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
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.
Monday, September 1, 2014
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