Ejura, and Augustine (2014) have opined that this is due to the lengthy procedure, especially in open bidding methods. Thus, there is the need to improve on the existing relationship between policymakers and providers who are expected to engage in activities that will improve the quality of lives of the citizens especially in the Human Development sectors (health, education, and social protection). Reflectively, Human Development Indicators of the UNDP 2018 expressed that the population vulnerable in multidimensional poverty in Nigeria was 16.9% and 14.0% in South Africa. Also, the population in severe multidimensional poverty was 32.7% and 1.1%, respectively. While the contribution of deprivation in dimension to overall multidimensional poverty measured by health, education, and standard of living stand in Nigeria recorded 27.1, 32.2 and 40.7; South Africa recorded 54.5, 11.1 and 34.4 (all in %) United Nations Human Development Indicator (2018). However, International Financial Corporation of the World Bank Group (2015) identified models of service delivery to depend on variables of who finances and who delivers. Meanwhile, how the services are delivered is also as important as previously mentioned. Of note, transparency and accountability of service delivery have always been reoccurring in the literature. The former attempts to make available information or processes that were previously opaque in the public domain while the latter encompasses the relationship between the power holder and delegator with critical elements to include setting standards, getting information about actions, making judgments about appropriateness, and sanctioning unsatisfactory performance (Joshi 2010). Safely, improved policy practice can enhance behavior and power relations that can expose corruption; lead to increased responsiveness on the part of providers; improved access and quality of service; consequently, better developmental outcomes; ensure greater empowerment of poor people as well as create greater awareness of rights by users; and

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greater engagement in service delivery through the practice of citizenship (Rocha Menocal and Sharma 2008). Unfortunately, Wambui (2013), Mcdonald (2008), and Thai (2001) had expressed that despite the attempts to introduce standard laws by development partners (OECD, United Nations Commission on International Trade Law), contradictory and contracting procurement requirement, malpractices and noncompliance to the procurement policies and procedures had plagued the developing nations.

Public Procurement, Service Delivery, and Corruption Perception in Nigeria and South Africa According to the World Bank (2012b), public procurement is central to the delivery of public services, results, and performance. Thus, it not only contributes to governance and social accountability, capacity development, and private sector development and trade but more intrepid, service delivery. Essentially, there is the need for reforms to ensure core elements of procurement programme that have a direct positive bearing on public service delivery; results and performance are enhanced especially with tools such as e-procurement and standard practitioners guide. Of note, Adebiyi, Ayo, and Adebiyi (2010) summarized Nigerian government procurement as follows: advertisement in at least two national dailies; submission of bids; the opening of tenders; analysis of tenders; award of contracts; supply and installation; and final payment. Raymond (2008) and Abioro (2017) expressed that procurement-related corruption is more rampant in developing countries rather than in developed countries. However, some of the identified factors especially in developing countries that magnify corruption opportunity are the monopoly of power, wide discretion, weak accountability, and lack of transparency which occurs at every stage of the procurement process. Similarly, Ferwerda, Deleanu, and Unger (2017); Wares, Moss, and Campos (2007) identified the phases of corruption in public procurement cycle to include: project identification and design; advertising, prequalification, bid preparation, and submission; bid evaluation, post qualification, and award of contract; and contract performance, administration, and supervision. It thus establishes that corruption takes place at

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every stage and contributes to the continued suffering from unsatisfactory performance and ultimately poor service delivered. In a related perspective, Wahab (2006) expressed that the problems of procurement in Nigeria stem from frequent government policy reversal; absence of efficient and effective project monitoring, preference for new projects while abandoning uncompleted ones unaccounted gap between budget and actual financial release, unharmonized project between and among related and competing ministries, departments, and agencies among others. In addition, Ambe and Badenhorst-Weiss (2011) assert that public procurement initiatives in South Africa were introduced to promote principles of good governance through a preference system to address socioeconomic objectives because of noticeable inconsistency in policy application, accountability, supportive structures, and fragmented processes that have smeared governmental intentions. The obvious deficiencies and fragmentation in governance, interpretation, and implementation of the Preferential Procurement Policy Framework Act (PPPFA) (Act No 5 of 2000) resulted in the introduction of Supply Chain Management (SCM) in the public sector as a policy tool. According to the National Treasury (2005), the procurement reform processes were embedded in Section 112 of the Municipal Financial Management Act (MFMA) (Act No 56 of 2003) and Section 76 (4) (C) of Public Finance Management Act (PFMA) and the PPPFA (Act No 5 of 2000). Notably, procurement policies in South Africa through the tendering process were designed to curtail the discriminatory practices and policies against the disadvantaged black majority by the white minority through enhanced public institutions toward an efficient service delivery (Munzhedi 2016; Ababio, Vyas-Doorgapersad and Mzini 2010). Though it is decentralized to a large extent, Horn and Raga (2012, p. 80); and the Department of Public Service and Administration (2003) express that lack of accountability, political interference, appointment of inexperienced and unqualified officials and contractors, have plagued the institutions resulting in service delivery failures, massive mismanagement, fraud, and corruption. Other fraudulent practices include a lack of technical expertise, and a lack of understanding of and non-compliance with regulatory frameworks. According to Anderson (2013) and Hellman, Jones, and Kaufmann (2000) there are two broad categories of corruption in public procurement: state capture and administrative corruption. However, Shah (2005)

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submits that politicians and bureaucrats are typically observed to show greater interest in rent-seeking activities than in delivering services wanted by their citizens. Further, the theory of rent seeking provides a better understanding of economic effects of corruption; their intent-seeking is called corruption when competition for preferential treatment is restricted to few insiders and when rent-seeking expenses are valuable to the recipient. To Soreide (2002; Søreide and Williams 2014) the act (corruption) first must be intentional and in conflict with the principles of objectivity in public service performance, second, the person who breaks the rule must derive some recognizable benefit for himself, family, friends, tribe, or party or some other relevant group. Third, the benefit derived must be seen as a direct return from the specific act of corruption. According to the United Nations Economic Commission for Africa (2017), despite series of reforms, corruption still affects Africa’s procurement systems owing mainly to bad governance where petty corruption remains prevalent with grand corruption, which is more worrisome in terms of scale and impact. The misallocation of resources to projects that are unnecessary and not economical, poor and low-quality infrastructure increased public spending and lost public revenue and income and reduced competitiveness among others. Although it is impossible to gauge, accurately, the incidence of corruption in Nigeria and South Africa just like in every other country, the Corruption Index 2018 published by Transparency International (TI) provides a useful corruption perception index of the public sector worldwide. It measures perceived levels of public sector corruption in 180 countries and territories, the index scores on a scale of zero (highly corrupt) to 100 (very clean). South Africa’s score was 43, ranked 73, while Nigeria scored 27 and ranked 144. Unfortunately, the regional analysis revealed that Sub-Saharan Africa has failed to translate anti-corruption commitments into any real progress scoring averagely 32/100. The report also noted that South Africa despite stagnation (having fluctuated score of 42–45 in 2012–2017) has promising developments through existing citizen engagement and various official inquiries into corruption abuses. Evidently, developing countries face the problem of rapid changes in procurement requirement, though, internal and external processes and procedures are faced with pressure (Kakwezi and Nyeko 2014). It reflects in the interaction between various elements, professionalism,

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staffing levels, and budget resources, procurement organizational structure whether centralized or decentralized, procurement regulations, rules, and guidance and internal control policies all need attention and influence the performance of the procurement function. Further, public procurement is faced by the challenges imposed by a variety of environmental factors (external factors) such as market, legal environment, and political environment, organizational and socioeconomic environmental factors.

Impact of Public Procurement on Governance World Bank (1997) identified systemic corruption trap with strong incentives for firms, individuals, and officials. These have thus led to continued and unabated corruption. Similarly, Williams-Elegbe (2018) affirmed that the systemic nature of corruption could be seen in the country’s consistently low scores in Corruption Perception Index. Evidently, big public corruption cases in Nigeria largely involve international investors and their companies as well as members of the political class (executive, legislature, and judiciary) across strata including ranking administrators in the system. A $2 billion natural gas plant for the Nigerian government saw procurement fraud by Halliburton Company where over $182 million has changed hands with several former Nigerian Presidents and officials through an agent (US DOJ 2009b). Also, Airbel Group Ltd highlighted bribes totaling $2.1 million bribes paid to Nigerian Customs officials and government officials in relation to oil exploration contracts (US DOJ 2008). Whereas, an executive of Willbros International Inc. admitted to paying bribes worth over $6 million to officials in Nigeria’s state-owned Petroleum Corporation to obtain pipeline construction contracts (US DOJ 2009a). While in 2010, Panalpina World Transport admitted to paying bribes worth $27 million to public officials in seven countries, including Nigeria (US DOJ 2010). In 2010, Process and Industrial Developments Limited entered into a 20-year agreement with the federal government of Nigeria to execute power deals that will ensure constant power supply. The contract was worth $6.6 billion. Due to poor procurement and management, the contract has ended in disappointments, lawsuits, and corruption allegations (The Cable 2019). In South Africa, the former Minister of Agriculture Tina JoemattPettersson behaved unethically and tried to interfere in an investigation into alleged misconduct by her and her department relating to an R800-million tender in which the tender award process showed

