About me.

Andrew M. Mwenda is the founding Managing Editor of The Independent, Uganda’s premier current affairs newsmagazine. One of Foreign Policy magazine 's top 100 Global Thinkers, TED Speaker and Foreign aid Critic

Monday, September 1, 2014

Missing the ball and kicking the leg

How adherence to public procurement is inflicting high costs on the taxpayer and creating a disaster for the country

Public procurement procedures have become a noose around the neck of Uganda. Over the last 16 years, nearly every major government contract or tender has violated some procurement procedure. This often leads the Inspector General of Government (IGG), Police, State House, security services, PPDA, Parliament and the press to intervene and investigate. Once this happens, the contract gets bogged down in endless quarrels and recriminations. The State is paralyzed to act while citizens are denied the service. By the time it is resolved, it is five or six years later and the contract sum has tripled or quadrupled.

Many Ugandans think that violation of procurement procedures is a sign of a corrupt intent. This leads them to believe that adherence to the rules is a sign of an honest and transparent procurement process. Both these assumptions are only partly true. Formal procedures can be used to create opportunities for corruption. For instance, a public official can frustrate a government contractor by being excessively proceduralistic in the hope of a bribe to speed things up. The counterpoint is that violating a few rules may not always (and necessarily) be motivated by a corrupt intent but by mere pragmatism. This is because rules can sometimes be stupid, arcane and mutually contradictory.

The Peruvian economist Hernando de Soto was the first to systematically expose the dubious assumptions behind government procedures in his famous book, The Mystery of Capital: Why Capitalism Succeeds in the West and Fails Everywhere Else. Through extensive research in Peru, Philippines, Egypt, Haiti and other poor countries, de Soto discovered that protracted government procedures can be counterproductive. They force people to resort to illegalities. Rather than reduce corruption they instead create opportunities for it.

In Peru, for example, to gain legal authorization to build a house on state-owned land took six years and 11 months – requiring 207 administrative steps in 52 government offices. To obtain legal title for a piece of land took 728 steps. To legally build on government land in the Philippines took 168 steps involving 53 public and private agencies over a period of 13 to 25 years. Now to legally purchase the same land would take another 45 additional bureaucratic procedures in 13 agencies, adding another two years to the quest.

In Egypt, one has to go through 77 bureaucratic procedures in 31 private and public agencies to buy government land, lasting anywhere between five to 13 years. In Haiti, to obtain a five-year lease on state land takes 65 bureaucratic steps lasting two years; to then buy the same piece of land takes another 111 bureaucratic steps and 12 more years. Total time to gain lawful land is 19 years. Only a mad person could follow such arcane procedures, so people resorted to “extra-legal” or “non-legal” means to get land. The lesson de Soto hammers home is: it is not people breaking the law; it is the law breaking people.

De Soto’s work became the foundation on which the World Bank’s ‘Doing Business Report’ was built. In Africa, it is Rwanda that has carried out the most comprehensive public sector reforms to make it easy for someone to register a business or acquire a land title. Today in Rwanda, it takes one day to sit on your computer and register a business and about two weeks to get a land title. Rwanda has not collapsed because of dismantling procedures and simplifying government processes. However, it has not transferred this lesson to government procurement. Many projects in that country delay as corrupt or lazy civil servants hide behind procedures to extort bribes (to speed things up) or as an excuse for their incompetence.

Simplifying and sometimes even eliminating some (even many) state procedures is necessary to improve government performance and create value for money. Procedures alone do not eliminate opportunities for corruption; political will does. Equally violating them is not always bad; it may be the best and most pragmatic way to cut government red tape and deliver public services to people in an effective, timely and efficient manner. Given that both adhering and breaking procedures creates room for corruption, the best way to resolve the situation is to move away from holding public officials accountable for procedures and hold them accountable for results.

The beginning point of crafting a solution to the conundrum of public procurement is to do what in military science is called “identification and maintenance of the aim.” For example, if Uganda went to war with Kenya, the aim of the state of Uganda would be to subordinate the will of the state of Kenya to the will of the state of Uganda. Therefore, the Ugandan commander must know that any decision he makes must be aimed at realizing the main aim.

Thus, whether he bombards Mombasa Port using the air force or bombs Kisumu using artillery or captures Eldoret using ground troops, the commander must know that all these actions must be aimed at the main objective – to destroy the ability of the Kenyan state to make war and therefore force it to surrender to the will of Uganda. If any of these actions, even if successful, undermine the ability of the commander to achieve his main aim, he must abandon them.

The same logic applies (or should apply) to procurement in Uganda. What is the main aim of government procurement? To provide Ugandans a high quality public good or service at a competitive price in the shortest time possible. Therefore the state should develop procedures specifically designed to achieve this aim. For now, most of our procedures are picked as “best practice” from other countries with different social and political dynamics. Often, they are cumbersome and mutually contradictory, making it difficult to achieve the main aim.

Procedures are not an end in themselves: they are a means to an end. Therefore procedures have to be subordinate to the main aim. However, the conduct of the IGG, PPDA, Parliament, and even us in the press has subordinated the main aim to procedures. In pursuit of a strict adherence to procedures, we are willing to inflict highly astronomical costs on taxpayers. This is best illustrated by what happened with NSSF’s Pension Towers on Lumumba Avenue and is likely to happen to the Mukono-Katosi Road if there is no intervention to avoid this pitfall. I will illustrate this point with figures and facts next week.


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