Enhancing transparency for better procurement and development outcomes

The UN Innovation Toolkit guided the International Fund for Agricultural Development (IFAD) project procurement unit in finding the right solution for its largest ongoing IT development: a procurement reporting system supporting its borrowers. 

Delivering transparency, competition and value in procurement. 

In developing IFAD's groundbreaking procurement digital solution to help  deliver transparency, competition and value in procurement, as assessed by the World Bank (read here the World Bank article), the IFAD team focused on one critical juncture: the transformation of funding to outputs through project procurement and how this was greatly improved at the International Fund for Agricultural Development (IFAD) by applying the UN Innovation Toolkit. 

Why is this innovative solution in procurement relevant?  

Developing countries spend an estimated $820 billion a year on procurement-related transactions1 and in Sub- Saharan countries for example, procurement makes up more than 50% of government expenditure.2 Public Procurement is the channel through which these resources are administered to provide basic infrastructure and services (roads, electricity, water, health care, and educational facilities) that are essential for sustainable development and the reduction of poverty.  

The greatest amount of IFAD’s investment funding is channeled through procurement to build rural roads, markets, to provide training as well as to source seeds and fertilizers to support smallholder farmers. IFAD does not carry out the procurement for its projects itself but supervises the processes of its borrowers to ensure that the funding is used for its intended purpose. Most borrowers work through their own national procurement systems, which makes the implementation efficient but also makes the supervision of procurement complex. 

Before this solution was introduced, IFAD and its borrowers faced the challenge that project procurement reporting for projects spread across multiple, disconnected systems. For example, a project’s procurement plan had to be created in an Excel template, while bidding documents, evaluation reports and other dossiers that require IFAD’s “No Objection” needed to be uploaded as pdf files into a web-app for consideration by parties involved in the process. Once the contracts were signed, they were entered into a separate “Contract Monitoring Tool”. This architecture was cumbersome to use for both borrowers and IFAD staff. The process also did not allow the monitoring unit to track procurement activities across different systems.  The process was unsatisfactory and in need of reform, leading the team to. A embark on exploring and originating ideas that could address the issue. The UN Innovation Toolkit structure and tools offered valid guidance to design a strategy that would help the project procurement team to think through innovation goals and barriers while assessing and strategizing for potential futures that could impact IFAD's goals.    

Applying the Headlines of the Future Tool to IFAD's project procurement strategy. 

The Headlines of the Future tool suggests beginning with the main goal or vision in mind. Framing and visualizing what success would look like for our team helped us to formulate a clear vision for the innovation that we wanted to pursue: better project implementation, transparency and efficiency. Following step one of the tool, we also realized that success lies primarily in the adoption of the innovation by borrowers and internal clients like IFAD country directors. For our team that meant that we needed to validate the idea and ensure that it provided value to our stakeholders. In other words, the proposed idea needed to contribute to the streamlining of day-to-day operations of end-users by allowing them to use the data generated by the procurement processes to steer project implementation or to make managerial decisions based on evidence.  

Based on the results of step one of this particular tool, the team developed a clear vision for the innovation that we wanted to introduce: a novel, integrated system that covered the entire procurement workflow from the beginning (procurement planning) to the end (contract award and contract management). The new system had to be adaptable to a wide variety of national procurement frameworks and had to be similar to the reporting systems established by the multilateral development banks (e.g., World Bank STEP) as IFAD borrowers are already familiar with these systems. Our goal or “Headline of the Future” for the proposed solution was to deliver great improvements in project implementation and evidence-based management after one and a half years of development and an additional year of gradual roll-out.   

Adopting the Ecosystem Analysis tool for benchmarking. 

It became clear during the use of the Headlines of the Future that we also needed to have a deep understanding of the ecosystem and align closely to other international financial institutions (IFIs) to ensure that the new system would offer value added and to identify actors in the ecosystem that could contribute with their knowledge and experiences to the design of our solution. We therefore reached out to the heads of procurement at the multilateral development banks (MDBs) to explore who had gone through similar challenges and processes in their organizations and was willing to share lessons learned. The result was an enriching exchange that allowed our team to identify the right technical solution for IFAD by leveraging on the experience collected by the contributing MDBs iwith over 10 years of operation.  

Using the Scenario Blueprint tool to forecast impact.  

Another aspect that became obvious through the implementation of the Headlines of the Future tool was that in order to achieve our vision or goal, the implementation of an innovative procurement solution was absolutely necessary. However, obtaining buy-in from IFAD's decision makers was not immediate. Aware that obtaining this buy in was a necessary step in our innovation journey, our team turned to Step one of the scenario blueprint tool to explore the strategic priorities and trends that influenced IFAD's priorities in the future and how our proposed innovation could contribute to them. In the case of IFAD, the organization recently received a credit rating that gave access to capital markets, which also entails increased scrutiny of the organization’s risk management and oversight. The tool also helped us to identify another influencing factor.  IFAD's donors are increasingly demanding greater transparency and granular data on how their contributions are being spent through procurement.  There are growing expectations from end-users and governments that IFAD can deliver results through greater efficiency in its  processes and oversight. 

Building on these driving forces, step two provided one clear scenario for IFAD to which our innovation would be contributing. As a response to demands for better and more granular data on procurement, the new end-to-end reporting system, named OPEN, would provide full visibility of the entirety of the procurement process that the borrower carries out. Each activity in the procurement plan would be tracked until completion, providing unparalleled oversight of the implementation progress and challenges for the borrower and for IFAD. Responding to the expectations from borrowers, the system now produces powerful analytics for the borrower and IFAD, which can also inform reporting to IFAD’s donors. As procurement is the main factor linking funding to development outputs and a frequent cause of delays, the importance of user-friendly and up-to-date analytics cannot be overstated. With this solution, we could build a clear case for how our innovation contributed to IFAD’s strategic priorities which helped its subsequent approval. 

OPEN has been in its development phase for one year and has been recently rolled out to all projects in Latin America, East and Southern Africa, West Africa and in the Near East and North Africa region. The initial feedback from the procurement officers is overwhelmingly positive. The introduction of this system marks a profound change in operations with the associated challenges in terms of change management. As identified in the first section (Headlines of the Future), the buy-in from stakeholders is the key determinant for the success of this innovation. Since they have been involved from the design phase, and the team has been proactively communicating the changes and improvements the system introduces, we are quite positive about the prospects of this innovation and about achieving the “Headlines of the Future” we are aiming to reach.