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evidence of collusive tendering and/or bid rigging (Public Protector, SA 2012/2013). In addition, there were revelations that Bheki Cele and a government minister were allegedly involved in property deals that were improper, unlawful, and amounted to maladministration. Whereas, a former Communications minister Dina Pule laundered a R6-million gift of taxpayers’ money. Similarly, the former EThekwini mayor, Obed Mlaba’s family was linked to a R3-billion alleged tender “hijack” in Durban (Media24 2014). There were, however, other corruption scandals that allegedly involved senior government members in both countries as well as Arms Deals saga, including the Dasukigate, Diezianigate in Nigeria and the Nkandla Gate in South Africa, respectively. Incontrovertibly, public procurement thus remains a means of organizing spending of public resources and accounts for a high proportion of total government expenditure with effective and efficient service delivered. Among other ways, corruption in public procurement plays out through increasing cost and lowering the quality of goods and services acquired with the possibility that it will not meet public needs. Such however hurts the economy, environment, public infrastructures provision and erode public confidence in government institutions. According to the United Nations Economic Commission for Africa (2017) despite series of reforms, corruption still affects Africa’s procurement systems owing mainly to bad governance where petty corruption remains prevalent with grand corruption, which is more worrisome in terms of scale and impact. The misallocation of resources to projects that are unnecessary and not economical, poor, and low-quality infrastructure increased public spending and lost public revenue and income and reduced competitiveness among others. The public procurement market is vast, and the range of economic sector it encompasses is as wide as the needs of government to function properly and deliver services to their citizens and majorly, it is the largest single marketplace in developing and developed economies, accounting for around one-fifth of global GDP. Given its size, a transparent, fair, and competitive public procurement system not only will generate business opportunities, foster innovation but also drive economic growth (Uyarra 2016). Unfortunately, Shah (2005) noted that public trust in public sector performance in delivering services consistent with citizen preferences has been considered weak (especially) in developing countries.

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Meanwhile, regulating the way public authorities purchase goods, works, and services is critical to creating a level playing field for all businesses and ensuring more effective and more citizen and business-friendly public procurement system (WBG 2016, pp. 13, 17). Unfortunately, the public procurement processes overtime in Nigeria and South Africa are vulnerable to waste, misconduct, corruption, and collusion which leads to inefficient allocation of public resources and a diminution of trust by citizens in the good governance of the country.

Conclusion and Recommendations The core principles of procurement are to provide value for money to the ministries, departments, and agencies of government and enhance the use of public funds in a transparent, efficient, and fair manner to achieve services in a transparent, accountable, competitive, equitable, effective, and efficient manner. Incidentally, the total economic and social effects of corrupt actions in public procurement might be costly and be out of proportion to the bribe received by officials in terms of resources wasted, but the opportunity cost of the misuse and inefficiency introduced into service delivery far outweighs it. Of note, studies have recently recommended e-procurement process, which replaces paper-based procedures with digital technology-based communications. This would allow the use of advanced technology that saves time, enhance bigger access to a larger marketplace, thus improving competition and efficiency, minimize opportunity for manipulation with increased public trust in the integrity of the government or and public procurement officials (OECD 2009; Rwanda Public Procurement Authority 2012; Komakech 2016). In addition, whenever there are infractions noticed in the process, administrative law remedy should apply accordingly. Evidently, the lack of strong institutions and political will to fight corruption in Nigeria and South Africa have implication for the countries especially in Corruption Perception and has caused citizens not to trust their governments and donors and development partners to have either reduced supports or show low enthusiasm in assisting the countries to exit development crisis. Thus, there is the need for reassessment of procurement systems in the countries to rebuild the existing structure of the procurement process with the aim of insulating the process from officials and politicians. As World Bank (2007) identified, the involvement

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of politicians in the procurement process as a serious problem that needs urgent attention, as unfortunately since then, both Nigeria and South Africa continue to nosedive in this direction. Moving forward, governments should not only develop initiatives to ensure corruption is reduced to barest minimum; it must also ensure sanity and reduce political influence in public procurement. This study thus supports the United Nations Economic Commission for Africa (2017) recommendation for country reforms based on contextual needs as there is no “one-size-fits-all” approach to meet international best practices that are cost-effective and sustainable (for instance, procurement is decentralized in Rwanda, Out-sourcing is taking root in Ethiopia while Ghana’s experiment with E-procurement was productive). There should be conscious effort at improving and strengthening transparency, accountability, participation, enforcement mechanisms, promote anticorruption initiatives (such as whistle blowing policy), coordination at levels of sub regional and continental platforms among others.

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CHAPTER 14

Charting Pathways to Growth and Development Through Transparent Procurement Management in Africa Soma Pillay

Introduction Governance is “about power, relationships and accountability” and decides who influences, who makes decisions and how different stakeholders have their say, and, more importantly, “how decision-makers are held accountable” (Hope 2009, p. 730). Thus, it is an essential part of sustainable development, and decides the level of capacity of government to formulate and implement sound public procurement policies in an effective and efficient manner (Smith 2007). The modern process of governance in developed countries is mainly based on “the challenges of the complex and fragmented modern societies” (Temmes et al. 2005, p. 63). Thus, the recent debate on governance in procurement systems

S. Pillay (B) Federation Business School, Federation University, Melbourne, Australia e-mail: [email protected] Durban University of Technology, Durban, South Africa © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_14

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focuses on how governance operates in society with multiple stakeholders and how decentralization, both vertically and horizontally, could create flexible and trust-based relationships among them. In this new paradigm, governance is based on “participatory policy making and a vast network comprising diverse actors” and “government is only one of many actors involved in governance” (Kim et al. 2005, p. 647). This is a formidable challenge for African countries where centralization is the norm, and authoritarian states with hierarchical structures are common. The experience in developing countries has shown that despite the recognition of the importance of diverse actors in policy making and implementation, the significance of these actors in governance has been largely overshadowed by excessive interference of government. During the 1950s and 1960s, variants of systems theory were used to explain how societies controlled and regulated themselves using mechanisms ranging from collectively binding decisions to uncoordinated voluntary actions. Since the 1950s, systems theory has advanced through various twists and turns toward a more finely grained understanding of social coordination. Although this was neither a linear nor a cumulative process, the state of knowledge overall has been enhanced, in particular with respect to coordination and adaptation in multi-layer social systems. Social systems are modelled as multi-layer phenomena, in which the interactions among actors in relatively autonomous sub-systems generate emergent phenomena at higher levels. These emergent phenomena cannot be understood by disaggregating the systems into components or representative units. Institutional theory and organizational ecology allow for both bottom-up and top-down coordination. Complex adaptive systems approach and the related class of agent-based models emphasize bottom-up dynamics. As these sub-systems and the matrices of rules they build are highly interdependent, institutional change will often be incremental and contingent upon coherent changes in other sub-systems, resulting in co-evolutionary developments. Systems theory has certain implications for integrated governance and practical policy. Time, space, the heterogeneity of actors, and their cognitive capabilities are important factors that influence the overall dynamics of the system. Because of the highly interrelated dynamics in social systems and similar procurement systems, no single actor is typically in a position to control the trajectory of the whole. At best, the system can be nudged in certain directions. Much work remains to be done in this area before the relative explanatory power of

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systems theory is fully understood. Detailed case studies are one avenue for future research. The development of practical implications for policymakers is another area in which fruitful efforts seem feasible. There are three intersecting and overlapping sectors (state, market, and civil society) where governance of the community is not the sole prerogative of the State but is shared among three clearly identifiable sectors (Coghill 2003). The relative power and influence of each sector is not fixed but dynamic. The relationship between agents in the state and market sectors may have both formal and informal elements important to the operations of both sectors. The three sectors intersect, overlap, and intermingle; the relative power and influence of each changes dynamically. The State of Governance in Africa Despite these attempts, concerns about public sector governance in Africa have intensified in recent years (Pillay 2008). Calls for greater efficiency and transparency have been driven by the realization that poor governance in the African public sector, especially reinforces the unequal distribution of opportunities and that poor governance threatens democracy. Many African states are structured and managed in accordance with outdated principles and methods, highlighting poor governance. There is a ruledriven bureaucracy. The African public service is premised on a highly complex set of rules and procedures that are entrenched in various policies. The basic assumption is that the workplace must be managed via regulations. Performance is therefore measured in terms of adherence to the rules rather than the achievement of results. Therefore, there is little incentive for creativity. African bureaucracies have operated in an ethical vacuum where the illegitimacy of the state has been consolidated into a culture of personal gain and misappropriation of funds. Considering the dynamics of the African environmental context, institutional and management practices are best understood though an integrated approach, by considering national culture and social institutions, and as such that the institutional and management process cannot be disentangled from its cultural context. A Systems Approach to Integrated Governance in Africa Examining integrated governance from a systems perspective is a useful way to visualize the institutional environment as an integrated whole.

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Open systems theory provides the most useful framework for understanding African transformation. Systems theory essentially argues that the whole is best understood as the product of the interactions and transactions between constituent parts of the whole (Johnson et al. 1964). This holistic understanding is useful to the understanding of the systemic elements of transformation. It therefore allows recognition of the influence of sub-systems on the whole system. African countries are complex societies. As such, within the African context, integrated governance should be seen as comprising three interlinked processes (3Rs): • Restructuring: This is the replacement of structures with new structures; • Reorganization: This refers to a process of changing systems, culture, and practices that are the content of structures; if these are not changed, the result may be new structures that operate in the old ways; and • Rationalization: This is the process of streamlining the size and the productivity of staff so that human resource costs are commensurate with the value of the output of the organization. Restructuring, reorganization, and rationalization take place within a system that has interrelated parts working interdependently to achieve multiple goals. Managers and managerial tools are needed to convert disorganized resources into an effective enterprise. What is clearly required is a strategy-led process that transforms existing structures, systems, and processes into an integrated system of governance, capable of implementing and executing the policies to encourage sustainable growth. In terms of strategic management reforms and reengineering in Africa, a mixed picture has presented itself. While in many countries, in certain departments, considerable efforts have been made and clear efficiency and rationalization gains have become evident, within other parts of each nation, and other departments little progress has been observed, with little or no addressing of institutional issues, which would be fundamental to change, reform, and improvement in governance and material progress. This lack of attention is in addition to enduring patterns of gross maladministration, inefficiency, and chaos.

