GOVERNANCE AND THE DIGITAL ECONOMY IN AFRICA TECHNICAL BACKGROUND PAPER SERIES ICT Procurement in Africa GOVERNANCE AND THE DIGITAL ECONOMY IN AFRICA TECHNICAL BACKGROUND PAPER SERIES ICT Procurement in Africa Hunt LaCascia, Justin Valentine, Travis Mells, Vineet Surapaneni, Kelly Flanagan, Maria Delfina Alcaide, and Michael Kramer Copyright © 2022 The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org Disclaimer This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. Rights and Permissions The material in this work is subject to copyright. Any queries on rights and licenses, including subsidiary rights, should be addressed to: Office of the Publisher The World Bank 1818 H Street NW Washington, DC 20433 USA Fax: 202-522-2422 E-mail: pubrights@worldbank.org. Acknowledgments This Background Note was prepared under the leadership of James Anderson (Lead Governance Specialist) and Hunt LaCascia (Senior Procurement Specialist, Governance Procurement) with contributions from Justin Valentine (Valent – Procurement Consultant), Travis Mells (Valent – Procurement Consultant), Vineet Surapaneni (Valent – Procurement Consultant), Kelly Flanagan (Valent – Procurement Consultant), Maria Delfina Alcaide (Governance Data Consultant), and Michael Kramer (Fraud and Anti-Corruption Consultant). The report benefited from the inputs of the following World Bank colleagues who kindly agreed to serve as peer reviewers: Knut Leipold, Khalid Bin Anjum, Rajesh Kumar, Hiba Tahboub, and Charles Pierre Marie Hurpy. The Background Note benefited immensely from the participation, assistance, and insights from other experts. The team is especially grateful for the support of the Global Governance Practice (GGP), and the prior work of governance, finance, and procurement colleagues in both the GGP and Operations Policy and Country Services (OPCS). We are grateful to Richard Crabbe for editorial services and Maria Lopez for cover design. iii Abbreviations Abbreviation / Term Full Terminology / Definition ARPU Average Revenue Per User COTS Commercial-off-the-Shelf CPB Central Purchasing Body CSR Corporate Social Responsibility Emerging technologies that result in a step change in the cost of or access to products Disruptive or services or that dramatically change how people gather information, make products, Technologies or interact eGP Electronic Government Procurement Electronic procurement, referring to the process of requisitioning, ordering, and eProcurement purchasing goods and services online FCPA Foreign Corrupt Practices Act FCV Fragility, Conflict, and Violence A contracting mechanism in which long-term contracts provide the terms and Framework conditions under which smaller repeat purchasing orders (or call-off orders) may be Agreement issued for a defined period of time GDP Gross Domestic Product GNI Gross National Income GPPD World Bank's Global Public Procurement Database ICT Information and Communications Technology IDA International Development Association IFMIS Integrated Financial Management Information System IIAG Ibrahim Index of African Governance IoT Internet of Things LCC Lifecycle Costing MEAT Most Economically Advantageous Tender P2P Purchase-to-Pay PII Personal Identifiable Information PPP Public-Private Partnership SaaS Software-as-a-Service iv Small Business Innovation Research: programs that encourage small businesses to SBIR engage in federal research/research and development with the potential for commercialization SEC United States Securities and Exchange Commission SITA State Information Technology Agency (South Africa) SLA Service-Level Agreement Total Cost of Ownership: an estimate of the total costs associated with a solution over TCO the whole of the operational life, including final disposal TVWS Television White Space USD United States Dollars VfM Value for Money v Table of Contents 1 Introduction ...................................................................................................................................1 2 Overview of ICT Categories .............................................................................................................2 3 ICT Infrastructure in Africa ..............................................................................................................6 3.1 Fiber Optic Cable Connectivity...................................................................................................... 8 3.2 Focus on Urban Versus Rural Populations .................................................................................. 11 3.3 ICT Deployment in Rural Areas ................................................................................................... 13 3.4 Case Study – Movement to the Cloud ........................................................................................ 14 4 Importance of ICT on Governance and Prevention of Corruption ....................................................15 5 Corruption in ICT Procurement ......................................................................................................18 6 Best Practices in ICT Procurement .................................................................................................20 6.1 GovTech Procurement Framework ............................................................................................. 20 6.2 Principle of Value for Money ...................................................................................................... 22 6.3 Framework Agreements ............................................................................................................. 24 6.4 Total Cost of Ownership.............................................................................................................. 26 6.5 Procurement of Disruptive Technology ...................................................................................... 28 7 ICT Procurement Progress Across the African Continent .................................................................31 8 Recommendations for Improving the Procurement of ICT ..............................................................33 9 Bibliography .................................................................................................................................37 ANNEX I: GPPD Key Terms and Definitions ........................................................................................39 ANNEX II: African Countries with Procurement Law Clauses by Procurement Practice Area ................ 41 List of Figures Figure I. Distribution of Undersea Cables Around Africa ............................................................................ 8 Figure II. Distribution of African Terrestrial Fiber Cables (2021) .............................................................. 10 Figure III. African Population Density with Fiber Cable Overlay .............................................................. 11 Figure IV. IIAG Indicators for the Measurement of Governance Performance........................................ 15 Figure V. Corruption Vis-à-vis Government Investment in Technology in Africa (2016-2017) ............... 16 Figure VI. Corruption Vis-à-Vis Government Investment in Technology in Africa (2018-2019) .............. 17 Figure VII. GovTech Procurement Framework for ICT Procurement ........................................................ 21 Figure VIII. Framework Agreement Illustration ........................................................................................ 24 Figure IX. Framework Agreement Efficiency Illustration .......................................................................... 25 Figure X. Visual Representation of Direct and Indirect Costs Associated with ICT Equipment ............... 26 Figure XI. Six Stage Competitive Dialogue Process for ICT Procurement ................................................. 30 List of Tables Table I. Data Center Tier Classification Definitions ..................................................................................... 