Publication - Policy Brief
Governments in developing countries typically spend over half of their budgets purchasing goods and services from private companies. The mismanagement of this procurement is common in many countries, including Ghana, and can severely undermine development. Common modes of malfeasance include public officials selecting contractors on the basis of personal or partisan...
When does the state deliver? An analysis of procurement practices among local governments in Ghana
Under what conditions do bureaucrats and politicians have an incentive to defraud the state through corrupt procurement practices? Public officers regularly award contracts to private companies to construct public goods. However, these elites often abuse their position and award contracts to politically connected firms in return for campaign donations or personal kickbacks. While non-meritocratic procurement is not a problem that is unique to developing countries, it is a salient problem in many young democracies, such as Ghana, where transparency in administrative processes is low and oversight institutions struggle to be independent. The consequences of malpractices in procurement process can be severe; at worst, they can result in firms receiving payments for local public goods that they never provide. Alternatively, firms may construct infrastructure using low-quality materials or fail to complete projects. Though these channels, corruption in procurement contributes to the poor development outcomes we observe in many developing countries.
Two research questions drive our study:
- What is the current level of corruption in public procurement in Ghana?
- What institutional arrangements may mitigate political interference in public procurement?
To answer these questions, in collaboration with the Ghana Center for Democratic Development (CDD) and Ghana’s Ministry of Local Government and Rural Development (MLGRD), we survey roughly 800 bureaucrats across 80 local governments in Ghana. To facilitate honest responses, we use a range of experimental survey methods. Using these methods, we assess how local bureaucrats weigh the relative importance of firms’ professional experience and the political benefits they offer in the awarding of government contracts.
To answer our second question, we leverage variation in the political composition of procurement committees and the level of local electoral competition to assess the extent to which these variables alter bureaucrats’ corrupt behaviour. We also collect objective data on individual contractors and tender advertisements for each of the local governments in our sample.
Our results will speak to the literature on public sector reform, corruption and public service delivery, as well as the wider academic literature on campaign finance and the structure of political parties in low-income democracies. Most importantly, the project will also result in concrete policy recommendations on issues that pertain to public procurement and the recruitment and autonomy of local bureaucrats. In collaboration with the MLGRD, we will share our policy outputs with Ghana’s Public Procurement Authority, the Local Government Service, the Public Accounts Committee in Parliament and other relevant stakeholders. In particular, we hope that the results will inform discussions on the Public Procurement Act which is currently being amended by the Parliament of Ghana.