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Integrated Governance The role of political leadership in managing the relationship between government and its agencies will be a crucial component in shifting from a bureaucratic administration to representative administration. Integrated governance involves active cooperation and ongoing engagement in the process of policy formulation and implementation between various stakeholders (Khan 1998). Such engagement serves to ensure that the practical mechanism through which this conception of governance is realized is via a reconceptualized policy process. This means breaking away from the traditional regime-driven policy process to one where there is a multiplicity of negotiated determinants of the problem identification, formulations of policy principles, setting of objectives, and the formulation of an implementation strategy. The way this is done, and the inputs at different points in the process, are the nuts and bolts of integrated governance. The process of transformation into a strategically managed developmental administration requires intervention on many levels. The institutional environment must be reconfigured, at the least, and reformed at best, to ensure an integrated approach that links and directs sociopolitical demands, constitutional change (to embed institutional features in a reformed structure), recognition of the real financial constraints that are likely to apply, and the service demands of citizens with, first, structures, systems, and workplace and bureaucratic culture, then to the delivery mechanisms, outcomes, and working relationships, and finally to what is actually delivered (services, community building), development processes, and reconstruction. This is a complex, interlocking set of relationships and processes in which no step can be omitted or weakened without consequential weakness to the approach. The integrated governance model thus focuses on democratizing work processes, devolution of power, and incorporating civil society into governance. This also implies that bureaucratic rigidities need to be loosened through the participation of various stakeholders. The governance model creates a strong policymaking and planning group at the center. It advocates a strong front-line organization with devolved decision-making power and centralized operations. In the African context, the strategic management team comprising various stakeholders should come together in structured forums to set the policy framework for planning and implementation. This model requires that a commitment to the strategic vision and values of the organization permeate the critical masses. Existing

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cultures and practices across African bureaucracies are shaped by a rigid control-oriented framework which clashes with the requirements of the governance model. If elements of the integrated governance model were to be adopted, it would be necessary to focus change interventions on a cultural as well as on a structural level (Bilney and Pillay 2015; Pillay 2014; Koerner and Pillay 2020; Wagle et al. 2020). Examining of the governance model of different African countries suggests that despite the unique contextual factors between countries, there are significant commonalities in their governance model. Both benefit and also, to an extent, suffer from a colonial legacy of adherence to process that has imposed constraints rather than developed to meet new challenges. The integrated governance model demonstrated that with complex interconnectedness, procurement network-style relations are increasingly regarded as effective toward coordinating corrupt action, as they are better at dissimulating information and at permitting deniability. It is therefore imperative to understand procurement systems as an integrated process comprising legal, administrative, and political elements, and that brings together many private and public sector actors (Roman 2014; Thai 2001). Scholars including Schapper et al. (2006) offer an interesting characterization of the environment within which this process takes place. The challenge with procurement management requires the reconciliation of three broad types of considerations, which are often in conflict with each other: budgetary performance, due process, and policy coherence. The systems and structural tension that exist between these objectives (which are all part of good governance when looked at individually) force governments to act as the arbitrator of different considerations (Hudon and Garzon 2016). Often, arbitrary power offers the opportunity for public officials to deviate from the ideal procurement process. Research seems to indicate that officials intervene in the early stages, during the strategic planning phase and in the decision to express (or not) a call for tenders. Conversely, civil servants usually become involved in the later stages of the process, during the contract awarding and management phase. However, according to Hudon and Garzon (2016), this separation is not perfectly watertight as officials can influence strategic planning, whereas elected officials can also intervene in procurement by authorizing some aspects of due process to be sidestepped, compromising good governance. According to the World Bank’s dimensions of governance (Kaufmann 2005), introducing management techniques such as performance

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measurement to the public sector as well as practices like outsourcing, privatization, and deregulation, could potentially address procurement challenges.

Using Networked Governance Approach to Understand Corruption in Procurement In chapter 3, reference was made to principles and agents collaborating to achieve a common objective through negotiation, through formal structures and hierarchies, but also through informal institutions based on reciprocity. The creation of informal institutions is also known as network governance (Follesdal 2004). The coordination of the action of multiple actors through networked governance helps explain systems where relations are neither transactional negotiations nor the result of specific hierarchical demands but rather, are informally institutionalized through reciprocity (Granovetter 1985). It is important to note that not all networks are characterized by unethical conducts. In fact, many are perfectly legitimate and effective at addressing complex issues and fostering cooperation between principles and agents. The concern with networks in procurement is that most are associated with unethical and deviant behavior, and for this reason, remain as invisible as possible. These networks are not overt (Raab and Milward 2003); and subsequently invest insignificant resources to remaining a covert stakeholder. The existence of dark networks is also common in a legal context (procurement, for example). In this sense, they are not considered a dark network in the traditional sense but share with them a concern for remaining undetected (Hudon and Garzon 2016). According to CartierBresson (1997), dark networks within procurement serve to moderate practices in intrinsically informal activities. Dark networks have arrangements based on obligation and reciprocity. Any opportunity to engage in whistle blowing is either eliminated or reduced. In instances where procurement controls are monitored, covert network arrangements become the only means of sustaining and maintaining stability. In addition, top and middle managers in the dark network play a strategic role in rent-seeking and manipulation and are therefore seen to be the most important actors in the network structure. Early entrepreneurial scholars examined entrepreneurship procurement coalition as an opportunity to discover opportunities, and exploit

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them (Langlois 2007; Symeonidou-Kastanidou 2007). Their contingent approach depends on the opportunity and the agents involved (Shane and Venkataraman 2000). While most of the literature has presented entrepreneurship as an opportunity to be creative and innovative, economists and criminologists have also looked at entrepreneurship within organized crime. Within the procurement literature, entrepreneurship has recently been examined from the perspective of organized criminal activity, where officials must be economically creative and innovative to ensure growth. Within the procurement corruption domain, entrepreneurial players exercise creativity, autonomy, and risk-taking outside the ethical guidelines of their organizations. Players are expected to be proactive in identifying ways to be covert and undetected. According to Hudon and Garzon (2016), “competitive aggression can be interpreted as the necessity to protect one’s system, by impeding denunciation and whistleblowing and by avoiding audit and control.” In order to avoid or reduce the risk of being identified, the unethical acts must be hidden while it must appear as if the rules have been respected (Søreide 2002, p. 14). According to network theorists, procurement corruption is essentially an entrepreneurial activity. In networked procurement corruption, principles and agents are aware of the need for risk-taking and proactive behaviors. In order for effectiveness and efficiency not to be compromised, corrupt network structures expand their networks beyond government procurement organizations. Often intimidation and retaliation methods are resorted to, to prevent condemnation. However, networks who assume a passive approach would steer clear of such methods. While networked corruption in procurement requires clear definition of roles and rules it also has as its core feature soft elements like discreteness, adaptability, and malleability. The concept of coalition (Stevenson et al. 1985) aptly reflects these kinds of interaction. In African countries, legislative measures and institutional practices should ideally incorporate core principles of behavior upon which procurement policy is based. They should include the following pillars (Munzhedzi 2016): • Procurement systems should be cost effective and value for money; • The procurement system should be characterised by open and effective competition including transparent, standardised and easily available laws, policies, practices and procedures open to public scrutiny;

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• Public officials should engage in fair dealings with all suppliers, abolition of prejudices, the elimination of fraud and corruption, as well as the non-acceptance of gifts or hospitality that could compromise the good standing of a municipality or the State; • A transparent system should also be one that is accountable, with all stakeholders including politicians and administrative officials being accountable; and • A system that is equitable also contributes to the advancement of people previously disadvantaged by discriminatory practices.