4 Table II. ICT Categories, Definitions, and Sample Market Participants ...................................................... 5 Table III. Global Connectivity Index 2020 Country Index – Africa .............................................................. 7 Table IV. African Fiber Cable Ownership and Online Dates........................................................................ 9 Table V. Future African Fiber Cable Ownership, Online Dates, and Location .......................................... 10 Table VI. Top 10 Most Populous Countries in Africa in 2020 and 2050 (Projected) ................................ 12 vi Table VII. Top 10 Most Populous Cities in Africa in 2010, 2020, and 2035 (Projected) ........................... 12 Table VIII. Publicized Cases of Corruption in ICT Procurement ................................................................ 19 Table IX. Key Elements and Corresponding Questions for VfM Evaluation ............................................. 23 Table X. Description of ICT TCO Costs........................................................................................................ 26 Table XI. Best Procurement Practice Area Definitions from the World Bank GPPD ................................ 31 Table XII. Count of African Countries in the GPPD with Procurement Policy and Laws .......................... 32 Table XIII. Market Research Methods ....................................................................................................... 34 Table XIV. Key Market Research Components .......................................................................................... 35 vii Technical Background Paper: ICT Procurement in Africa 1 Introduction The objective of this background paper is to provide the reader with an understanding of Information and Communications Technology (ICT) procurement with a focus on Africa. The intended audience of this background paper includes country officials working in ICT and procurement in Africa, including ministries of finance, regulatory agencies, and other government bodies. The intended audience also includes staff of international organizations, non-governmental organizations, academics, and students who are focused on ICT and procurement, and private sector participants who provide ICT products and services in Africa. This background paper aims to: • Define ICT categories. • Describe the importance of ICT procurement, including its relevance to Africa and economies at the local, state, national, and global levels. • Describe the components of ICT and how technology impacts procurement and governance. • Detail best practices in ICT procurement and set out the dichotomy between procurement of traditional and disruptive ICT technologies. • Discuss instances of corruption, bid rigging, collusion, and fraud in the procurement of ICT and best practices to reduce the vulnerability of IT procurements to corrupt practices. • Survey the progress of ICT procurement across Africa and suggest recommendations and resources to improve ICT procurement. The ICT industry is a vital component that makes a significant contribution to a vibrant and growing global economy. In 2018, ICT exports accounted for approximately 10 percent of global exports. 1 ICT is also an integral component of sustainable development and plays a role in making progress toward each of the United Nation’s sustainable development goals. 2 In particular, ICT can help to build resilient infrastructure, promote inclusive and sustainable industrialization, foster innovation, and enable countries to participate in the global digital economy. 3 A World Economic Forum Executive Opinion Survey indicates that government ICT procurement decisions that foster innovation on the African continent are comparable to the average country throughout the world (World Economic Forum). 4 The average score for Africa is 37 on a scale ranging from 0 to 100. While the average score for Sub-Saharan Africa (38) is higher than that of North Africa (31), the difference is small. Within Sub-Saharan Africa, the middle subregion has a significantly lower score (29) than the other subregions. Rwanda is the continent’s top performer, followed by Guinea and Kenya. The bottom performer is Libya, followed by Zimbabwe, The Democratic Republic of Congo, and Angola. The average scores of Africa and Sub-Saharan Africa are very similar to the average score of countries around the world (40). This indicates that there is a significant opportunity for the governments of African countries to improve the procurement of ICT and foster innovation across the continent. 1 The World Bank Open Data. https://data.worldbank.org/. 2 See https://www.itu.int/en/mediacentre/backgrounders/Pages/icts-to-achieve-the-united-nations-sustainable-development- goals.aspx. 3 Ibid. 4 Response to the survey question: "In your country, to what extent do government purchasing decisions foster innovation?” [0 = not at all; 100 = to a great extent]. Source: World Economic Forum, Executive Opinion Survey. Data is from 2016-2017, except for the following countries, for which the latest available data has been used: Angola (2013-2014), Burkina Faso (2013-2014), Côte d'Ivoire (2015-2016), Gabon (2015-2016) and Libya (2013-2014). Data is available for 41 African countries. 1 Technical Background Paper: ICT Procurement in Africa 2 Overview of ICT Categories ICT is an expansive term and contains many subcategories and industries. At its core, ICT covers all technologies, physical or virtual, that enable the transmission of data. In its modern incarnation, ICT is inextricably linked to internet access and the technologies that enable communication over the internet. ICT represents a singular opportunity for countries to accelerate economic growth and connect citizens to each other and government. Traditional ICT categories include hardware, software, cloud services, professional services, data centers, and telecommunications systems. Viewing ICT through a public sector lens, an additional ICT category that must be accounted for is GovTech. In a general sense, ICT enables the delivery of services while GovTech is defined as the use of ICT to support government operations, service delivery, and transparency, a mechanism for whole-of- government public sector modernization that places the citizen at the center of the reform (World Bank 2020d). Early digitization projects were often sector-specific, uncoordinated efforts that led to islands of excellence in some cases and inefficiencies in other cases. GovTech envisions modern e-governments facilitated by digital solutions that simplify procedures, are more accessible to citizens, and are accompanied by policies that promote greater transparency. GovTech helps a government to have a direct impact on the economy and the well-being of its citizens. GovTech does not mean simply upgrading aging ICT infrastructure; it fundamentally alters how government provides services to its citizens through the use of existing and new disruptive technology. Definitions and additional details related to each ICT category are discussed below. Hardware Hardware is the physical component of ICT and includes “complete” devices, such as personal computing devices (desktop and laptop computers) and smartphones, or components, such as switches, routers, satellite antennae, and other devices that need to be combined with other components to form a cohesive unit such as a network. For example, a single router or switch does not constitute a functional network; a network requires many different types of hardware, including (at a minimum) routers, switches, and cabling. Software Software is the virtual component of ICT and includes local and web-based applications and Software-as- a-Solution (SaaS), which is the provision of specific software solutions to a client, usually on a