Is public procurement a credible route to stimulate domestic economic growth?
Generally, public procurement provides a significant market opportunity for private sector firms since government, in most countries, is the largest procurer of goods and services.
Public procurement in Eswatini accounts for 65.9% of all government expenditure (Basheka and Bisangabasaija, 2010). As a small and open economy, government has become the largest player in the economy, with many parastatals as well as small and medium enterprises (SMEs) heavily dependent on it for business and sustainability (Basdevant, Forrest, and Borislava, 2013).
Facilitating SME access to the government procurement system has become an economic development priority for most governments. More governments place emphasis on SMEs being productive drivers of economic growth and development for African countries (Schlogl, 2004; Omar, Arokiasamy, and Ismail, 2009).
Doing business with government is attractive to private companies for several reasons; scholars argue that public contracts to private firms provide a predictable and stable source of demand for the goods and services produced by the private sector yet doing business with government can be bureaucratic, legalistic, and often inaccessible when compared business-to-business.
For SMEs, bidding for government business can be prohibitive, time-consuming, expensive, and at best an unattainable target. Subsequently, most public procurement contracts are dominated by big businesses, with many SMEs systematically excluded from participating.
It is against this background that the Eswatini Public Procurement Regulatory Authority (ESPPRA) has commissioned the Eswatini Economic Policy Analysis and Research Centre (ESEPARC) to conduct a study aimed at estimating the value of the country’s public procurement system.
The study also seeks to identify the core principles of public procurement that can be used as an accelerator for economic growth and recovery, and thereafter recommend how the public procurement principles can be applied to drive domestic purchasing to achieve local economic development. Preliminary findings of the research have been presented to ESPPRA and the study is near completion.
Some of the pertinent questions the study seeks to address are:
- What is the value of government procurement in the past three years?
- What are the types of goods and services procured?
- Who are the major players within the Eswatini public procurement system?
- Is public procurement a credible route to stimulate domestic economic growth? How so?
- What are the inhibitors and enablers, paying close attention to small medium and micro enterprises (SMEs)?
- How can government improve regulation to accommodate economic development and growth objectives?
- Besides policing the public procurement system, what other role can ESPPRA play to contribute to economic development – leveraging the public procurement system?