Reforming public procurement in Nigeria: What needs to change

Nigeria faces significant challenges with corruption, as illustrated by the 2023 Corruption Perceptions Index. Public procurement is particularly vulnerable, and is one of the main areas through which corruption manifests in the public sector. Addressing corruption in public procurement is therefore important for a number of reasons. First, procurement is a lever for development that helps to ensure projects deliver development benefits to beneficiaries. It is vital to promoting sustainability and is also crucial for the effective utilization of public funds. Furthermore, procurement accounts for up to 50% of government expenditures in sub-Saharan Africa, making it essential from a policy implementation and financial management perspective. Across the world, public procurement systems maintain procedures for addressing corruption in public procurement, but these are not always effective, especially in developing countries that have a problem with systemic corruption. For such countries, novel approaches to anti-corruption are required.

In response to the challenges facing public procurement in Nigeria, including corruption, in 2022, the Africa Growth Initiative (AGI) at the Brookings Institution formed a consortium with the African Procurement Law Unit, University of Stellenbosch, South Africa and the Centre for the Study of the Economies of Africa (CSEA) in Nigeria to undertake research focused on surfacing and disseminating solutions that could address corruption, gender equity, transparency, and skill gaps in Nigeria’s public procurement system.

The project had four research streams. The first examined the importance and challenges of gender-responsive public procurement (GRPP) in Nigeria. GRPP is defined by UN Women as “the sustainable selection of services, goods, and civil works that considers the impact on gender equality and that goes beyond cost management.” The Organization for Economic Cooperation and Development further describes it as “the introduction of gender requirements and considerations into public procurement policies and practices.” Moreover, according to the European Institute for Gender Equality (EIGE), gender-responsive procurement may promote “gender equality in how public resources are collected and spent” and can promote employment opportunities and social inclusion for women. GRPP is important as it has been found to reduce procurement costs and has been described as a “solution multiplier,” given its impact on sustainability and innovation in the public sector.

The interviews conducted for this first research stream on gender procurement revealed that there is a disparity between the value of public contracts awarded to women-owned businesses and the number of registered women-owned businesses. In Nigeria, there is no policy for GRPP, and procurement laws do not provide any preferences or set-asides for women-owned businesses. It was found that only Ekiti State has set-asides of up to 30% for women-owned businesses. The research also found several barriers to GRPP in Nigeria. These include the complexity of the procurement process, the high financial barriers to entry, inadequate access to technology, limited access to procurement information, patriarchal assumptions and bias against women, monetary and sexual corruption, favoritism, gender differences in risk appetites, and a lack of data on women-owned businesses’ participation in procurement. The research recommended that GRPP should be a priority for the Nigerian government with the development and implementation of a GRPP policy, that procurement laws should be amended to provide set-asides for women-owned businesses, and that technical support should be provided to women-owned businesses to enable them to compete for public contracts. Other helpful measures to address GRPP could include the simplification of procurement requirements, creating procurement hubs with gender desks, improving the dissemination and collection of procurement information, training procurement officials on gender equality and bias, increasing the reporting and protection of whistle-blowers, and collecting gender-disaggregated data on procurement contracts.

The second research stream examined how behavioral science tools in the form of “nudges” can be used to mitigate public procurement corruption in Nigeria. Behavioral science is concerned with understanding how humans act in different fields and systems. It provides insights into the way people make decisions, and these insights may be used to design and implement public policy tools, or to positively influence human behavior. In relation to understanding and addressing corruption, behavioral science may generate insights into human behavior which can inform novel and effective anti-corruption interventions that can encourage ethical decisions and practices. These interventions may include incentives, regulation, and “nudges” (i.e., small manipulations in the way choices are presented that can inspire people to make better choices). This part of the research examined the definition, concept, and challenges of nudges, and reviewed case studies from New Mexico in the U.S., Rwanda, and South Africa where nudges have been used to address corruption and fraud. In  New Mexico, the use of nudges led to a 60% reduction in fraudulent unemployment benefit claims between 2012 and 2013. In Rwanda, nudges related to corporate tax filings led to a 55% increase in tax payments. In South Africa, posters with descriptive norms messages about bribery in the province of KwaZulu Natal directly affected participants’ willingness to accept bribes, highlighting that verifiable social information about bribery could change beliefs and act as a counter-influence to people’s own experiences.

