Digital solution to corruption war

Corruption is an enormous global challenge, likely costing more than $1 trillion annually or $120 for every person. World leaders have long promised to tamp down on corruption. Unfortunately, we’re getting nowhere. 

Now, new research identifies a surprisingly straightforward, cheap way to reduce corruption that can also make countries hundreds of millions, or even billions, of dollars.

Part of the reason it is so hard to tackle corruption is that it is incredibly valuable for the officials to take bribes while customers paying up often get better or quicker service. Yet politicians have promised to substantially reduce corruption from 2016 to 2030 as part of the so-called Sustainable Development Goals (SDGs), agreed to by all governments.

Unfortunately, politicians aren’t delivering. The corruption perception index from Transparency International shows that, at a global level, there has been absolutely zero progress over the past decade. The world was as corrupt in 2022 as it was when the measure started in 2012. On current trends, we’re not going to curtail corruption in 2030—or at any time in the future.

Reducing corruption isn’t the only global promise we’re missing. In fact, it is just one of the hundreds of grand SDG promises for 2030, and we’re failing at nearly all of them. On current trends, we will reach the development promises half a century late. We need to do better and now is the right time to start this conversation: 2023 is the halftime point for the SDG promises but we are truly nowhere near halfway achieving them.

Research by my think-tank, Copenhagen Consensus, on corruption shows that improving public procurement should be a top priority for many governments. We should embrace the smartest policies first. 

In almost every country, the government is by far the largest buyer of works, goods and services from the private sector. Public procurement adds up to almost $13 trillion, or 15 per cent of the global GDP. In the countries where the poorer half of the world’s population lives, procurement makes up an astounding half of all government expenditure.

This procurement can be made less corrupt and more effective by putting the whole system online, making it transparent. Electronic procurement, or “e-procurement”, lets many more companies hear about procurement offers, ensures more bids can be submitted and means governments lose less money through corruption and waste.

Costs and impacts 

Although Kenya adopted e-procurement in 2014, four in 10 low- and lower-middle-income countries are missing a full system. We studied the costs and impacts of 11 e-procurement initiatives in low-income countries like Bangladesh and Rwanda, middle-income ones like Ukraine and Tunisia and high-income nations like Italy and South Korea.

On average, it takes a year to plan for an e-procurement system, another one and a half to design and build it and two and a half to pilot it. Over the first 12 years, costs average $16.7 million, irrespective of a country’s size—a trivial sum compared to most government budgets.

There are many benefits. A well-designed e-procurement system allows for proactive monitoring and the identification of corruption, which means concerns can be automatically flagged for action. It increases the number of bidders: In India’s Karnataka State, the number of suppliers increased from 130 to 4,800 in the first three years. Governments can spend less on advertising for bids on an easily accessible system. The Philippines saved $9 million yearly on newspaper ads.

Importantly, e-procurement speeds up procurement. In South Korea, the duration of bid processing was cut from an average of 30 hours to just two, whereas in Argentina it fell by more than 11 days. Of course, doing things quickly isn’t the same as doing things well. But digitising procurement means better oversight and improved service delivery. India saw a 12 per cent increase in road quality grade after shifting to e-procurement.

Perhaps the most important and well-documented consequence is that e-procurement cuts the overall cost of government spending. Our research shows the average saving is 6.75 per cent—and that matters when you spend billions. For the average low-income country, the savings across the first 12 years amount to more than $600 million. For every dollar spent, the low-income country will realise savings worth $38; for lower-middle-income countries, more than $5 billion, meaning every dollar creates over $300 of social benefits.

Ending corruption entirely may not be in our grasp. But there is compelling evidence that e-procurement can reduce it, at a low cost, while making societies much better off.

Dr Lomborg, president of the Copenhagen Consensus, is a Visiting Fellow at Stanford University’s Hoover Institution. [email protected]. @ Bjorn-Lomborg https://lomborg.com.