If we are serious about empowering women in business, we need inclusive procurement
Public agencies are typically reluctant to do business with new market entrants as well as with small, medium, and micro-enterprises. The hesitancy is even stronger when it comes to women-owned businesses.
Women excel in business. According to the World Bank, women-owned small and medium-sized enterprises contribute 20% to global gross domestic product. But they face an uphill battle. Covid-19 has not only exacerbated the opacity of the public procurement process, but also had a gendered effect, for example by disproportionately terminating public contracts in sectors serviced by women-owned businesses (WOBs).
In 2020 President Cyril Ramaphosa committed to setting aside 40% of all government procurement for WOBs in South Africa. But the reality is very different. We have recently conducted research into the challenges WOBs experience in South Africa. Our report, Equity and Inclusion of Women-owned Businesses in Public Procurement in South Africa, notes that in South Africa only between 1% and 6% of state contracts currently go to women, despite WOB being 19% and 31% of all businesses.
South Africa’s economic, gender, and procurement policies are misaligned. Institutional barriers and bias create a steep entry path to women’s participation in public procurement, one of the country’s largest marketplaces. Public agencies are reluctant to do business with new market entrants and with small, medium, and micro-enterprises — and the hesitancy is even stronger when it comes to WOBs. Unfortunately, despite the important objectives of South Africa’s preferential procurement policy, women do not see the benefits in practice.
With the government’s current drafting of regulations to accompany the new Public Procurement Bill, there is an immediate opportunity to reform the status quo. Including women is a smart thing to do, because women entrepreneurs tend to reinvest more than men in their local economies and increase the sustainability of supply chains, benefiting economies, families, and communities.
So how can we make sure women-owned businesses can reach their full potential?
First, public procurement needs to become more inclusive. The government should adopt a comprehensive policy and regulations to implement gender-responsive procurement with clear targets and guidance for public agencies. This can include measures such as requiring subcontracts to be offered to WOBs, using gender as a tie-breaker between equally qualified bidders and reserving contracts under certain thresholds for WOBs. But reforms need to go beyond the awarding of individual contracts. An inclusive public procurement cycle should include the perspectives and needs of women in the planning, award, and management of public contracts. Reaching out and communicating with the business community needs to include a diversity of women-owned businesses.
Even so, new regulations and laws can only do so much. We also need to identify and address underlying systemic issues of institutional bias. We must address barriers to access to information. A critical first step to that is to collect better data because what isn’t measured can’t be changed. To be able to monitor progress made and identify the gaps and barriers, we must collect and monitor data about the participation rate of women-led businesses in public procurement. We need to break down and categorise data on successful bidders based on gender. Addressing the lack of data on contracts going to WOBs is an easy fix to improve our understanding of how to make procurement more inclusive.
What’s more, systemic issues often extend to the broader business environment, so we can improve the access of WOBs to the public procurement market by ensuring transparency, simplified procedures, access to credit, and prompt payment, among other needed reforms. Better training and coaching efforts are important too — both for women businesses as well as sensitisation and diversity and inclusion training for officials. Initiatives such as UN Women’s work on gender-responsive procurement, training women entrepreneurs to participate in public tenders and accelerated through the Women’s Empowerment Principles, are crucial.
Tackle corruption to get more women involved. Corruption in public contracts is all too common in South Africa, and emergency procurement during the pandemic has further reduced accountability mechanisms. This has a key impact on women, who are frequently harmed more by corruption as they are often perceived as easier targets than men in contexts where they have less socio-economic power, agency, and recourse. Women also tend to be excluded from corrupt networks that often exist in public procurement, when contracts are negotiated over beers and golf. Additionally, where there is a perception of corruption, many women business owners walk away, because they don’t want to be implicated. Increasing transparency throughout the public procurement process, by making it clear what is being bought and when, is critical to overturning this perception. Opening up procurement through open tender processes and full transparency and open data from planning to payments is essential to building trust among all stakeholders.
Women’s participation in public procurement — as users, planners, and suppliers of effective public services — is about standing up for equality.
And it’s about real economic benefits. Boosting women-owned businesses can create jobs and inject the market with new ideas and competition. It’s about creating a transparent, inclusive, and fair chance for women business owners to thrive and create a stronger society. DM/MC
Professor Sope Williams-Elegbe is with the Department of Mercantile Law, Stellenbosch University and Nkechi Coker is Senior Manager for Africa at the Open Contracting Partnership.
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