Current Realities to Consider for Future Practice Strengthening Procurement Controls and Accountability While Maintaining Flexibility Over the years, scholars (McCue et al. 2015) have clearly distinguished between private sector, public sector, and not-for-profit sector through their purchasing power, highlighting noticeable differences between these agencies. Public officials are required to offer guidance and advice during the procurement process, including evaluating and negotiating contracts. This is expected to be undertaken in a way that the interests of the public institutions and the public are protected. This implies that public procurement is characterized by high levels of public disclosure and a heavy reliance on the bid process compared to private sector organizations (Osborne and Plastrik 1997). Due to their distinct difference, the private and the public sectors’ organizations respond differently to scarcity of economic and financial resources. Whereas the private sector is guided by increased competition (Harrigan 1980), the public institutions are constantly required to react to cutbacks by increasing centralization to avoid duplication (Ludwig 1993). The result is the increased use of purchasing consortia (Johnson 1999). As public institutions are guided by statutory regulations, public procurement must be transparent in a way unrivaled by private entities. Through public surveillance (Vagstad 1995), public institutions are often cautious and risk-adverse while responding to procedures and policies that outline how to avoid risk or the perception of misappropriation (McCue 2000). Even among transparent public procurement, the interface of public and private sectors creates incentives for corruption (Coppier and Piga 2007). Governance efforts to curb corruption include having accountable and transparent

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systems. However, often, such best practices required high implementation costs. If transparency is costly, institutions have a tendency to stop short of implementing the level of transparency in procurement that would address corruption. As a result, some scholars (Coppier and Piga 2007) have maintained that transparency alone is not enough to reduce corruption levels. In addition, as government agencies, given their controls and constraints especially, are reactive rather than proactive in addressing societal problems, a tension between agencies and the procurement institutions tends to develop over time. Thus, procurement stakeholders often view centralized procurement systems as barriers to effective service delivery. Despite this, agencies must continue to exercise controls by conforming to legal, professional, and administrative requirements that define the purchasing process (McCue and Pitzer 2000). Accountability plays an important role in the control of discretion and the ability to ensure responsibility, therefore it is easy to notice tensions developing in complying with the institutional structures and policies that attempt to limit flexibility (Aberbach and Rockman 1988). The need to address and respond to conflicting values requires flexibility and the willingness to accept risk through experimentation. Such dilemmas illustrate the public procurement tradeoff which center around the tension between economic efficiency in the procurement of public services and the public’s need to maintain control against corrupt practices (Schwartz 2010). African countries should aspire for procurement systems with established control systems and accountability standards that attempt to balance these inherent tensions between efficiency and oversight in the procurement process. Picci (2007) have maintained that a reputation-based governance model encourages routine production of statistics that are useful for monitoring purposes and provide a framework to limit rent-seeking and corruption. However, the decision of the “correct” balance between procurement efficiency and oversight is moderated by political assessment (Provan and Kenis 2008). There are usually tradeoffs though, between decentralizing and empowering public officials in order to provide more flexible procurement processes and the need to control how line managers spend public resources. Although ICTs in procurement systems contribute to more flexibility to officials, ultimately the central procurement authority should be accountable for unethical acts.

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Reducing Opportunity for Unethical Practices While Decreasing Operational Constraints In many African countries attempts to institutionalize internal control processes in procurement often have the unintended consequences of goal displacement. In such cases, the focus of procurement officials would likely shift to reporting and offering a detailed accounting of their activities that is reactive rather than proactive, and more administrative than strategic, thus inhibiting accountability in the procurement process. In turn, the procurement official is absolved of responsibilities for procurement mistakes and poor decisions because the forms were properly filled out while the standard operating procedures were followed. This is a significant contributing factor for institutions to becoming sclerotic and rule driven. It is this challenge that appears at the forefront of the reinventing government movement (Osborne and Gaebler 1992; Rauch 1999). With most bureaucratic agencies, the increased administrative paperwork adversely affects the quality and efficiency of the activity. To address such challenges within African countries, consideration must be given to establishing training and education programs for procurement personnel, administrators, suppliers, and other services personnel. An essential feature of such training programs is ethics education. The increased costs associated with training can be offset by personnel with specialized skill base for monitoring and evaluation of the systems. This allows for improved accountability and controls. In the procurement literature, discretion is an ongoing challenge and a balance must be struck between officials’ requests to adopt some flexibility around regulations (red tape), and against the need of institutions to operate according to standard operating procedures to reduce the opportunity for fraud (McCue et al. 2003). The discretion-corruption-red tape dilemma is one that is significant and critical to how institutions are constrained when attempting to empower managers yet simultaneously maintain accountability systems and structures that accurately demonstrate public values. Managing Competing Goals for Best Value-The Principle-Agent Challenge Procurement discretionary decisions are influenced by price, cost, quality, and value; however, the means by which accountability is achieved

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through such discretion is difficult. We have noted in preceding chapters that in procurement, a principal-agent relationship is based on a fiduciary relationship, which arises because of the asymmetric knowledge and superior training of the agent (Soudry 2007). This implies that the agent in charge of procuring goods and services has the trust and confidence to act as “caretaker” of rights, assets and/or wellbeing of others. The agentpurchaser has an ethical, moral, personal, and legal responsibility to ensure that the funds are expended responsibly and in compliance with rules and laws. During the procurement process, there are inevitable opportunities distracting responsibilities to act ethically. This is referred to as, moral hazards which is the incentive to act in a way detrimental to one party after an agreement has been made (Baron and Besanko 1987). A key feature of moral hazards is personal gains. This conflict of interest illustrates the dilemma of what is beneficial to the agent in terms of adopting best practices and what is beneficial to the principal in terms of best value, better quality, and quicker delivery. In this case, the code of ethics is crucial to regulate public procurement and associated costs. While internal policies guide the ethical conduct for all public employees, often even when diligently followed these codes of conduct, illustrate that the “best” value option is not completely apparent or clear because of conflicting goals and competing principals (McCue et al. 2015). Hence, it is easy to see how under conditions of scarce resources, competition for public resources can lead to actions by one agent that may contradict or counteract the actions of another (Rolfstam 2009). In such a case, it is unclear how the principal, acting on behalf of society, can maintain control over the agent ostensibly acting on its behalf. Reviewing Short-Term Benefits vs Long-Term Control Costs Internal checks and controls help ensure effective and efficient operations (Cox 2008) through reliable financial reporting; compliance and adherence to rules, policies, and procedures (Schiele and McCue 2010). The control environment is therefore one that is very important. The control environment is made up of the administrative assumptions, standards, values, and norms (Schein 2010) promoting a clear public purpose. Through this environment, officials and their behaviors are guided (Gruber and Palmer 2005) while ensuring that funds are expended responsibly and in compliance with the intentions, rules, laws, and concerns of the provider of the funds. According to McCue et al. (2015),

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there are numerous control activities, which increase accountability. For example, staff managing the procurement process should be familiar with the control environment with adequate training around institution’s policies and procedures. Control can also be exercised through the use of pre-approvals and auditing checks. Although control audits are typically employed in relation to high-value, high-risk transactions, it should not be restricted to this. According to Shead (2001), growth in probity audits demonstrate that public sector managers are more attuned to expectations and therefore more proficient at developing risk management strategies. Despite the importance of audit controls in procurement, administrative risk assessments affect such control activities. According to McCue et al. (2015) when service delivery managers are empowered with more purchasing authority there is a consequential increase in monitoring costs. In turn, monitoring costs require additional resources expended on procurement, either in terms of personnel with the appropriate monitoring skills or through technology that is capable of insuring compliance. In either case, the additional costs associated with monitoring increases since there is no true incentive for the service delivery managers to act in the best interests of the procurement department. Decentralized End User Benefits and Increased Training and Evaluation Costs In time to come, institutions can expect that flaws and delays in procurement protocols will ultimately lead to more rules and regulations designed to control these mistakes which will in turn lead to increasing overall costs and calls for centralization in the chase for more accountability (McCue et al. 2015). The result is loss of efficiency in the name of increased accountability—another public procurement dilemma. This may explain some of the cycles and swings from centralization to decentralization and back again that are often witnessed in public procurement institutions. Rulemaking explodes under devolution in order to control fraud or waste, which in turn, leads to calls for more efficiency via centralization of purchasing. However, this centralization can lead to less procurement responsiveness and end-user effectiveness because the discretion of enduser agency is curbed—all in the name of accountability (McCue et al. 2015). According to Lember et al. (2014), there is no single dominant approach to public procurement and innovation that governments follow.

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Implementation remains cautious and indirect rather than substantial and direct. The very process of public procurement, regardless of its position in the cyclical continuum, plays a far more modest role in the actual implementation than expected (Lember et al. 2014). It cannot be emphasized anymore how important it is for public officials to be as politically efficient as they are economically efficient. This highlights the paradigmatic shift from “doing things better” to “doing better things” (Fisher 2013). Both economic and political risks must be priced into any agenda for government reforms and institutional rearchitecture. In the studies by McCue et al. (2015), one participant indicated there will likely be a short term spike in training and evaluation costs, which should stabilize after some time, however, I believe that if a system becomes too decentralized that the lack of consistency between different operations will likely create a total breakdown in the procurement system. That’s why I still believe that there must be some form of centralization within an organization.

In the same study, another expert stated, “procurement left in the hands of the end user without proper and frequent training will result in higher cost overall. The end user is mission driven and therefore has less concern with regard to procurement policies and regulations.” With procurement being central to various core objectives, it is practically impossible to align all of the objectives together under multiple demands. Since each part or division in the procurement process is motivated by different objectives, a search for proper incentives to align procurement goals and department objectives remains.

Conclusion Throughout this book we have argued that a sound procurement system is contingent on effective legislative and regulatory framework, a transparent institutional framework, management capacity, and integrity of a procurement system. Public procurement has undoubtedly become an increasingly important issue in economic and business circles both nationally and globally. The increasing interest by stakeholders including donors, governments, civil society, professional organizations, the private sector and the general public, on matters of public procurement is becoming

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more and more evident. Poor public procurement systems in the African continent make it timely for governments to reform the legal, organizational, and institutional frameworks of public procurement. This book has demonstrated that public procurement in Africa is a significant topic as it accounts for a sizeable proportion of the continents GDP. This chapter has demonstrated that good governance is core to a just and economically efficient public procurement system. The preceding chapters have also demonstrated that corruption in public procurement has been a result of covert practices violating procurement rules.