subscription model. Software requires hardware for operation. Software can be bought for use on generalized hardware – for example, data management software for a Windows computer – or may only be useful or applicable on specific hardware, such as updated firmware for industrial control systems. Software can be classified as propriety or open source. Proprietary software, also known as closed source, non-free, or commercial software, can be bought, obtained through a software license, or leased from its publisher or developer. Typically, the developer of the software retains intellectual property rights and may impose restrictions on its use and distribution. Its source code is usually handled as a trade secret and cannot be modified by its end users. Restrictions of use by users are typically listed in the product's terms-of-service agreement or end-user license agreement. Open source software allows increased flexibility for users as it is free to use and can be studied, modified, and distributed by users. Changes can 2 Technical Background Paper: ICT Procurement in Africa be made to the source code of open source software which allows users to identify and fix security vulnerabilities and other bugs and integrate new features into the code. 5 Software acquisition approaches include SaaS, commercial-off-the-shelf (COTS), and custom-built solutions. In the SaaS approach, software is provided to the user as a shared service. The user pays to the use of the software, and the provider is responsible for managing the software stack. The user has the ability to configure the software according to the software’s capabilities. COTS software is built and maintained by a third party vendor and the user pays for or leases the software, which gives the user the right to install and operate the software. In this approach the user is responsible for the management and configuration of the software. 6 A custom-built solution involves an entity working with internal developers or a third party to either develop software from scratch or develop and customize an existing open source solution. Procuring entities should consider the costs and benefits of each acquisition approach before deciding which approaches best meets their needs. Cloud Services Cloud services facilitate the delivery of computing services, such as remote storage, application hosting, collaboration services, and database processing, over the internet. Cloud services can deliver these solutions on demand. Cloud systems enable organizations to access files and applications and communicate with other users on the same system. A private cloud is one in which all hardware and software is used and managed by a single organization. Private clouds can be developed internally or be procured from a managed service provider. Cost of maintenance can be high in the case of an internally developed private cloud, especially as the organization will need to maintain a staff of IT professionals to manage the system. In the case of a managed private cloud, the organization will not share hardware with other organizations, and the managed service provider will handle security, updates and upgrades, and maintenance. A potential downside to a managed private cloud is the cost of moving to another managed provider or internal private cloud, as the transition process can be costly, technically challenging, and can result in the loss of data. In terms of the software overlay on top of a private cloud, an organization can choose to build its own private cloud software, utilize that of a managed service provider, or outsource the creation of custom proprietary cloud management software. A public cloud is one in which hardware is shared, such as those offered by Amazon AWS, Microsoft Azure, and Google Cloud. Public cloud solutions utilize a distributed infrastructure where computing, storage, and networking are deployed separately and remotely. This modular approach offers a great deal of flexibility to an organization as large organizations can work with public cloud providers to precisely tailor their cloud to their particular demands. There can also be a hybrid cloud, which mixes both private and public cloud services. Public cloud providers provide low-cost infrastructure, while the private cloud is used to secure an organization’s most sensitive data. If an organization has particular security demands, such as handling customers’ personal identifiable information (PII), that information is likely best stored on a private cloud. In some scenarios, an organization will be legally bound to manage such data internally as opposed to utilizing a public cloud and potentially exposing that data to leak or exposure. 5 See https://bizfluent.com/13724327/what-is-proprietary-software-x-advantages-it-has-over-open-source-software. 6 See https://blogs.vmware.com/management/2020/10/an-cloud-architects-perspective-on-cots-vs-saas.html. 3 Technical Background Paper: ICT Procurement in Africa Another alternative is multicloud architecture, where an organization combines services from more than one cloud provider or vendor. Doing so increases redundancy and improves data continuity while mitigating the risk of downtime and service outages. Professional Services Professional services generally consist of computer programming and consulting services that are enabled by ICT. The package can include application development, process consulting, managed services such as remote network management, and fintech solutions such as mobile banking. Professional services are an important component in the growth of the ICT sector—individuals can utilize access to hardware, software, and telecommunications systems to innovate and establish professional services. Data Centers Data centers can be considered a subset of hardware, in that they comprise networking hardware such as routers, switches, and servers. Data centers are considered a main category of ICT because of the important role that they play in ICT adoption and expansion. In the early stages of ICT adoption, a country will often rely on remote data centers that can be thousands of miles away. As localized demand for ICT services grows, ICT suppliers will seek to construct data centers in-country to meet that demand. Data centers are also an important component of ICT and network security and integrity, since GovTech applications usually require local data centers to store sensitive information such as PII. Data centers enable governments to more closely manage security risks. Data centers can also be a localized driver of growth. Their requirements are internationally understood and accepted, and an enterprising local business can acquire (import) the necessary equipment and construct local data centers so long as demand exists. Data center tiers specify power and cooling requirements and provide the expected uptime or, alternatively, the maximum amount of time the tiered data center is expected to be down or nonfunctioning. Table I below provides additional information on data center tiers. 7 Data center complexity, redundancy, and uptime increases from one tier to the next, resulting in increased maintenance and operating costs across tiers. As an ICT industry matures, it will demand higher tier data centers to ensure continuity of service provision and minimize downtime. Table I. Data Center Tier Classification Definitions Tier Power / Cooling / Redundancy Uptime (Annual Downtime) 1 Single power/cooling path, few redundant components 99.671% (28.8 hours) 2 Single power/cooling path, some redundant components 99.741% (22 hours) 3 Multiple power/cooling paths, redundancy that enables 99.982% (1.6 hours) updates without going offline 4 Virtually fault tolerant, redundancy for every component 99.995% (26.3 minutes) Telecommunications Systems A telecommunications system is a combination of network components such as transmitters, receivers, and other devices that send messages to one another. Telecommunications systems are made up of hardware, software, data centers, and are supported by professional services for operations and maintenance. 