Author : Sarah Brierley
Affiliated Organization : International Growth Centre
Publication Type : Policy brief
Date of publication : August 2018
Link for the original document
Mismanagement in procurement is common in many countries, including Ghana, and can severely undermine development. This study analyses public procurement practices within local governments in Ghana. Governments in developing countries typically spend over half of their budgets purchasing goods and services from private companies (World Bank, 2016). Such high levels of spending ensure that measuring the extent of financial misconduct and analysing the motivation politicians and bureaucrats have to distort procurement processes is essential to the promotion of economic development.
Common modes of malfeasance include public officials selecting contractors on the basis of personal or partisan connection or receiving kickbacks from firms in return for contracts. In each case, elites have little incentive to monitor contractors. Without monitoring, companies may be inclined to construct public infrastructure using poor quality materials or not begin building at all.
The Government of Ghana, with support from donors, spend millions of dollars per year funding new local infrastructure projects through programmes like the District Assembly Common Fund (DACF), District Development Facility (DDF), and Urban Development Grants (UDG).
It is the job of public officials working in Metropolitan, Municipal, and District Assemblies (MMDAs) to award contracts to firms to construct this infrastructure. District Tender Boards, chaired by presidentially-appointed District (or Municipal) Chief Executives (DCE/MCEs), manage these processes. The Public Procure-ment Act 663, 2003 guides the steps that public officials must follow to ensure competition and transparency in the contracting processes. Prior to this study, anecdotal evidence suggested abuse in the awarding of local contracts, with corruption allegations leading to the dismissal of some DCEs and MCEs.
To minimise political interference in the selection of contractors, District Chief Executives should not chair District Tender Boards
A deeper understanding of the incentives of local politicians and civil servants to engage in corruption will better enable governments and funders to design policies to counteract graft and improve the delivery of local public services. Corruption in public procurement is rampant in many countries, including many in West Africa. In Ghana, one-third of local infra-structure projects stand unfinished, which suggests potential abuses in the contracting process. Similarly, 38 percent of publicly-funded projects in Nigeria never reach the construction phase.
To investigate procurement norms, we conducted surveys with 864 local bureaucrats in five regions of Ghana- Central, Eastern, Brong Ahafo, Ashanti, and Volta. A total of 128 MMDAs lie within these regions. We randomly selected 80 of these local governments. In each MMDA, we interviewed be-tween ten and twelve bureaucrats who are involved in the awarding of public contracts (contacting the same positions across all districts).
Slightly less than half of bureaucrats admit that contracts in their district are granted to contractors who are likely to give part of the money to the election campaign of the incumbent party. This figure suggests that political parties fund their local campaign activities using funds set aside for developmental purposes.
Table 1 shows that bureaucrats’ propensity to grant contracts to contractors in exchange for campaign finance varies according to the extent to which politicians can control bureaucrats’ careers through transfers; respondents are more likely to report abuse in public procurement when they perceive their MCE/DCE is. easily able to transfer them.
To employ this method, we gave each bureaucrat a die. Respondents then used the die to determine whether they should give an honest or predetermined (“forced”) response.
Specifically, when bureaucrats perceive their MCE/DCE has no influence on transfers only 34.3% report corruption in procurement. This figure increases to 49.8% when bureaucrats say the DCE/MCE has a lot of control over transfers.
- To minimise political interference in the selection of contractors, District Chief Executives should not chair District Tender Boards. DCE/MCEs should be removed as the chairs of district tender committees to ensure they do not have undue influence on the selection of contractors. As DCE/MCEs are presidential appointees, they are under pressure to secure votes for the governing party. The appointment process puts pressure on DCE/MCEs to award contracts to contractors who will donate part of the contracted sum to the local party organisation or to award contracts to party executives to pay for their prior contributions to the party.
- Members of the District Tender Committee should declare their assets to the Auditor General upon taking their position. Ghana’s Local Government Act 462, 1999 demands that members of the District Tender Board declare their assets to the Auditor General within three months
of taking office. This practice is rarely followed. Such practices should be institutionalised to guard against politicians and local bureaucrats making private gains from the distribution of public contracts.
- To depoliticise the transfer process, bureaucrats should be posted to work in districts for a fixed number of years, with the transfer process centralised in the hands of the Local Government Service Secretariat (LGSS). A more structured transfer process would allow bureaucrats to resist pressures from DCE/MCEs to undermine competitiveness procurement processes. Only rarely should bureaucrats be transferred before their fixed number of years has lapsed and for a reason that is authorised by the LGS. Similarly, the role of the Regional Co-ordinating Councils in transferring bureaucrats should be minimised.
- To ensure that MMDAs award contracts to experienced contractors, the Ministry of Local Government and Rural Development (MoLGRD) should monitor contracts awarded by local governments. As part of this monitoring, the MoLGRD should obtain evidence that the se-lected contractors have the personnel and equipment that they claim to have in their tender application documents. Officials should also verify the validity of the documents with physical inspections of contractors’ offices and equipment. The Ministry should also monitor value for money and the physical quality of projects.
- The MoLGRD or the LGSS should operate an anonymous corruption hotline that bureaucrats can call to file their complaints and concerns. The number for this hotline should be dis-played in offices at each MMDA.
MMDAs should advertise (on a public board outside the assembly) details of each infrastructure project under contract with the local government. This notice should include de-tails about the chosen contractor, location of the project and contracted amount. These public notices should also include a detailed project specification, the timeline for finishing, and details of the relevant experience of the chosen contractor.
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