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CHAPTER 15

Good Governance and the Prospect of Sustainable Growth and Development in Africa Omololu Fagbadebo and Nirmala Dorasamy

Introduction That the African continent is backward in terms of growth and development is not disputable. Paradoxically, however, the continent remains the most prosperous in terms of potential for an economic turnaround in view of its endowed vast natural resources, which has made it major supplier of raw materials for the highly industrialized nations in the West. Claude Ake has noted that efforts at promoting inclusive development yielded stagnation and regression, as its tragic consequences. According to him, the “rising tide of poverty, decaying public utilities and infrastructures, social

O. Fagbadebo (B) · N. Dorasamy Department of Public Management and Economics, Durban University of Technology, Durban, South Africa e-mail: [email protected] N. Dorasamy e-mail: [email protected] © The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3_15

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tensions and political turmoil, and now, premonition of inevitable drive into conflict and violence,” have remained the lots of the continent (Ake 1995). Events have continued to confirm this perception with worsening regression in the continent’s historical trajectory. Even though there are projections of promising growth rates because of its impressive economic potential, low productivity level has remained her characteristic feature (Schwab 2015). Weak public institutions of governance characterized by poor infrastructural facilities have remained major challenges facing the continents’ growth and development capacity. The spate of the crises of governance, with the attendant insecurity and humanitarian consequences, has continued to weaken the already fragile structural composition of the African states. The COVID-19 pandemic, for instance, was feared for the destructive tendencies for Africa, especially because of her vulnerable public health systems and state incapacity to deal with emergency crisis, in spite of huge resources allocated to various infrastructural sectors in the economies of African countries. In Africa, state capture and weak systems of checks and balances have remained two major factors compounding the crisis of governance. First, the collaboration among the political and economic elites in the mismanagement of national resources have led to the diversion, and in most cases, conversion of public funds to private use at the expense of citizens. The consequence is the dearth in the supply of basic public services. In South Africa, for instance, the Justice Zondo-led State Capture Commission has received a series of testimonies and confessions on the sleaze activities of top government officials that have crippled state-owned enterprises. Recent legislative oversights activities in Nigeria have shown the extent of sleaze in the activities of the various agencies of government in collaboration with the political and bureaucratic elites. This concluding chapter presents a prescriptive discourse on the feasibility of sustainable growth and development in Africa. Authors in this volume present analysis on the recurring African problem in procurement systems. The submission is that warped procurement management systems, powered by illicit and corrupt practices have worsened the continent’s crisis of governance. Thus, inclusive good governance that prioritizes the interests of the public would provide the long-awaited palliatives to redirect the continent toward the path of sustainable growth and development. This chapter addresses some of the challenges and the prospect of a continent determined to harness its vast natural resources. We start with corruption.

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The Corruption Albatross and Its Implications In Africa, corruption is a common phenomenon with its devastating consequences on every sector of society. Even though corruption is not an exclusive African disease, nevertheless, its impact is more pervasive. In 2013, Global Financial Integrity (GFI) and the African Development Bank (ADB) released a joint report on illicit financial flow out of the African continent. The report showed that between 1980 and 2009, total fund illicitly transferred outside Africa stood at US$1.4 trillion, an amount far less than the total financial inflows to the continent (Global Financial Integrity 2013). Described as “illicit hemorrhage of resources,” the amount estimated to be about four times the external debt of African countries to international lending agencies, and almost equivalent to its GDP. Even though some countries recorded a measure of gains from the inflow of resources, nevertheless, the volume of illicit financial flow (IFF) far outstripped the gains recorded from legitimate inflow. IFFs grew at a much faster pace over the 30-year period 1980-2009 than net recorded transfers, even accounting for the net inflows arising from the broad net recorded transfers. Illicit outflows were dominated by outflows from Sub-Saharan Africa, especially from West and Central Africa. Illicit outflows from Sub-Saharan Africa outstripped those from North Africa by over two times in nominal terms while in real terms, three African regions—West and Central Africa at US$494.0 billion (37 percent), North Africa at US$415.6 billion (31 percent), and Southern Africa at US$370.0 billion (27 percent)—account for 95 percent of total cumulative illicit outflows from Africa over the 30-year period. (Global Financial Integrity 2013, p. 3)

Nigeria, Egypt, Republic of Congo, and South Africa were the drivers of regional countries in West, North, Central, and Southern African countries. Nigeria and Cote d’Ivoire were the countries with largest IFF in West Africa, while Egypt, Algeria, and Libya, respectively, led the North African IFF, and South Africa, Mauritius, and Angola were the IFF spots in Southern Africa. The high rate of IFF in Africa has implications on good governance and sustainable growth and development. IFF diverts resources from domestic socio-economic projects and policies, designed to improve the wellbeing of citizens and society at large. Hence, the litany of decaying infrastructural facilities, such as bad roads, lack of water, collapsed heath care facilities, and the rising scourge of insecurity, in many

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African countries. The defective procurement management system is the major source that fueled IFF. The United Nations’ Economic Commission for Africa (ECA 2015) identified public procurement corruption as a major obstacle to economic growth and development. Public procurement systems of the African countries are corruption networks that have stifled effective public service delivery through “misallocation of scarce resources, reduction in the quality of services, increased cost of doing business, discouraging foreign investments as well as shrinking governments’ tax revenues” (ECA 2015). African countries lose an estimate US$ 148 billion per annum to corruption. In Nigeria, officials of the country’s oil resources corporation, the Nigerian National petroleum Corporation (NNPC) have been alleged to have been involved in the stealing 48 million barrels of crude oils, among other malfeasances (Nnodim 2020). Similarly, in Sudan, for instance, Global Financial Integrity (2020) discovered a culture of deliberate distortion in its trading earnings through mis-invoicing, a phenomenon common to most African countries that export crude oil products. While the Sudanese Central Bank reported gold exports of 205,446 kilograms (US$4.1 billion) between 2012–2018, the trading partners indicated an import of 404,732 kilograms (US$8.6 billion), a difference of 199,286 kilograms (US$12.7 billion) (GFI 2020, p. 3). Similarly, during the same period, there was a gap of 49.9 million barrels of crude oil exports (US$4.1 billion), as the Sudanese government reported 62.3 million barrels (US$4.8 billion) while the trading partners reported 112.2 million barrels (US$8.9 billion) (GFI 2020, pp. 2–3). The implication of this loss of revenue to corruption was the pronounced crisis of governance that characterized the country, and thus gave rise to public protests that led to the fall of the government. In other words, corruption is a driver of the crisis of governance in Africa. One of the manifestations of the crisis of governance in African countries is the preponderance of inequality in wealth distribution (Kar et al. 2010). This undermines growth, exacerbates income inequality, and increases poverty. According to the World Data Lab (2020), only 4 African countries, Algeria, Morocco, Tunisia, and Egypt had extreme poverty level below 3%, while 37 are in extreme poverty. Gabon, Mauritanian and Libya are on-track the Sustainable Development Goal (SDG) target with fewer citizens living in extreme poverty. In Nigeria and South Africa, with 50 and 28% of citizens, living in extreme poverty, the level of

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poverty in the two countries is rising daily. These two countries are also witnessing an increase in the rise of corruption in the public sector. Another characteristic feature of, but with significant impact on the African governance crisis, is the consequence of the piled up foreign debts, which have become burdensome. Africa’s eurobond has exceeded US$100 billion as of March 2019, with Egypt (US$25.5 billion), South Africa (US$18.9 billion), and Nigeria (US$11.2 billion) (Adegoke 2019). This is different from indebtedness to China, Africa’s leading creditor in the global economy (Kuo 2020), which is often shrouded in secrecy because “Chinese financiers are not very transparent, and do not systematically provide data on the loans they offer to individual overseas borrowers” (Brautigam et al. 2020, p. 3). It has been estimated that Chinese financiers signed an estimated 1,077 loan commitments to the tune of US$ 148 billion, with governments in Africa between 2000 and 2018 (Brautigam et al. 2020). Indeed, almost 24% of Africa’s external debts are owed to Chinese government, banks and State-Owned Enterprises (SOEs) (Kuo 2020). While some African countries have shown noteworthy evidence of tangible infrastructural facilities to justify such the loans (Brautigam et al. 2020), in others, external loans were diverted from their intended purpose to the private use of political elites. The implications of this debt trap came to the fore with the COVID-19 pandemic, where African states were confronted with the twin challenge of coping with the economic demands to fight the pandemic, and their commitment to loan repayment. As noted by Kuo (2020), African countries are burdened by their huge debts with its effects on their ability to allocate sufficient resources to protect citizens’ health while at the same time seeking to “minimize the negative economic outcomes of the pandemic.” Consequently, they “have little room to divert these resources toward more pressing health and economic needs” because they have to commit their resources for servicing and repayment of their loans to international creditors (Kuo 2020). Unfortunately, most African countries lack the capacity to convert their loans to substantial infrastructural facilities capable of coping with their domestic needs. The International Monetary Fund (IMF) in its Regional Economic Outlook (2020) projected that the COVID-19 threats, with its tolls on human health and the economy, would shrink African growth to the lowest level of 1.6 percent, from its 5.2 percent record of 2019. Weak health management systems, existing health vulnerabilities, ineffective

