Corruption is a pervasive issue in many developing countries, and Ghana is no exception. One of the factors contributing to corruption in Ghana is the practice of single-sourcing in government procurement. Single sourcing and sole sourcing are mostly used interchangeably, but there is a slight difference between them. Single sourcing occurs when a government entity awards a contract to a single supplier without a competitive bidding process, even when other suppliers are available. While sole sourcing is where there is only one supplier available for the required product and service that an organisation needs. It's also sometimes referred to as a monopolistic supplier. This lack of competition in single sourcing creates opportunities for corruption, as officials may collude with suppliers to inflate prices and receive kickbacks. In Ghana, single sourcing has been linked to corruption and inefficiency in the public procurement process due to the trajectory of procurement issues that have emerged over the years since the establishment of the Procurement Act 2003, Act 663.
One practical example of corruption resulting from single sourcing in Ghana is the case of the procurement of ambulances for the National Ambulance Service. In 2019, the government of Ghana awarded a contract to a single supplier to provide 307 ambulances which in the end cost $54.3million. The contract was awarded without competitive bidding, raising concerns about the transparency and integrity of the procurement process. The inflated cost of the ambulances combined with the lack of competition in the procurement process suggested that corruption played a role in the decision to single-source the contract.
The impact of corruption resulting from single sourcing goes beyond financial losses but puts tax burdens on the taxpayers. It also undermines public trust in government institutions, erodes confidence in the rule of law, and hampers economic development.
While sole sourcing can streamline the procurement process and foster efficient relationships, it also raises concerns about fairness, transparency, and potential conflicts of interest. In Ghana, sole sourcing of contracts often creates room for nepotism, where contracts are awarded based on personal relationships rather than merit. Single sourcing limits the pool of potential contractors, leading to a lack of diversity in the industry. This lack of competition allows individuals with connections to decision-makers to secure contracts even if their work may not be of the highest quality. As a result, competent companies may be overlooked in favour of those with personal connections.
Interestingly, efficiency, transparency, and accountability in the procurement process are gradually becoming a mirage. This opens doors to corruption in Ghana. Without a competitive bidding process, there is a limited chance to prove that the selected supplier is offering the best quality goods or services at the most competitive price. This lack of efficiency and transparency creates an avenue of corruption for government officials to conspire with suppliers to inflate prices or receive kickbacks in exchange for awarding contracts without consideration for value for money. It does not only waste taxpayer’s money but also hinders economic development by stifling innovation and growth in the private sector through the creation of bottlenecks in the supply chain. Thus, if the sole supplier experiences a disruption, the company will be left without a crucial service, leading to delays in production and potential losses in revenue. This vulnerability has a severe impact on a company's ability to grow and expand, as they are dependent on a single source for their operations. For instance, consider the case of Apple Inc. In the early 2000s, Apple relied solely on Samsung for the supply of LCD screens for their iPhones. However, when Samsung began to focus on its own smartphone business and reduced its supply of screens to Apple, it created a shortage and forced Apple to look for alternative suppliers. This disruption in the supply chain not only affected Apple's production schedule but also highlighted the risks associated with single sourcing.
Having argued the impact on the growth of domestic private companies, single sourcing further creates a culture of dependency on a few select suppliers, leading to monopolistic practices and reduced diversity in the supply chain. This has serious consequences in times of crisis or emergency, as the government will be forced to rely on a single supplier for essential goods or services, leaving them vulnerable to price gouging and supply shortages.
To address these issues, the government of Ghana should prioritize transparency and accountability in the public procurement process. By implementing oversight mechanisms such as regular audits and public disclosure of contracts. The government could ensure that single-sourcing is used judiciously and only in cases where it is necessary. Additionally, promoting competition and diversity in the supplier base through open bidding processes can help mitigate the risks associated with single-sourcing and prevent corruption from taking root.
Consequently, the Procurement Act 2003 (Act 663) should be reviewed. The review should consider a specific price ceiling for single-sourcing contracts, projects, or services that should be approved by the Public Procurement Board. Thus, any project and service beyond the price ceiling should be subjected to parliamentary scrutiny and approval across all public institutions. This would ensure some level of efficiency, accountability, and transparency within the process.
The single sourcing of contracts in Ghana has indeed been a contributing factor to corruption in the public procurement process. Therefore, by addressing the lack of transparency, accountability, and competition in single-sourcing practices, the government should work towards creating a more efficient and ethical procurement system to prevent financial improprieties.
Author:
Stephen Dansu
Head of Research, ILAPI
