How open contracting can empower women to transform their economies

August 31, 2017

More than 2,000 people gathered in New York recently to tackle the ambitious challenges set by the UN’s Sustainable Development Goals: to end poverty, protect the planet and ensure prosperity for everyone.

Among other things, achieving the goals depends on closing the gender gap and increasing the opportunities for women and girls in our societies and economies.

Investing in women is not only key to meeting development targets, but it also makes economic sense, too: Women tend to reinvest up to 90% of their earnings back into their families and communities (compared to men who reinvest 30 to 40%), according to the World Bank.

Public procurement is gaining recognition as a path to empowering women financially. But there are still some factors that exclude women from doing business with government. These include lack of access to information on bids, ability to meet requirements, and lack of understanding of procedures, according to a report by the International Trade Centre.

In New York, at a side event about breaking down barriers to gender and economic equality in Africa, the Caribbean and Latin America, I talked briefly about how open contracting can help to address these issues.

Women, too, should have access to government contracts

There are four key ways open contracting can support more inclusive public procurement:

  • Support for authenticity: open contracting data can contribute to the process of defining what women-owned businesses are. Establishing a consistent definition can be more complicated than you might think – should it refer to a company with at least one woman shareholder, or should the majority of shareholders be women? What about the people who run the company on a day-to-day basis? Are there other criteria, such as the size of the company, that should be taken into consideration? In South Africa, a 2013 study found that the lack of a uniform definition for women-owned businesses made it hard to evaluate the effectiveness of affirmative procurement policies through which certain firms were eligible for preferential treatment.

The open contracting approach seeks disclosure of the procurement process right from the planning phase, to the tender and award of the contract, as well as monitoring and evaluation of implementation. This data can give insights into the eligibility requirements for a woman-owned/run business and beneficial owners of the business. This is critical in stopping fraudulent practices such as ‘tokenism’ and ‘fronting’ by non-eligible parties.

  • Open contracting data can promote understanding of market demographics and the capacity of women, their understanding of bids and procedures, and ability to meet requirements.
  • A baseline for impact and progress of public procurement affirmative action initiatives and laws can be established through use of open contracting data.

Some countries have introduced preferential procurement regulations that aim to overcome barriers encountered by small businesses and marginalized groups, such as women and people with disabilities, in doing business with government.

In 2013, Kenya amended its Access to Government Procurement Opportunities (AGPO) law, to reserve 30 per cent of all public procurement for small businesses owned by women, youth and persons with disability. To qualify, a company must have “at least 70 percent membership of youth, women, or persons with disabilities and leadership shall be 100 percent youth, women and persons with disabilities, respectively.” However, the government has not presented any data so far on its implementation.

Kenya has a unique opportunity with its affirmative action AGPO law to empower disadvantaged groups by taking the next crucial step for the law past putting up the framework – that is, adopting implementation approaches that ensure its success.

  • Open contracting data can help to identify and address issues affecting access and participation in public procurement by women. For example, in 2013, the Indonesian government commissioned research that showed male-owned businesses participated in government contracting at a much higher rate than women-owned businesses. Only 5% of government vendors were owned by women. For all businesses, both male and female-owned, the survey found the barriers to participation in contracting included too many regulations; a confusing and troublesome e-procurement system; confusing regulations; and corruption, collusion and nepotism. Unlike male-owned businesses, the women-owned businesses said limited access to information was a significant barrier. In Albania, an NGO has done similar research on gender and procurement using publicly available government data.

More generally, in many countries, public procurement is subject to mismanagement, poor planning, fraud and corruption, which can reinforce women’s social and economic marginalization by diverting resources meant for public services, while also imposing informal ‘fees’ for services.

Open contracting offers a critical tool to combat these ills through disclosure, participation and accountability. This will have a broader impact as well. If governments open up public contracting processes it can help governments create a better business environment, stimulate innovation, increase savings on public spending, and gain better value for money for citizens.