IMPLEMENTATION OF E-PROCUREMENT IN NIGERIA:
PROSPECT AND CHALLENGES
Keynote Address by Engr. Dr. Funmilayo Wäheed Adekojo, MD/CED Funni Ayinke Nigeria Limited
Good morning distinguished Ladies and Gentlemen
All protocols duly observed.
I am incredibly honored to have been asked to deliver this keynote address to this group of professional procurers and reputable project managers. Let me start this keynote address by alluding that e-procurement is a viable tool for transparency, efficiency, competition, integrity, and cost saving. Let me also say that the timing of this conference and the theme adopted by the organizers is apt, given the challenges being faced in the procurement industry and the dire need to go electronic.
I believe that the goal of this conference is to provide a platform for stakeholders and procurement enthusiasts in Nigeria to crisscross ideas on the e-procurement processes and prepare us more than ever for its inevitable implementation. Nigeria has gone through different challenges that necessitated the need for the implementation of e-procurement.
Just like many other technological innovations, e-procurement is not new to Nigeria. However, Nigeria has taken an important step towards modernizing its public procurement system by distributing the federal e-Procurement Readiness Self-Assessment Report during a stakeholders workshop in August 2016. At this workshop, the need to examine the efficacy of old developmental paradigms, identifying and providing sustainable solutions to inadequacies or altogether discard them and explore more viable options was raised. The then Minister of Finance, Mrs. Kemi Adeosun also reiterated that for Nigeria to achieve transparency and efficiency, e-Procurement is an inevitable option.
For perspective, what exactly is e-procurement?
The -Procurement system is an internet-based purchasing system targeted at simplifying commercial transactions and documentation between organizations. It simply seeks to automate and streamline procurement processes using the Internet.
As we are aware, e-Procurement for an organization is a portal that facilitates corporate buying and selling of goods or services through the Internet. Its scope of engagement covers ordering, payments, and logistics. It serves as an alternative to the manual procurement process and is unquestionably better in many ways.
Organizations are choosing -Procurement platforms and systems more frequently as they become aware of their potential to reduce errors and avoidable expenses.
Several leading Multinational Corporations such as (Shell Petroleum Development Company (SPDC), Total -E & P (formerly ELF Petroleum), and ExxonMobil) and even governments around the world have partially or holistically succeeded in upgrading their procurement systems from the paper-based system. After all, Alfred Tennyson once said and I quote “The old order changes, giving place to the new.”
Essence of e-Procurement
In Nigeria, public procurement expenditure is estimated within 10% to 25% of GDP, buttressing the impact of procurement on the economic stability of the country: This further underscores the cascading effect that inappropriate or shady procurement could have on vulnerable groups such as SMEs, women and children, artisans, and fledgling businesses.
The past eight years have unveiled the manifold possibilities in Nigeria. With the developmental strides of this present administration, it is clear that resources when properly harnessed can be translated into development. It would seem that Nigeria has not met the developmental expectations of her citizens and the international community at large, this is due to its underwhelming development markers when compared to other countries of its age and many others without the same level of resource endowment. Corruption among many other factors has become our bane as a people.
For decades, Nigeria has consistently launched a coordinated campaign against graft from one administration to another. The Independent Corrupt Practices Commission (ICPC) Act, also known as the Corrupt Practices and Other Related Offenses Act of 2000, was the first attempt to combat corruption. It was then followed up by the Economic and Financial Corrupt Commission EFCC Act of
2004. Succeeding this was the Public Procurement Act of 2007 which was passed to coordinate. and regulate the procurement engagements of governments at all levels. Despite these initiatives, it appears that unethical practices are only getting worse. The consequences of this pervasive and persistent corruption are reflected in the poor Human Development Index, which measures the standard of living in a nation.
Transparency International’s 2022 Corruption Perceptions Index (CPI) gauges that Nigeria has moved up four places. Despite maintaining its previous score of 24 out of 100 points in the 2021 assessment, Nigeria’s position went up to 150th in the new index compared to its 154th position out of 180 countries assessed in the 2021 rankings. That same year in November, the National Bureau of Statistics (NBS) announced that about 63 percent of the nation’s population is living in multidimensional poverty.
Nigeria vacillates on her path to development because monies that are meant for projects find their way into the pockets of unscrupulous few. The Public Procurement Act of 2007 was passed as one of the measures taken to address this circumstance because most government processes rely on public procurement frequently and in large quantities. Therefore, it is susceptible to manipulation.
Public Procurement Act of 2007 (PPA 2007)
The Public Procurement Act of 2007 is legislation that aims to regulate and oversee how the Federal Government, as well as its departments, agencies, and ministries, procures goods and services. After almost (16) sixteen years of implementing the PPA 2007, Nigeria’s procurement system is still plagued by several: flaws that manifest in the form of protracted projects, contract terminations, exorbitant project costs, and violations. I know APPON is an organization that has always sought to promote national development through best practices. However, to ensure the timely completion of the procurement processes and reduce instances of infractions, it is essential to amend the Public Procurement Act 2007 to address some of the challenges that have been thrown at us in the last 16 years since its implementation. It is important to note that the spate of corruption incidents might not have only occurred from procurements; however, it is one of the leading causes of corruption.
