Spend Matters Chairs Procurement Conference in Africa (Part 2)

Jambo!  (“Hello” in Swahili)

Check out Part 1 here.

It’s my second day here in Nairobi – now with luggage and everything! My main activity was yesterday: presenting on the upstream strategic sourcing process and vendor risk issues, particularly those relevant to African companies working with US and European customers.

There were close to 50 attendees yesterday, and today’s spend analysis workshop drew about 35 people. Compared to similar conferences in the US, the participants here are evenly split between public/semi-public and purely private sector. Much of Kenyan business is still heavily involved with various government agencies, other non-government organizations or foreign-backed support organizations. 

Kenya has a Public Procurement Act that aims at addressing corruption and similar unwanted procurement practices. These issues were clearly on the minds of many participants, as they frequently brought up ethics, fairness, political influence, and similar topics around how buyers should conduct themselves. The Public Procurement Act also specifies when open tendering becomes mandated.  It appears that the Act, though well-intended, might be counterproductive in that some clauses could prevent a switch to modern e-sourcing solutions. I also question the philosophy behind requirements such as “the successful tender shall be the tender with the lowest evaluated price”—not exactly Best Value or TCO sourcing. Judging by the many strong statements against corruption and the open sharing of success stories around preventing this, it seems that at least the attendees operate ethically and actively work to stamp out any such behavior in their organizations.

The audience has been extremely lively, especially in contrast to the quiet Asian audience that I spent time with in Singapore recently. From the sharing of daily challenges, the participants clearly covered the full range from “gofer” procurement (the “yes boss” req-to-PO clerks) to relatively senior buyers from both the direct and indirect side and with a few obviously well-trained and highly experienced buyers that would fit in at high levels in any best practice Global 1000 organization.

At the macro level, Kenya has a huge advantage as a country from being so close to quickly growing Asia. Kenyans have a proper legal system and a good command of the English language. I will explore Kenya’s strengths in more detail in my next post.

Voices (2)

  1. Thomas Kase:

    Tony, I guess I shouldn’t say that I’m surprised at anything the public sector cooks up – in this case, I’m definitely not a fan of “mandatory sentencing” procurement rules. As you point out, something I didn’t elaborate too much on, this leads to suboptimal deals, and end-user dissatisfaction (probably not a high priority in this sector…).

    I won’t go overboard on John Ruskin, but here’s a quote from him that I like: “There is nothing in the world that some man cannot make a little worse and sell a little cheaper, and he who considers price only is that man’s lawful prey.” (I first came across that line while I was still in college, having just spent an exorbitant amount on half a dozen Van Laack shirts, and they came with that quote on their labels – great shirts, they have survived a few decades of regular use and still look fresh. That’s great TCO!)

  2. Tony Fross:

    Not too surprising that an initial tendering act would specify “lowest evaluated price” as a requirement., right? Wouldn’t you say that this is true in the first move in many markets?

    It seems to me that in the EU we’ve saw this as the original move in the pharmaceutical industry in a number of cases. Then gradually a move over time back towards TCO and Best Value. Similarly, in Latin America – particularly Chile, as I recall – the first move was to lowest price until a lot of the margins were eroded enough that governments started to focus again on quality.

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