The research further distilled the lessons learned from the three case studies above, such as: the need to understand the policy problem and the context before implementing nudges; the importance of research, testing, and refinement; and the importance of evaluating the efficacy and impact of nudges to ensure that the measures are sustainable in the long run. The research concluded that nudges would indeed be a useful tool in Nigeria’s anti-corruption armory but would require significant commitment from the public sector to ensure proper implementation.

The third research stream on transparency in public procurement examined the factors and challenges affecting the transparency of the procurement process in Nigeria. The research focused on procurement at the federal level, with a deeper dive on two states in Nigeria—Kaduna and Ekiti states. Utilizing field interviews, the research identified barriers to transparency in the procurement process. These include the absence of political will, delayed implementation of e-procurement, political intervention within procurement, and lack of access to comprehensive data. These challenges hinder the transparency and effectiveness of the procurement process. The research suggested reforms, such as amending the 2007 Public Procurement Act, streamlining the existing bureaucratic procedures, and addressing the digitalization of procurement and enhancing collaboration among both public and private stakeholders. The research concluded that transparency in public procurement and the openness of procurement data is a critical foundation of a good procurement system and is an area that requires urgent reform to address the shortcomings in public procurement in Nigeria.

The fourth research stream focused on the workforce needs and skill gaps in public procurement. Although there are opportunities for Nigeria’s procurement officers to improve their skills through the World Bank supported “Centers of Excellence” focusing on sustainable procurement, as well as environmental and social standards, there are still challenges with the skill-sets of procurement officers in Nigeria. This part of the research highlighted the modern skills needed for procurement officers, including technical, analytical, communication, ethical, digital, project management, and negotiation skills. It also provided examples of how these skills can improve procurement outcomes and value for money. The research revealed that the challenges to developing procurement skills in Nigeria include factors such as political patronage, lack of regular training, poor remuneration, inadequate Information and Communication Technology (ICT) facilities, a skewed distribution of the procurement workforce, and limited educational opportunities.

The research proposed policy recommendations to address these workforce needs and existing skill gaps in Nigeria’s procurement departments. These include enhancing merit-based recruitment, expanding funding and access to training opportunities, proper remuneration, increasing the number of institutions focused on procurement training, and enhancing collaboration between private and public stakeholders such as universities, vocational schools, and professional bodies. Finally, a key finding from the research on Nigeria’s procurement skills is that inadequate procurement outcomes in Nigeria can often be traced back to chronic understaffing and a lack of skills, which if addressed could lead to an improvement in procurement outcomes, elimination of inefficiencies, and the promotion of public procurement as a vehicle for sustainable development.

A final part of the project was a workshop held in March 2024 in Abuja, Nigeria with the public procurement community and stakeholders in Nigeria, including officials from federal ministries and agencies, officials from state government agencies and state procurement regulators, and  representatives from multilateral agencies, the business community, and civil society. The aim of the workshop was to present the preliminary findings from the research and share information and experiences on the changes occurring within public procurement in the states. Participants assessed the project to be of immense value, noting that it not only provided up-to-date and evidence-based information on the state of public procurement in Nigeria, but also presented pathways to improve transparency and gender-responsive public procurement in Nigeria.