7 See https://uptimeinstitute.com/tiers; https://www.hpe.com/us/en/what-is/data-center-tiers.html. 4 Technical Background Paper: ICT Procurement in Africa GovTech In terms of procurable goods and services, GovTech encompasses software that is used in the public sector. This software is usually designed to manage complex information systems and synthesizing data streams for more efficient collection and analysis. GovTech software, however, is not just about data intake and management. As more government services are managed and provided online, GovTech also includes online platforms and portals designed to facilitate government-citizens interaction. This type of GovTech can include online portals for services such as licensing or permitting. Table II below provides a summary of ICT category examples and a sample of market participants in each category. Table II. ICT Categories, Definitions, and Sample Market Participants ICT Category Examples Sample Market Participants Hardware Personal computing devices, networking HP Enterprise, Huawei, Samsung. components. Software Applications and productivity suites, Microsoft, Google. network/process management. Cloud Services Managed remote storage/backup, web Microsoft, Amazon, Google. hosting. Professional Services Process consulting, customer IBM, HP Enterprise, Microsoft, management solutions, application Salesforce, SAP. development. Data Centers Remote data centers, data center IBM, Fujitsu, Wipro. management. Telecommunications Fiber optic cabling, wireless antennae. Qualcomm, Huawei, ZTE, Ericsson, Systems CISCO, Nokia Networks, Samsung. GovTech Electronic voting machines, smart city Microsoft, Amazon, Google. technologies (lighting, surveillance, traffic management), information systems management and associate cloud storage. 5 Technical Background Paper: ICT Procurement in Africa 3 ICT Infrastructure in Africa Africa lags behind the rest of the world with less than one percent of Sub-Saharan Africa’s goods exports constituting ICT goods and less than five percent of the region’s services exports constituting ICT services. 8 The Global Connectivity Index 2020 Country Rankings 9 assess how economies use ICT to accelerate economic recovery and identify what other steps they can take to accelerate recovery. The index splits countries into three categories as shown below. i. Frontrunners are mature, developed economies that focus on enhancing user experiences and have shifted their priorities to investing in areas such as 5G, big data, artificial intelligence, and Internet of Things (IoT) to develop smarter and more innovative economies. ii. Adopters experience the largest Gross Domestic Product (GDP) growth from investment in ICT infrastructure as they are focused on increasing demand for high-speed connectivity to cloud to facilitate industry digitization and economic growth. iii. Starters are in the early stage of ICT infrastructure build-out and are focused on expanding connectivity coverage to provide more access to the digital economy. No African countries are categorized as a frontrunner; South Africa is the only one categorized as an adopter. Ten African countries – Morocco, Algeria, Kenya, Botswana, Ghana, Namibia, Nigeria, Uganda, Tanzania, and Ethiopia – are categorized as starters while the remaining countries were not categorized. The Global Connectivity Index follows the digital development of 79 countries across the world, so many countries are not included; as such there are many countries in Africa that have not been categorized. It should be noted that while adopters such as South Africa are focused on increasing demand for high- speed connectivity, the vast majority of the African continent is primarily focused on expanding internet access. Table III below shows how African countries are classified according to the Global Connectivity Index 2020 Country Rankings. It should be noted that African countries overlap significantly with the World Bank’s International Development Association (IDA) categorization. IDA countries are considered among the world’s poorest countries and are lent money on concessional terms with very low or no interest. 10 IDA countries are indicated in the table below with an asterisk (*). 11 A number of African countries are also experiencing fragility, conflict, and violence (FCV) conditions. The World Bank approaches countries experiencing FCV conditions with adapted approaches, policies, and instruments. 12 FCV countries are noted with another mark (“†”). 13 Building out ICT capabilities within a country has numerous benefits, including increased productivity and innovation. While ICT can help countries skip traditional stages of development, it is notable that half of the world population at the end of 2019 did not have Internet access. 14 Of the 25 least connected countries in the world, 21 are in Africa, 15 yet Africa has seen astounding progress in ICT adoption and 8 The World Bank Open Data. 9 See https://www.huawei.com/minisite/gci/assets/files/gci_2020_whitepaper_en.pdf?v=20201217v2. 10 See http://ida.worldbank.org/about/what-is-ida. 11 See http://ida.worldbank.org/about/borrowing-countries. 12 See https://www.worldbank.org/en/topic/fragilityconflictviolence/brief/harmonized-list-of-fragile-situations. 13 See http://pubdocs.worldbank.org/en/888211594267968803/FCSList-FY21.pdf. 14 See https://www.worldbank.org/en/topic/digitaldevelopment/overview, 10-12. 15 Ibid. 6 Technical Background Paper: ICT Procurement in Africa Table III. Global Connectivity Index 2020 Country Index – Africa Global Connectivity Index 2020 Country Rankings – Africa Frontrunners Adopters Starters Not Categorized N/A South Africa Algeria Angola Botswana Bahrain Ethiopia* Benin* Ghana* Burkina Faso*† Kenya* Burundi*† Morocco Cabo Verde* Namibia Cameroon† Nigeria*† Central African Republic*† Tanzania* Chad*† Uganda* Comoros*† Cote D'Ivoire* Congo, Democratic Republic*† Congo, Republic*† Djibouti* Egypt Equatorial Guinea Eritrea*† Eswatini Gabon Gambia, The*† Guinea* Guinea-Bissau*† Lesotho* Liberia*† Libya† Madagascar* Malawi* Mali*† Mauritania* Mauritius Mozambique*† Niger*† Rwanda* São Tomé and Príncipe* Senegal* Seychelles Sierra Leone* Somalia*† South Sudan*† Sudan*† Togo* Tunisia Zambia* Zimbabwe*† 7 Technical Background Paper: ICT Procurement in Africa improved Internet access. For example, Sub-Saharan Africa saw an 11-fold increase in the number of secure internet servers per 1 million between 2016 and 2019. 16 3.1 Fiber Optic Cable Connectivity Without fast, high-bandwidth, high-capacity fiber connectivity to global networks, a country cannot meaningfully participate and compete in the global economy. Africa has a number of submarine fiber optic cables connecting the continent to global networks. These cables vary wildly in ownership, age, and bandwidth capacity. The distribution of undersea cables around Africa is shown in the figure below. 17 Figure I. Distribution of Undersea Cables Around Africa Source: https://manypossibilities.net/african-undersea-cables/ Cable ownership usually falls into two categories. Multiple entities, often national and regional telecoms, work together to deploy submarine fiber optic cables across the countries or regions in which these 16 The World Bank Open Data. 17 See https://manypossibilities.net/african-undersea-cables/. 