By Judith Ugwumadu | 10 March 2014

The African Development Bank is expecting to save $3bn a year through a detailed review of its procurement policy, a process it hopes will be copied by governments across the continent, it said today.

An AfDB review will look at a 1% reduction in procurement costs in Africa, representing an annual saving of $3bn, money that could be invested elsewhere, it said.

Vinay Sharma, director of AfDB’s procurement and fiduciary services department, said the bank hoped the review would lead African countries to review and examine their own public procurement processes.

‘We expect this to bring about a transformation change, not only in how we do business, but also in how countries themselves do their own public procurement.

‘We are hoping that the fiduciary standards will actually increase and that greater flexibility will be brought in so that the effectiveness of public expenditure goes up.

‘It must be remembered that that almost 20% of a country’s gross domestic product is spent through public procurement. Even a 1% reduction of this expenditure through more effective public procurement means a huge savings and benefits to the countries.

‘The direct and indirect benefits will be substantially more socio-economic considerations are mainstreamed into procurement.’

He added that public procurement represented 50% of a country’s national budget, ‘so we’re talking about public procurement playing a catalytic role in helping those [African] countries’ to improve public service delivery.   

The aim of the AfDB review is to make the procurement process by the bank more about the development of effectiveness, said Sharma, adding that the finalised policy should play a more strategic role of strengthening ‘efficiency, [a country’s] economy, effectiveness and equity through value-for-money’.

Overall, the new policy would achieve flexible fit-for-purpose procurement methods.

The bank hopes to draft a procurement policy by the end of June, which would then be reviewed and approved by AfDB’s board of committees. The new procurement policy is expected to be rolled out to new Bank projects early next year.

A consultation process on the procurement policy review was launched in Pretoria, South Africa, today. It is seeking the views of ministries of finance, the donor community and civil society.