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commitment to contain the risk of the outbreak, and leadership commitment to transparent and accountable administrations are the major factor noted to be impediments in this regard. Lack of accountability, manifested in non-adherence to due process in procurement system have led to the loss of revenues earmarked for the provision of effective infrastructural facilities to mitigate the challenges of unintended emergency crisis, such as the COVID-19 pandemic. Reports from South Africa and Nigeria, for instance, showed that resources allocated to contain the spread and cushion the impact of COVID-19 ended up in private pockets of the political elites (Cele et al. 2020). The IMF mobilized US$57 bn funds for Africa and another US$13 bn facilitated by other private creditors (Booth 2020). The IMF approved US$ 3.4 billion and US$4.3 Billion, under its Rapid Financing Instrument (RFI) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic, for Nigeria and South Africa, respectively (International Monetary Fund 2020a, b). In addition to that, Pretoria announced a COVID-19 relief package of R500billion to citizens (Tromp 2020). Similarly, Abuja announced its N50billion COVID-19 stimulus package (Ayeni 2020). The management of these relief packages has been confronted with accountability problems. Central to this is the procurement corruption, which have attracted public condemnation in the two countries (Williams-Elegbe 2020; Wicks 2020; Corruption Watch 2020; Mabuza 2020; Ayado 2020; Iroanusi 2020). In its Global Corruption Barometer Africa 2019, Transparency International noted, “Corruption is hindering Africa’s economic, political and social development. It is a major barrier to economic growth, good governance and basic freedoms, such as freedom of speech or citizens’ right to hold governments to account” (Global Corruption Barometer: Africa 2019, p. 2). Beyond this, corruption undermines citizens’ opportunity to access facilities that could facilitate stable and prosperous future. Thus, a major factor engendering the crisis of governance in Africa is corruption. Corruption in Africa is multifaceted. While the local political elites are the major culprits, international collaborators, especially multinational corporations and individual businesses, have encouraged the intensity through capital flight and diversion of resources meant for public services. Foreign businesses continue to bribe public officials throughout the continent to get an unfair advantage during bidding processes and secure deals that are overpriced or do not yield real benefits. When money that

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should support critical services, such as health care and education, flows out of countries due to corruption, ordinary citizens suffer most. (Global Corruption Barometer: Africa 2019, p. 3)

African citizens are aware of the corruption pandemic but mostly powerless to confront the government. The Global Corruption Barometer report of 2019 showed that 55% of African citizens perceived that corruption was on the increase in their respective countries while 59% castigated their governments of weak anti-corruption measures (Global Corruption Barometer: Africa 2019). In the 2019 corruption perceptions index of the Transparency International, a majority of African countries remain locked in the corruption pandemic (Transparency International 2020). In most of these countries, the dearth of political integrity characterized the public sector. This abysmal record of sleaze in the African public sector is, largely, a function of defective public procurement system and the attendant dearth of transparency and accountability in the institutions of government.

Institutional Failures and the Crisis of Governance in Africa African countries have institutional structures and mechanisms to instill transparent administrative process and induce accountability. Nevertheless, these structures are dysfunctional because they are instruments of manipulation for the advancement of the interests of the political and bureaucratic elites. Thus, institutions of government designed as agencies of accountability and good governance have been rendered ineffective. Weak institutions engender festering corruption, most especially in developing economies (Brierley 2020). Political and bureaucratic elites often work in tandem to perpetrate corrupt practices through institutional manipulations. Brierley (2020, p. 210) has noted that the political elites that seek for rents in procurement system often “secure the cooperation of bureaucrats in order to manipulate procurement processes.” Thus, institutional manipulation to advance the interests of the elites through illicit practices often occurs in agreement between the politicians, who give directives, and the bureaucrats, who carry out the order. The political elites in government, described by Brierley (2020) as “unprincipled principals,” often set the pace for their bureaucratic subordinates, to desecrate institutional rules to circumvent due process.

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This politicians-bureaucrats nexus in the manipulation of institutions rules and procedures have developed into a systemic culture that defines governmental transactions. In Nigeria, for instance, institutionalized oversight and accountability mechanism have been compromised to promote the pecuniary interest of the stakeholders charged with the responsibility of safeguarding the system. Nigeria’s presidential constitution provides adequate legislative frameworks to strengthened institutions and structures designed to promote transparency and accountability (Fagbadebo 2019b). The epicenter of this malaise is the legislature, an institution designed and empowered to oversee executive activities in the public policy process with a view to ensuring checks and balances. Rather than explore the committee system of presidentialism to ensure effective implementation of public policies through compliance with the requisite statues and procedures, Nigerian lawmakers have exploited government agencies to perpetrate corrupt practices (The Eagle Online 2020). Institutions are crucial to the promotion of good governance and sustainable development. Effective institutions have the capacity to constraint political and bureaucratic actors from diverting public resources to private use or engage in any form of illicit practices. In other words, institutions serve as accountability mechanisms; they guard against any opportunity that the political actor could exploit to indulge in unethical practices. Adherence to rules and norms would ensure due process in policy processes and ascribe appropriate punishment for violation or circumvention of procedures. However, the effectiveness of institutions depends largely on the quality and commitment of the leadership toward the promotion of accountability.

Leadership Challenge and Good Governance in Africa Institutions of government do not have lives of their own; the actors who control their operations define their response to the expectations of effective performance. There are two broad categories of accountability: horizontal and vertical (Fagbadebo 2019a). Horizontal accountability connotes internal institutional mechanisms and structures, such as the legislature, judiciary, and other agencies of government, assigned with the responsibility of checkmating the activities of actors for compliance. The checks and balances system functions to ensure that public policy processes lead to effective public service delivery. Effective horizontal

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accountability, therefore, is an institutional constraint measure to enforce accountable administration. When the internal measures fail to stimulate an accountable government, society can exercise its vertical accountability power to enforce horizontal accountability during electoral process or public protests. Thus, vertical accountability connotes citizens’ power to remove political leaders through the electoral process or organization of public protests to demand accountability. Where electoral process fails, as in the case of most African countries where political corruption do not make votes to count, diagonal, or what Adamolekun (2010) calls society-drawn, accountability becomes the safety valve for citizens to hold government accountable. This requires the combined effort of the media and civil society, through sustained public protests, constant media publications to disseminate relevant information to expose malfeasances in government and a series of other civil society engagements (Brierley 2020). This mechanism has proved effective in Europe and Latin American countries, where regimes working against the collective interests of the public were forced out of power. In recent times, some of the classic cases where vertical accountability led to the fall of government include the 2011 Arab Spring uprisings, which started in Tunisia in 2010, that swept through the Middle East and the North African Region (MENA) (Sapsford et al. 2019), the public protest that led to the ousted of President Omar al-Bashir of Sudan (Hassan and Kodouda 2019) and the 2016 uprisings that forced president Yahya Jammeh to fled the country after his failed bid to cling to power (Kress and Nussberger 2017). When political leaders fail to demonstrate the capacity and commitment to the promotion of accountability and good governance, they will lose the confidence of the public, hence the resort to self-help in the face of institutional failure. In Nigeria, for instance, public outcries against the simmering crisis of government coupled with reports of corruption in government, gave rise to recent public protests, tagged “Revolution Now” (Olaiya et al. 2020), which government forcefully repelled (Erezi 2020). This manifested defiance by top government officials, coupled with worsening governance crisis, has weakened citizens’ confidence in government. A former US Ambassador to Nigeria, John Campbell, noted the “lack of confidence and faith amongst many Nigerians in the institutions of government,” which he described as worrisome (Nigerian Tribune 2020). Over the years, Nigerian leaders have demonstrated their

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inability to be held accountable, a phenomenon described by Campbell as a culture that fed “directly into corruption and institutional weakness” (Nigerian Tribune 2020). This is not limited to Nigeria. Most African leaders deliberately weakened institutions of government to their advantage (Majavu 2020). One of the findings of the Transparency International on the rise of corruption in Africa was the capability of African citizens to enforce accountability and stamp out corruption. In other words, citizens expressed determination to forge a truly democratic government committed to effective public service delivery. Most African leaders often seek to entrench themselves in power through a personalistic cult. In Sudan, for instance, Omar al-Bashir, who assumed power in 1989, expended the state resources to craft “a personalist autocracy that tied the fortunes of different political actors—particularly the various branches of the security apparatus—to his continued rule” (Hassan and Kodouda 2019, p. 89). This provided him with the necessary shields against public protests, in the past, until the uprisings that began on December 19, 2018. President Jammeh of the Gambia, like his Sudanese counterpart, used his military background to build a personality cult around himself. A newspaper columnist described Jammeh’s personality cult thus: “For 22 years Yahya used the state machinery to deal with his real and even imaginary enemies. Yahya created the National Intelligence Agency (NIA), a tool at his behest to act on his whims, when and where needed” (Kruabally 2017). Personality cult has enabled successive African leaders to capture their respective states, and covert national resources to personal use. State institutions become privatized property of the leaders, with disregards for due process. Security apparatuses are exploited and deployed instruments of political oppression and repression of opposition political groups as well as civil society. In countries with semblance of democratic ethos, oversight mechanisms and the agents of horizontal accountability are deployed as instruments of political vendetta (Fagbadebo 2019a). When state power becomes personalized, one of the tactics of the leader to ensure unfettered monopoly of state apparatuses is to deliberately weaken the “capacity of other political actors in order to reduce the chances of a successful challenge to his rule” (Hassan and Kodouda 2019, p. 90). In the face of repressive force often employed by African leaders, the people have to rise to demand accountability.