8 Technical Background Paper: ICT Procurement in Africa entities operate. A single entity handles financing, deployment, and management of a cable. Table IV below provides additional details on cable ownership and online dates. Cables denoted as having “multiple owners” are characterized as connecting two countries at a minimum and as stretching across as much as half of the African continent at a maximum. Cables that have multiple owners are typically not as long and complicated as those of single owners. Table IV. African Fiber Cable Ownership and Online Dates Cable Owner(s) Online Date West Africa SAT3/SAFE Multiple owners 18 2002 GLO-1 Globacom Limited 2010 GLO-2 Globacom Limited 2021 Q3 ACE ACE Consortium 2012 MainOne MainOne Cable Co. Ltd. 2010 NCSCS Camtel 2015 WACS Multiple owners 2012 SAIL Camtel, China Unicom 2018 SACS Angola Cables 2018 East Coast SEAS Seychelles Cable System 2012 TEAMs Etisalat, TEAMS Ltd. 2009 LION 2 Multiple owners 2012 EASSy Multiple owners 2010 SEACOM SEACOM, Tata 2009 Communications DARE Multiple owners 2020 Mediterranean Atlas Offshore Maroc Telecom 2007 EIG Multiple owners 2011 AAE-1 Multiple owners 2017 Single entities are similar to “multiple owner” cables in that the governing entity may be the result of a joint venture between multiple telecoms. The crucial difference is that management resides primarily in a single legally distinct entity. These single entities may not be as nationally or regionally focused as cables with multiple owners. For example, Equiano, the Google-backed cable, stretches intercontinentally from West Africa to Europe. Table V below provides details on cables that are planned to be deployed around Africa in the future. Figure II below shows that terrestrial fiber is concentrated on the coasts of the African continent and that dense terrestrial fiber networks are present in countries that are acknowledged to be farther ahead in terms of ICT infrastructure, including Ghana, Kenya, Nigeria Rwanda, and South Africa. 19 While there appears to be relatively adequate fiber network coverage, the interior of the continent is much more difficult and expensive to bring online. Challenges include issues with right of way, difficult terrain, and a lack of demand attributable to smaller population densities. 18 For the purpose of this table, “multiple owners” indicates that the cable is owned and operated by many different national and multinational telecoms. For more information, see https://www.submarinecablemap.com/. 19 See https://afterfibre.nsrc.org/. 9 Technical Background Paper: ICT Procurement in Africa Table V. Future African Fiber Cable Ownership, Online Dates, and Location Future Cables Name Owners Date Location PEACE Cable Peace Cable International Network 2021 Q4 Mediterranean, East Africa, Co. Middle East Equiano Google 2021 West Africa, Europe Africa-1 Telecom Egypt, Etisalat 2023 Q4 Mediterranean, East Africa, Middle East 2Africa Facebook, Vodafone, MTN Group, 2023 Europe, West Africa, East Africa, China Mobile Mediterranean, Middle East Figure II. Distribution of African Terrestrial Fiber Cables (2021) Source: https://afterfibre.nsrc.org/ Population dense regions of the continent are better served by fiber cabling, as demonstrated below in Figure III. 20 This is logical, because where there are more people, there will be increased demand for the internet, online services, and bandwidth in general. But it is also evident that less population-dense areas 20 See https://blogs.worldbank.org/digital-development/africas-connectivity-gap-can-map-tell-story. 10 Technical Background Paper: ICT Procurement in Africa and the rural folk who live there are underserved. Significant portions of Burkina Faso, Cote d’Ivoire, the Democratic Republic of Congo, Sierra Leone, and Sudan, are either wholly unserved or have planned terrestrial fiber deployments. Figure III. African Population Density with Fiber Cable Overlay Source: https://blogs.worldbank.org/digital-development/africas-connectivity-gap-can-map-tell-story 3.2 Focus on Urban Versus Rural Populations ICT solutions can also help developing economies better serve their growing urban centers. By 2050, population growth in developing countries is expected to be limited to urban centers. 21 The population of Sub-Saharan Africa is expected to double between 2020 and 2050. 22 In 2018, nearly 60 percent of Africans lived in rural conditions but by 2030 that share is expected to fall to less than 40 percent. 23 Legacy systems that provide government services will likely be unable to meet steadily increasing demand over the next several decades. Improved internet access will enable solutions to reach more citizens while decreasing 21 See https://www.un.org/development/desa/publications/wp-content/uploads/sites/10/2020/09/20-124-UNEN-75Report-2- 1.pdf. 22 See https://www.un.org/en/sections/issues-depth/population/. 23 See https://www.un.org/en/events/citiesday/assets/pdf/the_worlds_cities_in_2018_data_booklet.pdf. 11 Technical Background Paper: ICT Procurement in Africa the per capita costs of delivering services. Table VI below lists projected positions in 2050 for the top 10 most populous countries in Africa in 2020. 24 Table VI. Top 10 Most Populous Countries in Africa in 2020 and 2050 (Projected) Top 10 Most Populous Countries in Africa # 2020 2050 1 Nigeria Nigeria 2 Egypt Dem. Rep. of the Congo 3 Dem. Rep. of the Congo Egypt 4 South Africa Tanzania 5 Algeria Ethiopia 6 Morocco Angola 7 Tanzania South Africa 8 Angola Algeria 9 Ghana Uganda 10 Sudan Kenya Table VII below ranks the top 10 most populous cities in Africa in 2010, 2020, and projections for 2050. 25 Cities that have moved up in rankings, compared to the previous year of comparison, are listed in green text while cities that have dropped in the rankings are listed in red text. Table VII. Top 10 Most Populous Cities in Africa in 2010, 2020, and 2035 (Projected) Top 10 Most Populous Cities in Africa # 2010 2020 2035 1 Cairo, Egypt Cairo, Egypt Cairo, Egypt 2 Lagos, Nigeria Lagos, Nigeria Kinshasa, D.R. Congo 3 Kinshasa, D.R. Kinshasa, D.R. Lagos, Nigeria Congo Congo 4 Luanda, Angola Luanda, Angola Luanda, Angola 5 Khartoum, Sudan Dar es Salaam, Dar es Salaam, Tanzania Tanzania 6 Alexandria, Egypt Khartoum, Sudan Khartoum, Sudan 7 Johannesburg, Johannesburg, Addis Ababa, Ethiopia South Africa South Africa 8 Abidjan, Côte Alexandria, Egypt Abidjan, Côte D’Ivoire d’Ivoire 9 Dar es Salaam, Abidjan, Côte Nairobi, Kenya Tanzania D’Ivoire 10 Cape Town, South Addis Ababa, Johannesburg, South Africa Africa Ethiopia When it comes to ICT investment, rural populations are at a clear disadvantage compared to urban populations. The first order of challenge for ICT investment is a lack of internet access and penetration in rural areas. By definition, rural areas are away from population centers, meaning that ICT investment per capita is lower in rural areas than in urban areas. Conversely, ICT investment costs more in rural areas; 24 See https://www.un.org/development/desa/publications/2018-revision-of-world-urbanization-prospects.html and https://population.un.org/wup/DataQuery/. 25 Ibid. 12 Technical Background Paper: ICT Procurement in Africa many rural areas are characterized by poor to nonexistent broadband speeds and availability, thereby requiring baseline ICT infrastructure investment to begin to realize the development and economic gains traditionally associated with ICT investment. Available data on internet usage in Africa suggests that rural populations are not necessarily disadvantaged or left behind by the lack of ICT investment. According to the World Bank, in 2020 there were 94 mobile cellular subscriptions per 100 people in Sub-Saharan Africa. 