Procedures of e-procurement
Among other procedures, -Procurement includes indent Management, REX creation, -Tendering, e-Auctioning, Vendor Management, and Contract Management. The entire procedure can be automated by an e-Procurement system, sparing organizations from the hassle and irregularities associated with manual procurement. E-Procurement portals are made to allow users to sign up as suppliers or buyers, send all necessary paperwork online, and participate in the subsequent tendering process. Nigeria has been trying to implement e-procurement with the aim of improving public procurement practices. However, there are still some challenges that need to be addressed.
Let us take a closer look at these procedures.
Indent Management is simply clearly defining the processes involved in the preparation of tenders that will be acceptable. This is a major part of the e-tendering procedure.
RFX (request for x creation encompasses every request that will be made to bidders to pitch their technical profile. It includes Requests for Proposals, Information, Bids, and Quotes. The RFX can be published online and on paper for interested bidders to know what is expected of them.
Bid Submission is the first step on the part of bidders where expression of interest in the job or response to the RFX is made public on the e-Procurement portal through the submission of their bids accompanied by other necessary documents.
After the successful submission of bids, they are evaluated, and the suppliers are examined. The selected vendors are invited to the e-Auction. The e-Auction heralds the vendor selection process: One or more vendors are agreed upon and the Purchase Order is issued. This completes the procurement procedures.
Effective interaction between the buyer and seller is important to ensure the timely and efficient delivery of the project at hand. Hence the need to run a system. that cut across the global market space. For instance, on supplier-based e-procurement portals, buyers should be able to locate suppliers from around the world, so as to source for goods that are not easily available locally. Even though shipping times and expenses would be involved, the supply, price, and quality certainty may outweigh this disadvantage.
Additionally, it ensures that spending money with preferred suppliers results in savings through a given discount. The more frequently you make purchases from a favored vendor, the lower the unit cost and quantity discount would become over time. As a consequence of this patronage, costs are reduced. The fact that the e-procurement processes can be tracked and managed on this system is also an edge because transactions can be remotely monitored and overseen in e-procurement processes. Cost savings and streamlining are the outcome of this.
E-Procurement Systems’ Benefits
1. Increased transparency:
E-procurement improves access to information and enables real-time monitoring of procurement activities, making the procurement process more transparent. This helps reduce corruption and promote accountability.
2. Improved efficiency:
E-procurement automates many manual procurement processes and reduces the time and resources required to complete procurement tasks. This increases efficiency and reduces costs. It would greatly increase transaction traceability and transparency. Also, it would expand vendors’ and buyers’ access to the market while significantly lowering the infractions and manipulation tendencies connected with paper-based procurement. The security and confidentiality of bid information, which is frequently compromised in the manual procurement system, is very likely to be guaranteed. In the same vein, it significantly narrows down the market, moving the search for the right quality of needed goods and services in the right direction.
3. Improved competitiveness:
-procurement makes it easier for suppliers to bid, thus increasing competition among suppliers. This helps reduce costs and improve the quality of goods and services. With procuring directly from the vendor, the likelihood of a decrease in the unit cost and quantity discount would be considerably higher than what would be possible under the paper-based system. For the government’s Ministries, Departments, and Agencies, this would result in expense savings and cost reduction.
4. Improved data management:
Electronic procurement can improve data management by providing a central system for storing and analyzing procurement data. This helps identify trends and improve decision-making.
Some drawbacks of e-procurement
E-procurement portals can be very complex and challenging when not properly custom-tailored based on the people and purpose it serves. A comprehensive catalog of the men and materials should be on the ground so that the buyers and sellers can easily do business. Some of its challenges include:
1. Internet Access Restrictions:
One of the biggest challenges in implementing e-procurement in Nigeria is limited internet access. This can make it difficult for suppliers to access bid opportunities and procurement personnel to use the system effectively.
2. Insufficient capacity:
Another challenge is the lack of ability of procurement managers to effectively use electronic procurement systems. This may create resistance to change and delay the adoption of -procurement practices. Also introducing older vendors who are used to the conventional paper method of procurement is worth examining. To start with, many of them are not even tech-savvy. However they can be trained, or better still, employ professionals to help manage their e-procurement engagements.
3. Poor infrastructure:
Inadequate infrastructure, such as power supply and communications, can also hinder the effective implementation of e-procurement.
4. Cybersecurity concerns:
The use of electronic procurement systems also raises cybersecurity concerns.
Systems must be properly secured to prevent unauthorized access and data breaches. To avoid this, the cyber security and integrity of the e-procurement processes should be top-notch.
In summary, the introduction of e-procurement in Nigeria offers great prospects for improving government procurement practices. The Federal Government’s announcement of a pilot program to switch to the E-Procurement platform is encouraging because it is anticipated to save the nation a significant amount of money that is lost through the implementation of the present Public Procurement Act, which is paper-dependent. The anticipated outcome of E-Procurement Systems could save greatly on recurring expenses and capital expenditures, respectively. Lowering the cost of governance in order to free up financial resources for growth should be everyone’s target, and with e-Procurement, this can be easily achieved
However, there are still some challenges that need to be resolved, such as Internet access restrictions, lack of capacity, inadequate infrastructure, and cybersecurity concerns. Addressing these challenges will require concerted efforts by governments, the private sector, and other stakeholders.
I thank you for your rapt attention.
God bless APPON and God bless you all.