Monitoring Contracts to Increase Transparency | World Bank Institute (WBI)

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STORY HIGHLIGHTS

  • One in four Africans lives in a country rich in oil or mineral resources that can generate wealth and help lead its citizens out of poverty. 
  • Developing country governments don’t always have technical expertise or resources for production and engage with private companies, leading to misconceptions about these agreements.
  • WBI and the World Bank’s Africa Region (AFR) created a contract monitoring initiative to help make the diverse groups engaged in these agreements to work together to oversee the awarding and implementation of contracts.

 

June 20, 2011—In 2007, oil was discovered off the coast of Ghana, in the Jubilee oil field. Tullow Oil, a British company, began oil production in 2010. The reserves are said to contain 600 million barrels of oil and valued at US$ 30 billion – eclipsing Ghana’s current GDP.

Despite high public expectations and pressure to exploit the find, the government awarded contracts for production without legislation in place to manage the oil reserves.  Civil society and the media pushed hard for transparency in the sector, including on the contracting award process and information on the distribution of revenues.

An Abundance of Resources

Ghana is not alone. One in four Africans lives in a country rich in oil or mineral resources that can generate wealth and help lead its citizens out of poverty. Unfortunately, many of these nations have succumbed to the ‘resource curse,’ of poor management of production, a single sector economy, corruption and inefficient exploitation of the resources.

“In many contexts, the gap between popular expectations of development through mineral resources and the results that citizens have experienced on the ground perpetuates a negative public predisposition towards this industry” said Michael Jarvis, Sr. Private Sector Development Specialist at the World Bank Institute (WBI). 

Engaging Services: Procurement and Contracting

Developing country governments don’t always have technical expertise or resources for production and engage with private companies, leading to misconceptions about these agreements. According to the OECD, globally, procurement accounts for about 70% of the overall national budget and in many African countries 80% of their budgets, go through procurement.

In 2007, Uganda hosted the high-level Commonwealth Heads of Government Meeting. Millions of dollars were spent on gearing up for the event, but a portion of the funds for this project went to politicians and project engineers as the procurement system had many loopholes. The parliament, local media and civil society uncovered this corruption scandal. Uganda has good procurement legislation, but its enforcement still remains weak.
 

open-quotesThere is often conflict each party tries to solve it by itself and this does not work. Having a multi-stakeholder approach will help us to get smart solutions to solve common problems.close-quotesDr. Shirima, Public Procurement Regulatory Authority in Tanzania

Companies across Africa often advocate for confidentiality clauses in their contracts, while civil society presses for these contracts to be disclosed, and governments seek more advice before taking a stand on the issue. When these processes are not transparent, revenues can disappear and result in schools or hospitals not being built and citizens lacking access to clean water or basic services.

“The situation can be different and resources can lead to the transformation of a society” said Robert Hunja, Manager of the WBI’s Public Institutions program. “The reality is that over the long term this diverse set of stakeholders has many common interests and making these contracts easily understood and public makes it difficult for any single entity to break or manipulate the contract for short-term gains.”

Seeking Common Ground and Showing Results

To help make this a reality WBI and the World Bank’s Africa Region (AFR) created a contract monitoring initiative to help make the different groups work together to oversee the awarding and implementation of contracts.

The initiative’s first effort was to bring together the actors involved in the extractive industries sector in Ghana, Liberia, Nigeria and Sierra Leone. Individuals from the private sector, government, civil society and journalists gathered in Liberia in November, 2010 to form coalitions that would make the contracts easily understandable and their awarding and implementation more transparent.

“The private sector is a participant, we are a part of the system…and we think we are partly responsible in causing the problem and therefore we think we should be part of the solution,” said Ali-Dausy Massally, President, Business Action Against Corruption in Sierra Leone.

In recent weeks in Ghana, Tullow Oil and Kosmos Energy have posted contracts online in US Securities and Exchange Commission filings, and the Ghanaian government has now asked that all agreements be made public. This move is part of an emerging global trend. In July 2010, the US Congress passed the Dodd-Frank Act requiring greater transparency of oil, mining and gas companies listed on US exchanges.

More Coalitions for Transparency

WBI and AFR are also helping coalitions come together in East Africa and just held a workshop in Kampala, Uganda from June 1 to 3, 2011 bringing together the private sector, government, civil society and journalists. The group identified monitoring of construction, especially of road projects, as a key priority for Uganda. Going forward the group will lead monitoring efforts, including working with mobile phones to involve citizen directly.

“We had many participants, some meeting for the first time across a variety of sectors and put in a lot of energy into forming their coalitions,” said Marcela Rozo, Senior Operations Officer with WBI. “Different countries focused on different sectors – in Uganda, it was the construction of schools and the oil industry, pharmaceuticals in Kenya, construction of roads and mining in Tanzania, construction and mining in Zambia and general public procurement in Rwanda.”

Just as in West Africa, coalitions in each country created action plans to create innovative solutions to their issues of procurement and monitoring contracts.
“Construction sector has many stakeholders with different needs,” said Dr. Shirima, Public Procurement Regulatory Authority in Tanzania.  “There is often conflict each party tries to solve it by itself and this does not work. Having a multi-stakeholder approach will help us to get smart solutions to solve common problems”