26 3.3 ICT Deployment in Rural Areas The nature of population distribution between urban and rural populations demands varying solutions that depend largely on the density of the populations being served. Installing terrestrial fiber in the interior of the continent, where the population is less dense, is an important step, but it is merely the first step in connecting more Africans. Because the population of the interior of the continent is less dense, terrestrial fiber will need to be supplemented with wireless backhaul technologies in order to cover those individuals who live farther from terrestrial cables. Wireless backhaul technologies may offer greater bandwidth than some mobile solutions, but they are also susceptible to interference that does not impact mobile solutions. For example, Ku-band satellite communication is more susceptible to rain fade and weather-related interference than traditional cellular mobile technology. Television white space (TVWS) is the usage of unused TV channels in the very-high frequency (VHF) and ultra-high frequency (UHF) spectrum in order to broadcast data. TVWS uses existing spectrum without interfering with existing TV channels. TVWS solutions have been deployed in Africa to enable last-mile connectivity, or backhaul, over large geographic areas. For example, TVWS has been used to provide rural locations in Namibia and Malawi with internet service 27 and to provide Internet access in areas without electricity in Kenya by utilizing solar-powered base stations. 28 If rural populations are better served by purely mobile solutions, the nature of ICT systems that will be demanded or required will be different than that which would have been appropriate if connectivity was based more on terrestrial fiber. For example, municipalities may not have to procure or demand equipment to install municipal fiber or lay cable off of a fiber backbone to reach the local seat of government. Rather, the municipalities that rely on mobile networks would seek to procure technologies that boost and bolster existing cellular network signals. If a rural municipality eschewed terrestrial fiber and traditional wired connectivity, its ICT procurements would be focused primarily on maintaining the fidelity of wireless solutions—for example, improving speed and bandwidth while accounting for increased draw on local networks from mobile phone use. What would not change, however, are the tools and services that rural municipalities procure as they relate to ICT. The main difference discussed here is enabling connectivity. Once connectivity is achieved, whether through terrestrial fiber networks or mobile cellular networks, the types of government services provided through that connectivity would not necessarily change. Enabling that connectivity can take many novel forms, such as utilizing unused spectrum to connect more isolated citizens 29 to a fiber backbone or “hanging” cabling to existing infrastructure such as power lines. 26 See https://data.worldbank.org/indicator/IT.CEL.SETS.P2?locations=ZG. 27 See https://adaptrum.com/CaseStudy/Namibia-MyDigitalBridge; https://adaptrum.com/Projects. 28 See https://adaptrum.com/Projects. 29 For example, some connectivity solutions utilized television white space (TVWS) to broadcast data where mobile coverage is inadequate and other fiber backhaul options are not feasible. 13 Technical Background Paper: ICT Procurement in Africa 3.4 Case Study – Movement to the Cloud ICT adoption in general is vital to achieving a digital transformation, and cloud service solutions offer among the most immediate, high-impact opportunities to use ICT to accelerate positive change in the lives of citizens, both rural and urban. For example, in late 2019, Microsoft and South Africa’s State Information Technology Agency (SITA) signed a memorandum of understanding (MOU) signaling SITA’s intent to move the government’s services to Microsoft’s Azure cloud. 30 The move to the cloud is intended to “optimize service delivery” and “create more engaged citizens.” SITA’s move to Microsoft’s Azure cloud is a component in its aim to develop a secure private cloud for the South African government. SITA plans for the cloud to be used by all agencies in service provision and envisions an open data platform that will enable departments and agencies to share data more efficiently. 31 Cloud services offer greater fidelity and scalability to existing services and solutions, in addition to reaching more citizens by virtue of increased internet access and penetration. For example, Kenya’s M- PESA is Africa’s largest mobile money payments, banking, and micro-financing platform. The service, developed by Vodafone, was originally linked to the Global System for Mobile Communications (GSM) cellular phone service. In April 2020, South Africa’s Vodacom and Kenya’s Safaricom acquired M-Pesa in a joint venture, demonstrating the growing expertise and capabilities of African business. The joint venture is intended to transform M-PESA into a cloud-based platform to drive growth, promote greater financial inclusion, and bridge the digital divide between connected and unconnected communities in Africa. 32 In general, moving solutions to the cloud can decrease overall costs while increasing average revenue per user (ARPU). While ARPU isn’t necessarily an applicable metric to measure GovTech success, decreasing costs while producing more resilient, interactive, and innovative systems is just one of the reasons cloud services are particularly suited to enabling GovTech solutions. 30 See https://news.microsoft.com/en-xm/2019/10/29/new-agreement-with-microsoft-supports-government-to-embrace- public-cloud/. 31 See http://www.sita.co.za/content/cloud-computing-0. 32 See https://www.forbes.com/sites/tobyshapshak/2020/04/06/vodacom-and-safaricom-acquire-m-pesa-to-accelerate- mobile-money-services-in-africa/?sh=18a805f7a392. 14 Technical Background Paper: ICT Procurement in Africa 4 Importance of ICT on Governance and Prevention of Corruption Importance of ICT and Digital Transformation Increased GovTech adoption has the potential to radically impact and improve governance at the local, state, and national levels. GovTech adoption requires the procurement of a wide range of ICT goods and services. GovTech and ICT adoption have the ability to benefit both urban and rural populations. Urban populations, already beneficiaries of market efficiencies and opportunities inherent to urban centers, will likely take advantage of wider internet access, high-capacity bandwidth, and GovTech IoT solutions such as smart city technologies. While some of these benefits, such as IoT solutions, may be inappropriate for rural contexts, ICT adoption can still positively impact rural populations. For example, a national fiber optic backbone can increase internet access and network coverage to rural populations by utilizing wireless technologies in more remote locations. Increased ICT adoption will spur improved digital literacy, further enabling citizens to participate in the national and global connected economy. Impact of ICT on Governance The Ibrahim Index of African Governance (IIAG) 33 assesses governance performance in 54 African countries from 2010 to 2019. IIAG’s four Foundations for Economic Opportunity are public administration, business environment, infrastructure, and rural sector. While IIAG indicates that the average African score in this category has improved between 2010 and 2019, it categorizes that improvement as “slowing.” IIAG defines infrastructure, one of the four main components of economic opportunity, as including transport network, access to energy, mobile communications, and digital access. While Africa saw positive change in all four categories, infrastructure saw the greatest change. Of the five most improved average scores, Infrastructure sub-categories dominate, as shown in Figure IV below. Figure IV. IIAG Indicators for the Measurement of Governance Performance Source: https://mo.ibrahim.foundation/iiag The dramatic advances in infrastructure can be attributed to improvement in ICT indicators, including mobile communications, digital access, access to financial services, and access to energy. These indicators all have practical, real-world applications such as expanded smartphone usage, improved internet access, increased access to digital and mobile payment systems and networks, and ICT-connected solar microgrids, respectively. The fact that these indicators have driven improved infrastructure indicates that ICT growth bolsters the infrastructure upon which good governance can operate. In other words, as ICT technologies expand and are adopted and implemented, economic opportunities increase and provide strong footing and structure for governments to better deliver services. 