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For whose gain? Procurement, tied aid and the use of country systems in Ghana

02 April 2010

While Ghana has made much progress in reforming country procurement systems, this progress does not seem to have been complemented by changes in donor conduct. Donors’ own reporting suggests that the extent to which they use country systems has not changed a great deal. Furthermore, while official reporting suggest that they have made progress in formally untying their Official Development Assistance (ODA) to Ghana as committed, this case study will go on to show that according to Ghanaian stakeholders interviewed in country, donors’ country based firms still profit disproportionately. Formal tying has often been replaced by less tangible forms of de facto aid tying.

This country case study is an input to a larger Eurodad research project on public procurement policies and practices of donors and recipient country governments. It is based on a literature review and interviews with stakeholders in Ghana representing selected international organisations and bilateral aid agencies, government officials and Civil Society Organisations (CSOs). It explores and analyses procurement policies and practice in Ghana and assesses the development effectiveness of these policies.

Public procurement is the single most important economic activity in developing countries which is under direct control of the state. In Ghana it amounts to about 17% of Gross Domestic Product (GDP) and about 80% of tax revenue. Public procurement, by governments as well as by development agencies, has thus a large potential to boost economic development in general, and private sector development in particular. By setting certain criteria for contract awards, targeted procurement can increase the development impact of public spending through job creation and income generation. It can also assist in achieving broader socioeconomic objectives such as social equity or environmental sustainability. But, procurement practices which take additional criteria other than just the lowest price or highest quality into account in decision-making, also pose challenges for cost-efficiency and accountability of public spending. This case study explores how this dichotomy is addressed in Ghana.

For whose gain? Procurement, tied aid and the use of country systems in Ghana : 682 Kb