The project has led to greater collaboration between organizations impacted by the research and all the consortium partners continue to engage in advocacy towards making the policy recommendations a reality. For instance, in the aftermath of the workshop, the World Bank office in Nigeria requested the final version of the research reports as resources to inform and strengthen their own research on public procurement in Nigeria. The International Anti-Corruption Academy, Vienna, also invited Prof. Sope Williams to speak at an event about gender-responsive procurement as a means of addressing gender equality in celebration of International Women’s Day 2024.  In addition, the chairman of the Nigerian Economic Fraud and Crime Commission (EFCC) cited the research during official remarks in July 2024, while the Nigerian Ministry of Interior and the Office of the Governor of Ekiti State have requested technical assistance from CSEA based on the findings from the research. Furthermore, policymakers from Kaduna State’s Open Contracting Technical Working Group (TWG), have requested AGI to collaborate on issues around transparency, ensuring value for money, and better service delivery through improved governance of public procurement processes.

Overall, the project revealed that while there have been significant improvements to Nigeria’s public procurement ecosystem since the 2007 legislative and institutional reforms, there is still room for improvement—especially in relation to the public disclosure of procurement information and shortcomings in the development of a skilled procurement workforce. The research also revealed that much more needs to be done in relation to gender-responsive procurement, and that with the right level of support, behavioral tools such as “nudges” may assist to mitigate corruption in Nigeria’s public procurement processes.

The main recommendations from the research are as follows.

1. Improve gender equality: Nigeria’s public procurement is still very male-dominated with women-owned businesses not participating fully in public contracts in Nigeria. This has implications for women’s economic empowerment and gender equality. In Nigeria, only Ekiti State has tried to address the disparity in public contract awards to women-owned businesses. At the federal level, in November 2023, a high-level committee was constituted to consider reforms needed to improve the Public Procurement Act of 2007. As the committee engages in this task, it is recommended that it considers adoption of preferences (with measurable targets) for women and Small and Medium-sized Enterprises (SMEs), to increase the participation of women-owned businesses in Nigeria’s public procurement. In addition, the state and federal governments must work to reduce the complexity of public procurement by simplifying the requirements for SMEs and women-owned businesses. This will boost women’s economic empowerment, which is an important lever towards gender equality in Africa.
2. Enhance integrity in procurement through behavioral tools: “Nudges” are tools that could be used to motivate procurement officials to take more ethical decisions and have been used to reduce fraud and corruption in different contexts. In Nigeria, the research showed that implementing nudges at various stages of the procurement process could provide benefits for the procurement process, given the integrity challenges currently faced by public procurement in Nigeria. The research recommends that the federal government should undertake a scoping project to determine what aspects of the procurement process can benefit from the adoption of nudges. State governments can also play a role in piloting and testing innovations that can later be scaled and replicated at the federal level.
3. Increase transparency: Procurement transparency is important for accountability, to reduce and uncover corruption, and also to provide information for systemic reforms. The research found that there were low levels of publication of procurement information across the states and the federal government. To increase transparency in the Nigerian procurement system, it is recommended that government departments and agencies publicize procurement data by default and increase the disclosure of procurement information throughout the entire procurement cycle. The federal government could also adopt an e-procurement platform at the federal level, as well as invest in the digitization and automation of public procurement processes. Electronic procurement will help to address the low levels of transparency and reduce the potential for fraud and corruption in procurement. Moreover, establishing a specialized dispute resolution entity, modifying the Public Procurement Act to incorporate explicit provisions for resolving disputes, and providing an internet platform for submitting feedback would ensure complaints from aggrieved bidders are sufficiently addressed.
4. Support skills development: The research highlighted that there is chronic understaffing, insufficient training of procurement officials, and limited access to existing training opportunities for Nigeria’s procurement departments. To improve the capacity of procurement staff, the state and the federal governments can address the procurement skill gaps by addressing political interference in public sector recruitment, making continuous professional development a mandatory requirement for procurement officials, and providing wider access to existing training opportunities for procurement officials. To distill and share the findings from the research, the project undertook a workshop in March 2024 in Abuja, where public officials shared experiences and knowledge in relation to procurement at the federal and state levels. As part of efforts to enhance skills development for procurement officials, the project will also share training materials on the various dimensions covered under the research.

The insights gleaned from this research could go a long way in improving the efficiency, equity, and integrity of the procurement process in Nigeria at both the state and federal levels—so long as there is sufficient political will to make the outlined reforms.