Review urges World Bank to support developing nation vendors

16 October 2012

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16 October 2012 | Anna Reynolds

The World Bank must reform its procurement guidelines to support suppliers in developing countries, according to a joint review by Eurodad, a network of NGOs addressing development issues.

Eighteen partners, including Oxfam and Fair Trade, have contributed to the report, which stressed the need for the bank to remove restrictions and create smaller contracts to boost local industry in developing countries.

Research carried out last year by Eurodad – The European Network on Debt and Development - found half of the contract value of bank-funded projects from January 2000 until February 2011 in Ghana, Namibia, Uganda, Bangladesh, Bolivia and Nicaragua went to foreign firms, and the share increased with the size of the contract.

The review highlighted this is a consequence of procurement guidelines that consider international competitive bidding as best practice and make it compulsory for larger contracts. This leaves domestic firms in developing countries unable to compete for international tenders as they do not have access to the same resources as large multinationals.

The study also revealed firms in industrialised and emerging economies are currently the main beneficiaries of the business opportunities offered by World Bank finance. The bank's 2008 annual report showed 67 per cent of World Bank-financed contracts went to firms from just 10 countries: China, Brazil, Russia, India, Italy, Argentina, Spain, Vietnam, Indonesia and France.

Eurodad warned donors such as the bank and other development banks continue to exert a strong influence on procurement policy reform in developing countries and define trade and investment treaties with other countries.

The report said World Bank procurement needs to become an economic policy tool that is pro-poor, promotes domestic industry and works towards poverty eradication and sustainable development.

It also recommended the bank reviews its procurement policies and gives active participation to small and medium enterprises, parliaments and civil societies in developing countries. This would mean creating smaller contracts, advertising all tenders locally in local languages and creating domestic preference allowances.

Jeroen Kwakkenbos, policy officer at Eurodad, said: “We wish to see the World Bank live up to its development mandate and ensure that those in most need benefit from its procurement policies.”

The report encouraged the bank to increase the efficiency of procurement contracts through using tools such as e-procurement and to ensure local firms have access to these tools.

The World Bank declined the opportunity to comment.

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