Unleashing potential: Africa Business Council’s drive to boost private sector participation in government procurement

June 5, 2023 - Reading Time: 3 minutes - By Jewel Tete

The African Business Council has taken a bold step in pursuit of economic growth and empowering local businesses. The council is championing a game-changing initiative that calls for 40% of all government procurements across the 55 African countries to be allocated to the African private sector. 

Speaking in Midrand, South Africa, while addressing a two-day workshop on Accelerating the African Continental Free Trade Area (AfCFTA)  and the significance of the pan-African Parliament, Dr Amany Asfour, President of the African Business Council, highlighted that the African private sector is already conducting a comprehensive mapping exercise, identifying the vast resources present on the continent and exploring ways to maximise their value. In her speech, she emphasised the importance of collaboration, stating that all the resources required for success are within Africa.

Dr Asfour underscored the critical role of the private sector in realising the vision of AfCFTA, acknowledging the need for an enabling environment and favourable investment climate. She stressed the significance of legislation in creating better procurement opportunities for African businesses, calling for a shift towards incentivising African investors rather than favouring multinational companies that dominate the continent’s markets. To achieve this vision, Dr Asfour urged the Pan-African Parliament (PAP) to lend its support by advocating for legislation in domestic Parliaments across Africa, mandating that 40% of all government procurements be allocated to the African private sector. 

Procurement laws and regulations vary across different countries and jurisdictions. While some countries may have specific provisions or policies that encourage or prioritize the participation of the private sector in government procurements, it is less common to find procurement laws that dictate a fixed percentage or quota for private sector involvement. 

Comparative analysis of procurement laws and regulations across Africa 

Kenya

The primary legislation governing public procurement in Kenya is the Public Procurement and Asset Disposal Act, 2015 (PPADA) and its accompanying regulations. Regarding the percentage of procurements that go to the private sector, the PPADA does not specify a fixed percentage. However, it establishes principles and procedures that promote competition, transparency, fairness, and accountability in government procurement processes. The Act emphasizes open and fair competition, encourages broad-based participation of suppliers, and requires public entities to ensure maximum participation of local contractors, suppliers, and consultants.

Nigeria

The primary legislation governing public procurement in Nigeria is the Public Procurement Act 2007. The Public Procurement Act 2007 encourages the participation of Nigerian companies in government procurement processes and includes provisions for preferences and reservations for local suppliers and contractors. It establishes a framework to promote transparency, competition, and the development of local industries. Specifically, Section 34(1) of the Public Procurement Act 2007 recognises domestic preferences by stating that “A procuring entity may grant a margin of preference in the evaluation of tenders, when comparing tenders from domestic bidders with those from foreign bidders or when comparing tenders from domestic suppliers offering goods manufactured locally with those offering goods manufactured abroad.” While the Public Procurement Act 2007 does not stipulate a fixed percentage of procurements allocated to the private sector, it establishes the preference for domestic companies in government procurement processes, thereby promoting the participation of the private sector in Nigeria.

South Africa

In South Africa, there are procurement laws and regulations that prescribe specific requirements for the allocation of government procurements to the private sector, particularly concerning promoting broad-based black economic empowerment. The primary legislation governing public procurement in South Africa is the Preferential Procurement Policy Framework Act (PPPFA) of 2000. The PPPFA aims to promote economic transformation and inclusivity by providing preferential treatment to historically disadvantaged individuals and entities. While the PPPFA does not explicitly dictate a fixed percentage of government procurements to be allocated to the private sector, it establishes a preferential procurement system that assigns specific scoring criteria to bidders based on their level of empowerment.

Conclusion and recommendations

By directing a significant chunk of government procurements to the private sector, local businesses stand to thrive and potentially lead to increased job creation, entrepreneurial spirit, and a vibrant marketplace. This could become a catalyst for economic growth, triggering a ripple effect of prosperity. Moreover, fueling private sector involvement fosters competition, igniting a blaze of innovation. As businesses vie for government contracts, they will bring forth fresh ideas, cutting-edge technologies, and efficient solutions, ultimately benefiting the public sector and society as a whole.

A 40% procurement allocation has the potential to offer an opportunity to empower small and medium-sized enterprises (SMEs), the backbone of many economies. By levelling the playing field, this legislation could enable local enterprises to participate and flourish. Additionally, prioritising the private sector could nurture the growth of domestic industries. Increased investment in sectors such as manufacturing, infrastructure, and technology will foster sustainable industry development, boosting capabilities and competitiveness.

Despite this, the Africa Business Council ought to address questions on how to ensure a fair and transparent procurement process, prevent monopolistic behaviour or the formation of cartels within the private sector, and balance support for local businesses while allowing the participation of foreign companies if African states are to implement such an approach. Disruption of existing supplier relationships and ecosystems is another factor to look out for, requiring adaptation and adjustment. 

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