For decades, African countries have been building key infrastructure with public money, borrowed capital, and private investment. However, the role of procurement as a catalyst for growth has yet to be fully realised. Procurement is a vital mechanism that enables governments to determine where to ignite growth by ensuring the right supplies are available at the right time and price. African countries have been moving towards economic independence, but procurement has not been utilised to its full potential. Effective procurement can help create jobs, stimulate manufacturing, and grow small businesses. It can also ensure that development investment circulates throughout the economy.
Procurement is often viewed as an administrative procedure, but it must go beyond ensuring compliance to become a key aspect of industrial and employment policy. Supply chain professionals can drive growth by shifting their focus from following procedures to ensuring that every dollar is spent creating the greatest possible African development value. This requires a change in mindset, from just ensuring that rules are followed to ensuring that procurement systems contribute to economic growth. The African continent has benefited from international experience, including competitive tendering, transparency, and independent oversight. However, this has also led to policy replication, with procurement systems shaped by colonial legal traditions and donor procedures.
The need for mechanisms that prove money was spent according to the rules is essential, but it cannot stand alone. Auditor General reports across Africa show that rigorous procurement compliance controls can be in place yet fail to deal with the fact that the right items need to be bought at the right price to ensure lasting domestic capability. As supply chain professionals, there is a need to move beyond the narrow, typically western approach of identifying qualified bidders. Instead, procurement systems should be designed to consider how much local economic value will be generated through a project. This requires questions such as how much of the money will remain in Africa and how African companies can participate.
An African-centred, industrial policy-based approach to procurement is necessary to drive growth. This approach should consider how much local economic value will be generated through a project. It should also determine how African companies can best participate, whether local manufacturing capacity will be created, and whether local companies will be provided with opportunities for expansion. When considering the circular economy, African countries need to look to their neighbours, as they often pay a fragmentation premium. Intelligent aggregation, not indiscriminate centralisation, is how this cycle can be changed. Pooled procurement in health and pharmaceuticals is a concrete example of how African demand can become a source of bargaining power and industrial development.
African countries should ensure that companies grow internally so they are not disadvantaged due to their size and have to compete unfairly for contracts. Government contracts can be connected to invoice and insurance finance, development finance institutions, and fintech mechanisms. This can help companies grow and compete fairly. Artificial intelligence (AI) can also play a role in ensuring that procurement systems meet the needs of citizens through job creation and developing economies. AI can ensure regulatory and legislative conformity and cut down on fraud through information sharing across borders.
A digital-native procurement intelligence system is proposed to drive growth. This system, built by African talent for Africa, in partnership with global AI powerhouses, would enable the creation of a collective procurement intelligence database. The system would go beyond electronic tendering and ensure that procurement systems contribute to economic growth. Success should be measured not by compliance and short-term savings but by how much value stays within African economies. This requires a shift in focus from adapting other people's procurement systems to designing one's own.
The design of Africa's economic future should be driven by African talent and not outsourced. African countries should work with the world and compete with it where it matters, but no longer outsource the intellectual design of Africa's economic future. Effective procurement systems can help African countries achieve economic independence and drive growth. It requires a change in mindset, from just ensuring that rules are followed to ensuring that procurement systems contribute to economic growth.
Key points
- Effective procurement systems can help African countries achieve economic independence and drive growth.
- Procurement systems should be designed to consider how much local economic value will be generated through a project.
- A digital-native procurement intelligence system can drive growth and ensure that procurement systems contribute to economic growth.
