Dr Douglas Boateng highlights the importance of strategic sourcing to Africa’s economic development

CIPS 7 September 2012

Dr Douglas Boateng highlights the importance of strategic sourcing to Africa’s economic development

Dr. Boateng, who is Chairman of the Chartered Instituted of Purchasing and Supply’s (CIPS) Africa Strategic Advisory Board, was presenting a paper at the 2012 CIPS Africa Distinguished Lecture series in Accra. The event was attended by more than 500 African policy makers, procurement professionals, captains of industry and government officials.

The theme for the lecture was: “Accelerating Economic Development - SMME growth and job creation through Strategic sourcing”.

Strategic sourcing, defined as a procurement process that continuously improves and re-evaluates the purchasing activities of an organization, has helped organizations achieve quantifiable savings, often between 4% and 12% on procurement spend. It also leads to improved productivity and corporate social responsibility initiatives. As a concept, Dr. Boateng asserted, Strategic Sourcing assists governments to industrialize, develop and create long term jobs in certain deprived localities and rural areas.

According to Dr. Boateng, a well-developed strategic sourcing strategy can strengthen economic capacity by increasing demand for local suppliers, which in turn improves the investment environment and ensures an increase in local productivity, quality and competitiveness.

The development of local suppliers (SMEs) as part of strategic sourcing has fruit beyond empowering the socio-economically disadvantaged and marginalized communities by facilitating wealth redistribution. It has the added benefits of job creation through capacity and institutional development; a broadening of the local tax base; improving council services; and linking the developed and underdeveloped areas. Dr. Boateng highlighted the “Buy Ghana, Build Ghana” initiative launched by the Association of Ghana Industries, as a perfect example of this strategy at play.

Strategic sourcing is not just about buying goods and services – even the sourcing of finance for various projects must be strategically looked into in the interest of socio-economic development.

With major banks on stock exchanges on the continents, African governments and banks can now source capital from the various banks and stock exchanges on the continent. African banks would then be able to plough back the increased share of interest from these loans into development financing on the continent, Dr. Boateng said. Citing the case of the Foreign Direct Investment (FDI), Dr. Boateng highlighted that the majority of the profits on relatively small capital raised in Canada and the US, for exploration initiatives in minerals and oil and capital intensive projects, are owned by the Americans, Europeans, the Chinese investors outside Africa.  

Amongst Dr. Boateng’s recommendations for government, were:

  • Government must revisit and revise the Public Procurement Act 663 so that significant price flexibility could be given to local suppliers supporting local industries. This will help Government boost SMME growth and create jobs, for especially the youth.
  • The Public Procurement Authority (PPA) and private sector procurement departments must be encouraged through policy revisions, to aggressively support local businesses so that there is increased opportunity to bid for and win contracts.
  • Increase public sector spending within locally based companies, and strengthen the support arrangements to local businesses, which will promote business start-ups, encourage businesses to grow, attract new inward investment, improve prosperity and drive regeneration in Africa.
  • African Governments appoint an independent Senior Supply Chain Management & Procurement Expert in the Office of the Presidency to further enlighten the leadership and various Ministers on the long term economic developmental aspects of strategic sourcing and supply chain management as a whole. 

Dr. Boateng finished with a promise to continue working in his capacity as the Chairperson of the CIPS Advisory Board, to highlight the strategic importance of the procurement aspects of supply chain management to African economic development, to policy makers, captains of industry and Government. He commented:

“A new era has dawned for the procurement and supply chain management profession. I foresee within the next twenty four months all practitioners will be required to sign a professional code of practice and conduct with the appropriate professional body.”   He commented

Supporting organisations for the lecture included amongst others Vodafone South African Airways, SBL-UNISA Plascon, Bank of Africa, the British Council,  RTT Medical IOM  GMA, ETV Ghana, KNUST etc.

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