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Toward Sustainable Growth and Development in Africa The mantra of the Arab Spring uprising was, Ash-sha’b yurid isqat annizam, meaning, “The people want the fall of the regime” (Hassan and Kodouda 2019; Salih 2013). This should be the motivation for other African citizens under the excruciating burden of the crisis of governance. Different countries in the MENA region witnessed citizens’ outrage against poor governance, with differing outcomes. For the North African countries in MENA, revolutionary protests drove President Zine El Abidine Ben Ali of Tunisia to Saudi Arabia on January 14, after 18 days of sustained mass protests, President Hosni Mubarak of Egypt resigned on February 11, 2011, and Libyan leader Muammar al-Gaddafi, lost his life to the mass protests backed by the international community, on October 20, 2011. The Arab Spring, the Sudanese uprisings and the prevailed people’s power in the Gambia, have demonstrated the extent, at which sustained public pressures could serve as the catalyst for the envisaged transformation in African governance. Sustained public protests, championed by the opposition political groups, forced the Gambia president, Yahya Jammeh, to organize the December 2016 elections which he lost (Barry and Searcey 2016). The actions of the pro-democracy groups drew the attention of the international community to the political crisis in the country. The involvement of the United Nations Organization (UNO), the African Union (AU), and the Economic Community of West African States (ECOWAS) bolstered the public protests and the anti-Yammeh sentiments in the country. Despite the victory of opposition candidate, Adama Barrow, and the intervention of ECOWAS’ heads of states, Jammeh adopted various strategies to cling to power (Perfect 2017). While this impasse lasted, the UN Security Council, the AU and the ECOWAS threatened military actions to ousted Jammeh should he refuse to respect the popular will of the people expressed through their electoral votes (Kress and Nussberger 2017). With 222,708 (43.3%) of total votes, Barrow defeated his other two opponents Jammeh 208,487 votes (39.6%) and Kandeh 89,768 votes (17.1%, to emerge as the president (BBC News 2017). Jammeh condemned foreign intervention in the internal affairs of the country and vowed not to relinquish power until May 201, when the country’s Supreme Court would deliver its ruling on the adjudication

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over the election result (cf. Aljazeera 2017a). The decision of the county’s parliament that extended his tenure by another 90 days emboldened him to insist that he would not relinquish power to Barrow, the winner of the election (cf. Aljazeera Aljazeera 2017b). When this could not assuage the tempo of public protests, Jammeh, whose tenure of office expired on January 19, 2017, declared a state of emergency on January 18, 2017, because of what he regarded as “the unprecedented and extraordinary amount of foreign interference the in internal affairs of The Gambia and the unwarranted hostile atmosphere threatening the sovereignty, peace, security and stability of the country” (cf. Aljazeera 2017a). Nevertheless, he was forced to leave the country on January 21, 2017, after Barrow, who was sworn in as President in the Gambian Embassy in Dakar, Senegal, called for international intervention to enforce the sanctity of his electoral mandate (Kress and Nussberger 2017). The Arab Spring uprising was occasioned by the reactions of the governments to the public outcries against the bourgeoning corruption and deterioration of the economy (Salih 2013). Most of the regimes in the MENA region were repressive and violent. With public discontentment against the raging corruption and its attendant consequence manifested in the deteriorating economy, various regimes suppressed individual liberties. Arab Spring uprisings were bolstered by the resilience of the protesting masses, strengthened by the increased power of public opinion. In the face of repressive state intervention, the hitherto silent and fearful masses developed vocal and active attitude to make demands with sustained public demonstrations and protests. The underlying factor in most of the cases of sustained public protests that led to the collapse of regimes characterized by personalized power, is the problem associated with the crises of governance and the repressive response of the regimes. In Sudan, for instance, the 2018–2019 the rising prices of basic goods, especially bread, gave rise to the popular uprisings that led to the ousted of President Omar al-Bashir (Salih 2013; Hassan and Kodouda 2019). The Gambia case was also a reaction to the bourgeoning corruption and human security challenges occasioned the personalized power in the country. Jammeh presided over the Gambia with heightened repression (BBC News 2016) amidst pillaging of the country’s resources. One of his cabinet members, Sidi Sanneh, who resigned at the wake of the electoral impasse confirmed Jammeh’s appetite for the country’s treasury, saying, “I don’t think the Gambian people

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are prepared to let him off with any more loot from the treasury” (cf. Aljazeera 2017b). We, therefore, recommend the role of civil society in these cases as panacea for other African citizens determined to demand accountability form their leaders. One of the aspirations of the leadership of the African Union (AU) is the emergence of an African continent characterized by good governance, democracy, and respect for human rights, justice, and the rule of law. In its Agenda 2063: The Africa We Want, the AU leadership expressed its concern about the bourgeoning crisis of governance, exacerbated by poor leadership and corruption, and its consequential impacts on the wellbeing of the citizens. This prospect would remain a mirage without sustained public protests against the entrenched personality cult that have characterized African leadership. A high rate of poverty, hunger, unemployment, insecurity, and the low standard of living and quality of life, and numerous other social challenges, occasioned by stunted growth and low-level economic development, are most of the problems ravaging the richest continent in natural resources (African Union 2015). This crisis has attracted the attention of foreign donor agencies and foreign countries, as well as researchers across the globe. This crisis of governance has its root in the leadership management of public resources, mostly characterized by corruption.

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Index

A accountability, 10, 14–17, 22, 24, 27, 28, 37, 40, 45, 46, 66, 74, 80, 82–85, 95–97, 99, 102, 103, 105, 120, 122, 125, 135, 144, 146, 150, 153, 155, 156, 158, 167–169, 174–176, 186, 190– 192, 194, 197, 200, 206, 208, 212, 218, 224, 228, 239–241, 249, 252, 254–258, 263, 269, 278, 279, 281, 292–296, 299 anti-corruption, 7, 11, 12, 21, 23, 24, 27, 29, 32, 49, 114, 121, 123, 130, 144–146, 151, 152, 155, 166, 173, 208, 210, 211, 214, 218, 219, 259, 263, 293 Arab Spring, 295, 297, 298 B Basutoland Congress Party (BCP), 207 bribery/bribes, 3, 27, 28, 37, 38, 44, 46, 60, 61, 87, 103, 113, 117,

118, 145, 152, 166, 169, 180, 186, 191, 209, 213, 215, 224, 233, 234, 236, 252, 260, 262, 292 Budget Monitoring and Price Intelligence Unit (BMPIU), 169–174, 253 bureaucracy, 27, 64, 65, 68, 191, 216, 219, 225, 227, 271 bureaucrats, 9, 37, 45, 60, 61, 67, 128, 136, 167, 233, 241, 259, 293, 294 Bureau of Public Procurement (BPP), 174, 175, 180, 253 C centralisation, 74, 77–82 civil society, 17, 227, 242, 271, 273, 282, 295, 296, 299 clientelism, 9, 48, 63, 67 Consolidated Fund, 130, 147 Constitution, 23, 25, 27, 76, 77, 95, 96, 98–100, 122, 123, 147–152,

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 N. Dorasamy and O. Fagbadebo (eds.), Public Procurement, Corruption and the Crisis of Governance in Africa, https://doi.org/10.1007/978-3-030-63857-3

305

306

INDEX

174, 201, 229, 230, 232–235, 237, 238, 241, 254, 294 Corporate Affairs Commission (CAC), 179 corruption, 3–17, 21–23, 25–29, 31, 32, 35–39, 43–46, 48, 49, 55, 56, 58, 61–63, 66–68, 83–85, 87, 95, 97, 98, 101–107, 113–121, 123–126, 128–130, 132, 133, 135–138, 144–146, 148, 150–159, 165–171, 173, 177–181, 186, 189–194, 196– 199, 201, 202, 205, 208–210, 212–219, 224–228, 230–236, 238–242, 251–262, 276–278, 283, 288–293, 295, 296, 298, 299 Critical Success Factors (CSFs), 137 cronyism, 63, 207 Crown Agents, 234

D decentralisation, 74, 77, 78, 82 defiance, 295 Directorate on Corruption and Economic Offices (DCEO), 208, 209, 212, 214, 216

E Economic and Financial Crime Commission (EFCC), 166, 178 economic development, 8, 11, 13, 21, 60, 102, 103, 105, 145, 171, 185, 192, 209, 217, 299 economic systems, 37 economic theory of corruption, 9, 61, 66, 67 election, 207, 218, 297, 298 embezzlement, 44, 145, 147, 186, 213, 252

e-procurement, 16, 45, 122, 146, 153, 154, 224, 230–232, 235, 238, 239, 257, 262, 263 E-tender, 231 ethics code of conduct, 99 The Exchequer and Audit (Public Procurement) Regulatory, 234 expenditure, 4, 11, 44, 49, 80, 84–86, 90, 95, 98, 99, 102, 105, 116, 129–131, 147, 167, 168, 170, 172, 180, 208, 217, 231–235, 261 expenditure management, 105

F fiscal management, 116 fragile democracy, 206 free market, 44, 59, 60

G Ghana, 12, 144, 145, 147, 148, 150, 151, 154–158, 263 Ghana Public Procurement Act, 143 good governance, 5, 6, 8–10, 12, 16, 21, 28, 32, 36, 49, 74, 94, 96, 97, 99, 103, 104, 107, 113–117, 120, 121, 124, 165, 206–208, 217, 224, 228, 232, 236, 238, 241, 242, 258, 262, 274, 283, 288, 289, 292–295, 299 governance, 5–8, 10–12, 14, 16–18, 22, 24, 29–32, 35, 38, 39, 49, 88, 96–98, 103, 105, 113–116, 122–124, 126, 132–138, 167, 168, 186, 190, 192, 193, 195, 198, 200, 202, 206, 208, 224, 227–229, 232–234, 236, 239, 241, 242, 251, 255–259, 261, 269–275, 277, 278, 288, 290–292, 295, 297–299

