Women’s Business Organisations, Public Procurement and Sustainable Development
Procurement is about the transparent use of public funds and value for money, but must also be matched with making these funds sustainable. Each year, despite USD15 trillion passing through government hands to suppliers through the government procurement market, only 1% goes to women based organisations (WBOs). To this effect, more needs to be done by government to integrate WBOs into the supply chains. While governments have used public-procurement policies as a vehicle for socio-economic objectives, few governments have fully recognised how procurement can unleash the potential for WBOs and entrepreneurs.
The International Trade Centre (ITC 2014) unveiled the “Empowering Women Through Public Procurement” to increase the number of public procurement contracts awarded to WBOs. ITC is the joint agency of the World Trade Organisation and the UN in working towards strengthening developing economies to become more competitive in global markets.
The following six points outline the main obstacles for WBOs, as highlighted in ITC’s report:
1. Public procurement procedures are often complex, burdensome and costly that they dissuade WBOs from participating in public procurement markets.
2. Prequalification can create barriers: in many cases women entrepreneurs are dissuaded from the procurement process because the registration and pre-qualification processes are too complex, too onerous or they do not meet some of the prequalification requirements.
3. Women entrepreneurs in rural communities are excluded from procurement processes that require electronic applications, since they are less likely to have access to the internet.
4. The requirement for audited financial accounts is one of the biggest challenges to WBOs. Many WBOs interested in doing business with the government have not been trained in the basics of accounting to properly maintain their books and records and to have them audited imposes further financial burden.
5. One of the frequent problems faced by small and medium sized businesses (SMEs), which comprise a majority of WBOs, is the preference within public procurement towards lowest price rather than best value.
6. WBOs are less able to absorb the impact of delayed payments from procuring entities. This limits the functioning capacity of WBOs who rely on these funds to generate production and profit. It is not unusual for payments to be delayed by 6-12 months.
Solutions to these challenges facing WBOs must be gender-specific, simply because businesses owned by men and those owed by women are not similarly situated. Often gender-neutral rules and procedures around procurement can end up excluding WBOs.
Overcoming these challenges will ensure a fairer market in which women have a better chance of bidding for public tenders. This makes good economic sense. Research shows that women invest up to 90% of their earnings in their family and community, such as in education, health, food for their families, compared to only 40% of men. The executive director of the ITC, Arancha Gonzales, said that it is because of women’s commitment to their families and communities that they are “a powerful instrument to achieve development” in emerging markets. The guidelines will reduce poverty and promote inclusive economic growth.
ITC has devised 10 policy objectives for governments to encourage WBO procurement:
1. Publish all procurement opportunities on a central electronic clearinghouse and disseminate the same information directly to women’s business organizations.
2. Streamline and standardize tender documentation and prequalification procedures across procuring entities.
3. Permit women-owned businesses to prequalify for groups of contracts or certain categories of goods, works and services.
4. Ensure one procuring agency can use the results of prequalification procedures conducted by another.
5. Tailor the technical, financial and other qualification and prequalification requirements to the size and complexity of the procurement opportunities.
6. Avoid bundling multiple requirements into one large contract.
7. Allow sufficient time for firms to prepare tenders.
8. Encourage use of economically most advantageous or best value award criteria where appropriate. Caveat: The use of economically most advantageous award criteria may not be appropriate where the added discretion invites corruption or increases complexity.
9. Provide meaningful feedback to unsuccessful bidders on the strengths and weaknesses of their tenders and areas for improvement.
10. Implement and enforce rules regarding prompt payment of women-owned businesses at the prime and subcontract levels and hold procuring entities and government officials accountable for the same
Kenya is leading the way in creating greater space for WBOs in public procurement. Kenya has already stated its intention to amend the country’s public procurement regulations to reserve 30% of government contracts for women, youth and persons with disability. Additionally, Kenya is the first country in Africa to introduce the Commonwealth Business Women’s Academy, to be established in Nairobi, specifically built to train women on how to increase the capacity of WBOs to take advantage of business opportunities through procurement. Public procurement can be used for the empowerment of women by advancing economic security and development. So far, 55,000 businesses have registered under the procurement programme at the Academy. This innovative programme addresses many of the critical areas of the Beijing Platform for Action on Poverty and the Economy that are key for the socio-economic advancement of women.
The Academy will support a greater demand for goods and services from WBOs whilst also ensuring their capacity to meet market demands. Capacity-building programmes such as these help support a more comprehensive preferential procurement system, in favour of WBOs. This will also promote greater partnerships between traders and government to ensure that WBOs can mitigate many of the challenges outlined by ITC. This will also mean helping certify more WBOs if procuring entities require ISO 9001 certification to perform contracts.
The Global Platform for Action on Sourcing from Women Vendors (2010) encourages public and private sector collaboration. ITC reports that since 2010, the Global Platform has yielded over USD25m in contracts and letters of intent signed by women entrepreneurs. It is important that governments acknowledge and leverage the capabilities and knowledge of WBOs:
“Governments can use public procurement to leverage the potential of women-owned businesses for their economies. The sooner governments invest in reforms and targeted assistance to increase access to public procurement, the sooner the benefits will flow to women, their families, their communities and their nations.” (ITC 2014)
For instance, bringing in WBOs as part of coordinated disaster response management will help recognise the need for gendered emergency procurement to fill the gap in provisions especially around emergency reproductive health care, female WASH facilities, and gender-appropriate shelters. More effort needs to put behind generating gender-disaggregated data for procurement purposes. At present this is severely lacking. WBOs should also be included into the procurement process and disaster response, since they are more able to understand the context-specific community risks for women. This is particularly acute, given that the UN reported around 63,000 women were pregnant in Haiti when the earthquake struck (UNFPA 2010), already burdening a country with one of the highest maternal mortality rates in the world. Poor communication and coordination during the disaster meant mothers and newborns were ill catered for, leaving them vulnerable to malnutrition and dehydration. WBOs are a crucial link to emergency reproductive health during disasters, especially for the effective delivery of Minimum Initial Service Package (MISP). More funding and awareness is needed to support this initiative.
In recognising the major role women play in today’s economies, the High-Level Panel of Eminent Person on the Post-2015 Development Agenda (Post-2015 Agenda (2013)) has encouraged governments to lay the foundation to allow women the chance for economic security so that they can “transform their families, their communities, their economies, and their societies.” Since governments have immense regulatory and buying powers, they are in a unique position as well as have prime responsibility for opening up the huge economic potential represented by WBOs. The benefits are clear: the World Economic Forum (2013) reported that countries with smaller gender gaps are more competitive internationally, have higher GDP per capita and are ranked higher on the Human Development Index. Governments can help achieve this in a significant way through their public procurement policies.
In striving towards gender equality and women’s empowerment through the inclusion of WBOs, governments are also ensuring public procurement remains consistent with the General Assembly’s Open Working Group on the Sustainable Development Goals: “12.7 promote public procurement practices that are sustainable in accordance with national policies and priorities.”
ITC’s initiatives will no doubt build momentum as the UN prepares for the Beijing+20, which will be reviewing how to advance women’s rights. Promoting women’s economic potential through WBOs through more direct involvement in public procurement will be an important perquisite to achieving sustained and sustainable development.
In the end, “no society has become prosperous without a major contribution from its women” (Post-2015 Agenda (2013)). By investing in WBOs and opening up the procurement process, more can be done to encourage social mobility and harvest opportunity, both for women, families, communities and the nation, achieving greater strives towards inclusive and sustainable development.