Firm performance and participation in public procurement: Evidence from sub-Saharan Africa

Policy brief Firms

  • Public procurement of goods and services accounts for more than 10 percent of GDP in many African countries meaning that governments are an important source of demand.
  • This study uses firm-level data from 19 sub-Saharan African countries to assess the productivity performance of firms participating in public procurement.
  • The findings suggest that companies that sell more of their outputs to government entities perform better. This is most strongly the case for domestically-owned firms, especially smaller companies with total employment between 10-50 workers, firms engaged in manufacturing activities, and companies that are located in the capital city.
  • A positive relationship between participation in public procurement and performance is not observed for foreign-owned firms or services companies.
  • The findings suggest that more attention should be devoted to understanding how procurement practices in sub-Saharan African countries impact firm performance.
  • Creating systems for collecting and analysing this data could be important to assessing the potential for procurement to be used as an instrument of industrial policy.