INDEX

government, 3–14, 16–18, 21, 22, 24–28, 31, 32, 35–37, 39, 41, 44–46, 49, 57–62, 64, 66, 68, 74, 75, 77, 78, 80, 83, 84, 86, 87, 89–91, 93–106, 114–130, 132–137, 144, 145, 147, 148, 150–158, 166–181, 185–194, 197–202, 206–209, 212–214, 216–219, 223–236, 238–242, 249–255, 257, 258, 260–263, 270, 273, 274, 276, 278, 279, 281–283, 288, 290–296, 298 government institutions, 188, 192, 200, 261 grand corruption, 11, 12, 43, 157, 158, 205, 259, 261

I Illicit Financial Flow (IFF), 17, 31, 289, 290 impunity, 16, 21, 155, 167–170 Independent Corrupt Practices, and Allied offences Commission (ICPC), 166, 178 institutional theory, 38, 41, 48, 49, 270 institutions, 6–8, 11, 12, 14, 17, 24, 31, 32, 37, 47–49, 58, 60, 61, 64, 65, 77, 79, 80, 82, 85, 106, 114, 116, 121, 124, 129, 133, 134, 136, 137, 143–148, 150, 156–158, 167, 168, 172, 173, 186, 188–190, 192, 198–200, 202, 206, 210–213, 216, 218, 219, 225–230, 234, 238, 239, 250, 251, 258, 262, 271, 275, 277–279, 281, 288, 293–296 integrated governance, 270–274 integrity, 14, 16, 22, 25–27, 45, 190, 191, 208, 209, 218, 219, 242, 252, 254, 262, 282, 290, 293

307

International Monetary Fund (IMF), 114, 115, 206, 291, 292

K Kenya, 15, 124, 223, 224, 234–237, 239, 241, 242, 252 kickbacks, 145, 166–169, 252

L Leadership Code of Conduct, 130 legal-rational, 63, 65 legislative frameworks, 6, 10, 12, 13, 23–26, 28, 31, 76, 100, 103, 167, 173, 180, 181, 229, 234, 239, 250, 255, 294 Lesotho, 15, 23, 29, 205–211, 213–219 Local Government Municipal Finance Management Act (LGMFMA), 229, 230

M malfeasances, 11, 13, 24, 28, 30–32, 68, 156, 226, 239, 242, 290, 295 Marematlou Freedom Party (MFP), 207 modernization, 27, 64, 65 Municipal Finance Management Act (MFMA), 76, 77, 85, 86, 91, 95, 96, 100, 103, 254, 258

N National Council on Public Procurement (NCPP), 174, 253 National Treasury, 27, 76, 84, 91, 96, 97, 100, 101, 103, 180, 229, 231, 234, 254, 255, 258 neopatrimonialism, 9, 62–64, 66, 67

308

INDEX

nepotism, 9, 10, 23, 24, 26, 27, 38, 63, 67, 68, 144, 166, 168, 170, 173, 178, 207, 252 New Public Management (NPM), 39, 114–116, 223 O Operational constraints, 279 organizational practice, 8 oversight, 6, 8, 11, 13, 15, 26, 27, 45, 89, 97–99, 104, 105, 148–150, 159, 168, 172, 174, 179, 181, 200, 201, 208, 209, 212, 216, 225–227, 231, 233, 235, 236, 239–242, 253, 256, 278, 288, 294, 296 P parliamentary control, 146, 148 patronage, 23, 27, 32, 38, 56, 61, 64, 65, 67, 252 personality cult, 296, 299 political interference, 8, 12, 24, 133, 144, 146, 151, 155–159, 258 political leadership, 186, 190, 193, 273 political power, 66 poverty, 4, 6, 13, 17, 30, 31, 106, 145, 185, 206, 207, 232, 239, 256, 287, 290, 299 Preferential Procurement Policy Framework Act (PPPFA), 76, 77, 95–97, 230, 238, 258 procurement corruption, 13, 15, 16, 23, 24, 26, 29–31, 117, 126, 128, 129, 133–135, 137, 158, 169, 173, 177, 180, 181, 217, 236, 242, 250, 251, 276, 290, 292 procurement process, 5, 6, 9, 10, 13–16, 23, 25–30, 44, 47,

49, 62, 74, 76, 77, 79, 80, 83, 97, 98, 102–104, 106, 117, 121, 124, 128, 132, 134, 136, 144–146, 151, 154, 156, 158, 166, 168, 170, 172, 174, 175, 178, 189, 190, 192–194, 199–202, 205, 209, 211, 212, 215, 224, 226, 227, 229, 230, 232, 234, 237, 240, 252, 254, 257, 262, 274, 277–282, 293 procurement system, 7, 8, 12–16, 24, 25, 27, 28, 30, 31, 45, 74, 77, 82, 84–87, 91, 96, 100, 101, 117, 121, 122, 133, 135, 144, 155, 165–168, 171–173, 175, 177, 180, 181, 185, 186, 188–193, 202, 209, 211, 228, 230–232, 250, 252–254, 259, 261, 262, 269, 270, 274, 276, 278, 282, 288, 290, 292, 293 Promotion of Access to Information Act (PAIA), 230, 232, 233 The Public Accounts Committee (PAC), 148–150 Public Finance Management Act (PFMA), 24, 76, 77, 85, 86, 91, 95, 96, 100, 101, 103, 229, 230, 238, 254, 258 public procurement, 7–18, 22–24, 26–29, 37, 43–47, 49, 62, 73–77, 83, 84, 86, 87, 89–91, 93, 94, 96, 97, 100–102, 106, 114–126, 128–130, 132–138, 143–146, 150, 151, 153–155, 158, 165, 167–174, 176, 177, 180, 185, 186, 188–190, 192, 193, 195, 197, 198, 200–202, 208–219, 223–242, 249–255, 257, 258, 260–263, 269, 277, 278, 280–283, 290, 293 Public Procurement Act (PPA), 95, 143, 144, 146–148, 154–156,

INDEX

158, 174–181, 192, 199–201, 253 Public Procurement and Assets Disposal Act, 237 Public Procurement and Supply Management, 189 public procurement corruption, 16, 23, 29, 117, 128, 133, 134, 250 public procurement process, 10, 132, 136, 145, 174, 201, 215, 227, 230, 262 Public Procurement Regulations, 101, 210, 212, 217 public protests, 290, 295–299 public sector, 5, 7, 9, 10, 13, 15, 16, 22, 23, 27–29, 31, 37, 39, 43–45, 47, 62, 74–76, 83, 87, 88, 91, 94–100, 103, 105–107, 116, 127, 137, 147, 154, 166–171, 173, 175, 177, 180, 181, 191, 208, 218, 223, 225, 232, 256, 258, 259, 261, 271, 274, 275, 277, 281, 291, 293 public service, 3–5, 7, 8, 12–15, 18, 22–29, 31, 32, 36, 37, 39, 40, 47, 83, 103–105, 114–118, 121, 122, 125, 134, 151, 167, 169, 170, 177, 178, 180, 181, 186, 189, 191, 205, 208, 209, 216–219, 251, 254, 256, 257, 259, 271, 278, 288, 290, 292, 294, 296 Public Service Act, 254 public service delivery, 11, 15, 24, 25, 27–29, 32, 116, 118, 167, 169, 170, 177, 178, 180, 181, 189, 251, 290, 294, 296

R rent-seeking, 29, 56, 63, 217, 259, 275, 278

309

S service delivery, 4–8, 10, 11, 13, 15, 16, 18, 22–25, 27–29, 32, 62, 74, 75, 93, 97–99, 102–106, 116–118, 125, 132, 167, 169, 170, 177, 178, 180, 181, 186, 189, 192, 198, 200, 208, 216, 224, 233, 238, 240, 250–253, 255–258, 262, 278, 281, 290, 294, 296 South Africa, 6, 9–11, 15, 16, 24, 31, 32, 36, 39, 62, 67, 74–78, 83–85, 90, 91, 93–96, 98–100, 102–106, 123, 124, 129, 144, 205, 214, 223, 224, 226, 228, 229, 231–233, 236–238, 240, 242, 250–252, 254, 256, 258–263, 288–292 stakeholders, 8, 13, 22, 23, 45, 49, 78, 91, 117, 135, 144, 186, 224, 269, 270, 273, 275, 277, 278, 282, 294 supply chain management (SCM), 10, 73–76, 82–85, 90, 91, 95, 96, 99–102, 168, 229, 255, 258 T tender, 6, 23, 25, 27–29, 45, 73, 80, 84, 97, 98, 101, 104, 128, 130, 145, 147, 153, 154, 156, 168, 172, 175, 187, 188, 190, 192–197, 199, 200, 202, 208–213, 215, 217, 227–230, 234, 235, 241, 251, 252, 255, 257, 258, 260, 274 transparency, 5, 11, 13, 15, 16, 22, 23, 26–28, 45, 49, 62, 75, 87, 94, 95, 97, 99, 104, 115, 117, 121, 122, 125, 144, 153–156, 158, 167, 169, 170, 172, 174–176, 180, 192, 193, 197, 199, 201, 208, 210–212, 224,

310

INDEX

229–232, 234–236, 239–242, 249, 251–254, 256, 257, 263, 271, 278, 292–294 Treasury Regulation, 229 tribalism, 63, 144

U uprisings, 295–298 W Women-Owned Businesses (WOBs), 118, 129, 134