33 See https://mo.ibrahim.foundation/iiag. 15 Technical Background Paper: ICT Procurement in Africa ICT and the Prevention of Corruption GovTech adoption has a wider impact than promoting digital literacy and plugging governments and economies into global networks. Analyzing government procurement against measures of corruption 34 suggests that the higher the level of government investment in technology, the lower the level of corruption. For some of the measures of corruption, there is a moderate correlation. Figures V and VI below demonstrate this correlation – governments that procured more advanced technology products scored better on a corruption perception index than governments that procured fewer such products. Electronic Government Procurement (eGP) is a potential solution for decreasing the rate of corruption in public procurements. End-to-end eGP solutions can standardize procurement processes while simultaneously improving transparency around the process as a whole. The shift to digital platforms for procurement can also enable greater oversight and reveal trends by creating data that can be analyzed as opposed to data languishing on shelves or in boxes in a paper-only format. Real-time monitoring via eGP methods and tools can also serve as a check against corruption or, at the very least, as a means to prevent corrupt practices from spreading and taking hold of the procurement process. This correlation is not limited solely to governments that actually procure advanced technologies; it is also present when comparing governments’ investments into emerging technologies as shown in the figures below. 35 There remains work to be done, however. In response to surveys of government promotion of investment in emerging technologies, Africa is the world region with the lowest score – 27, on a scale from 0 to 100 – compared to the global average of 41. 36 Figure V. Corruption Vis-à-vis Government Investment in Technology in Africa (2016-2017) 100 Corruption Perceptions Index, 2019 (0= highly corrupt; 100= very clean) 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70 80 90 100 Government procurement of advanced technology products, 2016-2017 Sources: Transparency International; World Economic Forum, Executive Opinion Survey 34 Transparency International, World Bank Enterprise Surveys, and Worldwide Governance Indicators. 35 Average answer to survey questions concerning the extent to which government foster investment (public and private) in five types of emerging technologies: artificial intelligence, robotics, app- and web-enabled markets, big data analytics, and cloud computing. Score ranges from 0 (lowest) to 100 (highest). Source: World Economic Forum, Executive Opinion Survey. Data is available for a total of 35 African countries. 36 Average answer to survey questions concerning the extent to which government fosters investment (public and private) in five types of emerging technologies: artificial intelligence, robotics, app- and web-enabled markets, big data analytics, and cloud computing. Score ranges from 0 (lowest) to 100 (highest). Source: World Economic Forum, Executive Opinion Survey. Data is from 2018–2019. Data is available for a total of 35 African countries. 16 Technical Background Paper: ICT Procurement in Africa Figure VI. Corruption Vis-à-Vis Government Investment in Technology in Africa (2018-2019) 100 (o= highly corrupt; 100= very clean) Corruption Perceptions Index, 2019 90 80 70 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70 80 90 100 Government promotion of investment in emerging technologies, 2018-2019 Sources: Transparency International; World Economic Forum, Executive Opinion Survey Importance of Integrated Financial Management Information System (IFMIS) to Prevent Corruption An IFMIS is a software application or platform that controls, monitors, and manages accounting and internal and external financial reporting. IFMIS tracks financial events and can improve governance by providing financial information that managers can use to better administer programs effectively, formulate budgets, and manage resources (USAID 2008). While the scale of an IFMIS can vary, the functionality of the system generally serves to: • Provide timely, accurate, and consistent data for management and budget decision-making. • Support government-wide as well as agency-level policy decisions. • Integrate budget and budget execution data, allowing greater financial control and reducing opportunities for discretion in the use of public funds. • Provide information for budget planning, analysis, and government-wide reporting. • Facilitate financial statement preparation. • Provide a complete audit trail to facilitate audits. As critical financial data flows through IFMIS, they are often the target of digital fraud. The IFMIS is vulnerable to fraud in the form of misallocation of budget items, processing of inflated payments to shell companies or vendors, and payment to offshore vendors as part of money laundering schemes (World Bank 2020). Most fraud detection systems recognize fraud after the fact, in that they identify fraud indicators in past procurements, when the misconduct has already occurred. eGP solutions enable fraud detection to run throughout the platform and facilitate the detection of fraud as it is happening. eGP solutions provide immediate, easy access to a critical mass of relevant data that would not only make fraud detection easier but would enable fraud prevention by marrying the eGP system with digital fraud detection algorithms. These algorithms, also called “Integrity Filters” or “Governance Filters,” have a number of benefits, including: • Instantly reviewing 100 percent of all transactions, rather than limited samples as in standard audits. 17 Technical Background Paper: ICT Procurement in Africa • Blocking noncompliant or improper procurement transactions, such as bids from companies on ineligible lists or bids received after the bid deadline. • Providing instant alerts of possible fraud, prioritized by importance and level of risk. • Permitting detailed, real-time remote monitoring by oversight agencies, which is not currently feasible in paper procurement transactions. • Creating detailed audit trails and digital evidence for auditors and investigators. 5 Corruption in ICT Procurement IFMIS and other ICT systems play important roles in improving transparency and accountability and reducing the opportunities for fraud and corruption in developing countries. The procurement and implementation of such systems, however, present significant opportunities for abuse. The main reasons include: • The systemic corruption in many parts of the developing world where such systems are procured in an attempt to reduce the impact of corruption and improve governance. • The large scale and complexity of such systems, which provide many opportunities to improperly rig contract specifications, manipulate implementation, and inflate prices, and which make it difficult to detect such abuses. • The expense and potentially large profit margins of such systems, which provide ample margins to offer and pay substantial bribes to corrupt officials. • The relatively low risk of vendors or officials being caught and sanctioned in many developing countries. There are many publicized cases of corruption that took place during the procurement of ICT systems in various countries across the world. The table below provides a few summaries. 37 In addition to the cases summarized here, there are currently a number of investigations underway including one into SAP in South Africa. Initiated in 2020, South Africa is attempting to recover US$23 million from SAP for two government contracts that are alleged to have been entered into unlawfully. 