Corruption is a huge global challenge, probably costing more than a trillion dollars a year, about $120 per person in the world. World leaders have long promised to limit corruption, but unfortunately that has not happened.
now a new research identifies a surprisingly simple and cheap way to reduce corruption that can also earn countries hundreds of millions or even billions of dollars.
One of the reasons corruption is so difficult to combat is that officials who take bribes make an incredible profit, while paying customers also often get better or faster service. Faced with this reality, politicians have promised to substantially reduce corruption from 2016 to 2030 as part of the so-called Sustainable Development Goals (SDGs), agreed by all the governments of the world.
Unfortunately, politicians are not delivering. He corruption perception index of Transparency International shows that, globally, there has been absolutely no progress in the last decade. The world was as corrupt in 2022 as when the measurement began in 2012. Given this information, we are not going to reduce corruption in 2030, or at any time in the future.
Reducing corruption is not the only global promise we are breaking. In fact, it is just one of the hundreds of great promises of the SDGs for 2030 and we are failing on almost all of them. On current trends, we will achieve development promises half a century late. We need to do better, and now is the right time to start this conversation: 2023 is halfway to achieving the SDG promises, but we are not even halfway there.
That’s why my think tank, the Copenhagen Consensus, has worked for years with dozens of the world’s best economists to identify areas where more progress can be made. We must adopt the smartest policies first. Our new study on corruption shows that improving public procurement should be a priority for many governments.
In almost all countries, the government is by far the largest purchaser of works, goods, and services from the private sector. Public procurement adds up to almost 13 trillion dollars, that is, 15% of the world Gross Domestic Product. In countries where the poorest half of the world’s population lives, public procurement accounts for the staggering half of all public spending.
This contracting can be less corrupt and more effective if the entire system is brought online, making it transparent. Electronic procurement or “e-procurement” allows many more companies to find out about procurement offers, ensures that more offers can be submitted and means that governments lose less money through corruption and waste.
The Dominican Republic already introduced its first e-procurement system in 2012, but four out of ten low-income and lower-middle-income countries still lack a complete e-procurement system. Research shows that it takes an average year to plan an e-procurement system, another year and a half to design and build it, and 2.5 years to test it. Over the first 12 years, the average cost is $16.7 million, regardless of the size of the country, a paltry amount compared to most public budgets.
The benefits are many. A well-designed e-procurement system allows for proactive monitoring and detection of corruption, meaning problems can be automatically flagged for action. And e-procurement increases the number of bidders: in the Indian state of Karnataka, the number of suppliers rose from 130 to 4,800 in the first three years. And governments can spend less on advertising for tenders, when they have an easily accessible system. The Philippine government saved $9 million annually on advertisements.
More importantly, the introduction of e-procurement speeds up the recruitment process. In South Korea, e-procurement reduced the duration of the bidding process from an average of 30 to just 2 hours, while in Argentina the duration of the process was reduced by more than 11 days. Of course, doing things fast is not the same as doing them well. But there is evidence that digitizing procurement means better oversight, and better service delivery. India, for example, saw a 12% increase in road quality grade after switching to an e-procurement system.
Perhaps the most important and well-documented consequence is that e-procurement reduces the total cost of public spending. Our research shows that the average savings is 6.75%, and that’s important when spending billions. For the average low-income country, this means savings over the first 12 years amount to more than $600 million. For every dollar spent, the low-income country will save $38. For lower-middle-income countries, the average saving is more than $5 billion in the first 12 years, meaning that every dollar spent generates more than $300 in social benefits. This makes e-procurement one of the most effective policies in the world.
Ending corruption completely may not be within our reach. But there is compelling evidence that, around the world, e-procurement can reduce it, at low cost, while benefiting societies.
The author is President of the Copenhagen Consensus Center and vvisiting fellow at the Hoover Institution of Stanford University. He has been considered one of the 100 most influential people in the world by Time magazine, one of the 75 most influential people of the 21st century by Esquire magazine and one of the 50 people capable of saving the planet by The Guardian newspaper, of the United Kingdom. United. The most recent book of his in Spanish is False alarm: Why panic over climate change won’t save the planetwhich adds to his numerous publications, among them thebestseller“The Skeptical Environmentalist” and “Cool It.”