The case for public procurement as a development finance priority at UN’s 4th Financing for Development Conference

Next week, Open Contracting Partnership will join forces with our partners in New York to make the case for transparency, integrity and accountability in development finance at the Multistakeholder Forum of the Fourth International Conference on Financing for Development Conference (FfD4) as set out in our submission to its “Elements Paper”, the basis of a future agreement around development aid. Register to follow online or join at UN HQ.

Coming right after the World Bank and IMF Annual Meetings and just ahead of IDA discussions in December, we know a lot is at stake. A new World Bank report on the fiscal vulnerability of the world’s 26 poorest economies estimates that these economies—home to about 40 percent of all people who live on less than $2.15 a day—are poorer today than before COVID-19 and deeper in debt than at any time since 2006. 

As a result of mounting deficits, government spending has shifted away from crucial sectors, such as health, infrastructure, and education, that are crucial to achieve the SDGs. A critical finding and recommendation of the World Bank report is to strengthen the transparency and efficiency of public spending and procurement, including through open data and digital procurement reforms. 

All too often I’m told that public procurement is boring, technical and abstract, too removed from people’s lives, and that some money will inevitably be “lost” to corruption or poor financial management, like it is an inevitability we have to accept. But I disagree. None of this money is ever really “lost” — someone always knows exactly where it is. 

Public procurement scandals in Kenya and Sri Lanka are two strong cases in point — and the public backlash shows that citizens have a very good idea of where the “missing” money has gone. They know they aren’t getting the return on investment they should rightfully expect from aid, loans and their own tax contributions and they don’t need experts in public financial management to explain it for them. They know full well they will be the ones ultimately paying for it through higher taxes and poorer development outcomes.

Every dollar that isn’t transparently invested in achieving sustainable development outcomes risks being invested in democratic decline. Stolen and poorly managed funds contribute to state capture, kleptocracy, wasteful spending, failed projects and inadequate public services, eroding the social contract between citizens and government.

Digitizing and opening up public procurement data to include public stakeholders and improve feedback loops in that process gives citizens a chance to have a say in planning how funds are spent, track progress and monitor outcomes locally in a way that is really relevant to them day to day and rebuilds trust. 

We know it works:

• In Assam, India, Civic Data Labs worked with the state government to map flood risks, socio-economic data and other key indicators against infrastructure procurements to create a digital investment map and improve how funds were allocated, increasing the percentage going to the areas most in need to 95%. 
• In Moldova, A collaboration between local HIV and tuberculosis patient group Positive Initiative and the government on open contracting reforms for medicines helped the country improve and increase treatment by saving 14.5% on medical procurement overall, and enabling the real-time monitoring of $60 million worth of medical contracts. 
• In Ukraine, the Digital Restoration Ecosystem for Accountable Management or “DREAM” provides an digital end-to-end ecosystem for public investment management from registering damages to project preparation and delivery from the ground up with community input from the beginning, enabling multilateral and bilateral donors to identify projects to fund or track where their spending has been allocated. 

The FfD4 outcome document should recognize the vital importance of open contracting and better public procurement as a priority public financial management reform.

In our submission to the Elements Paper, we share in detail:

• Good practice examples of open contracting reforms from every region across diverse country contexts
• Specific, concrete and actionable priority reform elements with supporting precedent language from the UN General Assembly’s Special Session on Corruption political declaration and the UN Convention Against Corruption’s recent Resolution 10/9 “Promoting transparency and integrity in public procurement in support of the 2030 Agenda for Sustainable Development” 
• Examples of how open contracting data can be used as a key source of data for monitoring and evaluation of the delivery of goods, works and services needed for the SDGs themselves

Building on agreed language from these texts, the Fourth Financing for Development’s outcome document must encourage scaling the benefits of open contracting across climate and development finance as part of a package of financial integrity measures on open budgets, company and beneficial ownership, tax measures, and asset recovery.

We can’t afford to see high standards of transparency, integrity and public participation in development finance as a compliance bolt on or a nice-to-have. It is essential not only to make the most of increasingly tight sustainable development budgets, but also to rebuild the one asset that is even harder to recover than money: public trust.

Join us in person or sign up to follow online and continue the conversation with our partners working across the full chain of integrity in financial flows and public financial management to learn how we can make sure the Fourth Financing for Development Conference makes the most of every dollar raised for the SDGs.