E-Procurement Lessons from Georgia, Ukraine, and Moldova
Summary
Corruption is one of the major challenges for post-Soviet countries such as Georgia, Moldova, and Ukraine. While attempting to build democracy and a free-market economy, they had no experience in transparent governance through the rule of law. Until recently, state procurement was one of the biggest problem areas for them as it was one of the most corrupt areas in governance. Due to a lack of transparent procedures, the state would procure goods and services at much higher prices than those of the market. As a result, over the last three decades these states wasted huge financial resources through procurement—millions of euros in the case of Moldova and Georgia, and billions of euros in the case of Ukraine.
However, states in transition can also become a source of inspiration when they are able to put in place quick and effective reforms, especially if those are empowered by the digital technology. This paper looks at how Georgia, Moldova, and Ukraine have worked to build transparent procedures in state procurement with the help of digital tools. Their e-procurement reforms saved these states millions of euros within a few months. They have also boosted overall business competitiveness, resulting in a better quality of goods and services for citizens. There is no “one size fits all” reform and reform is never an easy process. Nevertheless, having a strong digital component in reforms offers a shortcut by bringing transparency and scrutiny over the process. Moreover, the experience of these three countries shows that that the e-component serves as a stabilizing element where there is weak rule of law and a constantly changing political landscape.
Even though political will remains a key component behind reforms, the digitalization of the procedures of state procurement makes it easier for different stakeholders to monitor the process and to intervene in case of misconduct by one of them or due to corrupt activity of an official. Consequently, illegal conduct becomes less frequent while the interest of the business community to participate in such tenders increases due to fair play and open competition.
What was not obvious at the planning stage of the reform process was the spillover that digitalization would have into other sectors and areas. To the surprise of many, state e-procurement has triggered the introduction of digitalization into other sectors, such as banking and healthcare, which are also areas full of corrupt practices. It has also led to experimenting with new technologies such as big data and artificial intelligence to detect potential risks of corrupt practice.
However, the main achievement of state e-procurement reforms in Georgia, Moldova, and Ukraine was to break up corrupt practices. It demonstrated to different stakeholders that it is possible to have a well-functioning transparent process that is almost free of corruption. Setting the question of political will aside, on a technical level this success was possible mainly due to transparency brought by the use of digital tools.
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