38 Although it may be impossible to completely eliminate corruption in the ICT procurement process, there are a number of best practices that provide governments with tools to reduce the risk of corruption during the ICT procurement process. These best practices are summarized in the recommendations section of this background note. 37 For the FreeBalance, Inc. case, see https://www.worldbank.org/en/news/press-release/2017/11/09/world-bank-group- announces-settlement-with-freebalance. For all other cases and additional cases, see https://www.sec.gov/enforce/sec- enforcement-actions-fcpa-cases. 38 See https://www.reuters.com/article/us-sap-se-safrica-exclusive/exclusive-south-africa-tries-to-recover-over-23-million- from-sap-for-unlawful-contracts-idUSKCN2531MX. 18 Technical Background Paper: ICT Procurement in Africa Table VIII. Publicized Cases of Corruption in ICT Procurement Company Year Case Summary International Business 2011 The United States Securities and Exchange Commission (SEC) charged IBM for Machines (IBM) providing improper cash payments, gifts, and travel and entertainment to government officials in China and South Korea in order to secure the sale of IBM products. IBM agreed to pay US$10 million to settle the charges. Oracle 2012 SEC charged the California-based computer technology company with violating the Foreign Corrupt Practices Act (FCPA) by failing to prevent a subsidiary from secretly setting aside money off the company's books to make unauthorized payments to phony vendors in India. Oracle agreed to pay a US$2 million fine. Hewlett-Packard (HP) 2014 The SEC charged the Palo Alto, Calif.-based technology company with violating the FCPA when subsidiaries in Mexico, Poland, and Russia made improper payments to government officials to obtain or retain lucrative public contracts. HP agreed to pay US$108 million to settle the SEC charges and a parallel criminal case. SAP SE 2016 The software manufacturer agreed to give up US$3.7 million in sales profits to settle SEC charges that it violated the FCPA when its deficient internal controls enabled an executive to pay bribes to procure business in Panama. FreeBalance, Inc. 2017 The World Bank Group announced the debarment for six months of FreeBalance, Inc., a Canadian provider of financial-management-related software, in relation to sanctionable misconduct under the Integrated Financial Management Information System (IFMIS) Project for Liberia. The debarment, which precluded the company from participating in World Bank- financed projects, was part of a Negotiated Resolution Agreement (NRA) under which the company did not contest the fraudulent practice of failing to disclose the identity and payment terms of a local agent in Liberia. Microsoft 2019 The company agreed to pay more than US$24 million to settle SEC charges related to FCPA violations in Hungary, Saudi Arabia, Thailand, and Turkey, and criminal charges related to Hungary. Ericsson 2019 The multinational telecommunications company agreed to pay more than US$1 billion to the SEC and DOJ to resolve charges that it violated the FCPA by engaging in a large-scale bribery scheme involving the use of sham consultants to secretly funnel money to government officials in multiple countries including China, Djibouti, Indonesia, Kuwait, Saudi Arabia, and Vietnam. 19 Technical Background Paper: ICT Procurement in Africa 6 Best Practices in ICT Procurement There are several key challenges in building a government’s GovTech and ICT procurement processes, including: 1. Lack of industry knowledge about the complexities and unique characteristics of public sector operations. In many cases, private sector solutions do not translate perfectly to meet public sector needs. Without an understanding of public sector needs, suppliers’ services will not contribute to widespread GovTech and ICT adoption. 2. Complex Interoperability requirements across numerous legacy systems and all levels of government can complicate solutions options. The public sector is characterized by multifarious siloed networks and systems—this situation presents a significant challenge to breaking intra- government barriers and ensuring that GovTech and ICT adoption is uniform across government. 3. Lack of understanding of Total Cost of Ownership (TCO) or limited budgets can negatively impact the sustainability or operating life of GovTech and ICT solutions. Limited budgets, especially those that do not account for continuing operating costs, threaten the medium- and long-term effectiveness and viability of GovTech and ICT solutions. 4. Existing technology solutions are highly customized and rarely based on open-source technology, potentially leading to vendor lock-in and an inability to innovate away from proprietary solutions and technologies. Proprietary solutions and technologies can seem attractive at the outset for their purported tailoring to a public sector client’s needs, but as those needs change over time, proprietary solutions may constrain innovative GovTech and ICT solutions. 5. Established domestic laws and regulations can constrain GovTech and ICT procurement and implementation processes. Some countries may impose domestic content requirements that limit the ability to acquire goods and services from vendors that are not based locally. This can drastically impact GovTech and ICT procurement as, in some nations, offerings in the domestic market may not be as robust as in other nations. Local capacity for consulting and integration services will impact the GovTech and ICT implementation process as well as maintenance and upkeep of hardware, data centers, etc. In order to address these challenges, governments should review and implement best practice procurement techniques that are suitable for GovTech and ICT procurement. The sections that follow describe key procurement principles and techniques that can lead to improved GovTech and ICT procurement outcomes. The ability to implement these best practices depends on several factors including ICT or GovTech system requirements, procurement timeline, and the expertise/skill sets of members of the procurement team. The World Bank’s GovTech Procurement Practice Note (World Bank 2021) can be referenced for additional information on GovTech and ICT procurement risks and challenges. 6.1 GovTech Procurement Framework Figure VII below displays a five-step GovTech procurement framework that provides a strategic and holistic plan for the design, procurement, and implementation of GovTech solutions, with key activities 20 Technical Background Paper: ICT Procurement in Africa and deliverables for each step. 39 Execution details and considerations for each step are described in this section. Prior to undertaking a GovTech acquisition, it is imperative to establish a business case for the project that considers the following items. 1. Anticipated project benefits and business value, including how it aligns to country priorities. 2. Projected costs and proposed high-level implementation plan. 3. Project assumptions, dependencies, and key stakeholders. 4. Project risks and potential mitigation strategies. 5. Expected outcomes if the project is not funded. Figure VII. GovTech Procurement Framework for ICT Procurement Step 1: Technology Assessment and Gap Analysis A technology readiness assessment is a systematic analysis of an organization’s potential and ability to successfully use technology to implement transformational processes or change. The assessment identifies the potential challenges that might arise when introducing new technology and any accompanying procedures, structures, and processes within a current organizational context. As part of a readiness assessment, a gap analysis is performed to identify gaps or risk areas that should be addressed and remedied before or as part of the implementation plan. Step 2: Requirements Definition When defining technology requirements, there are four considerations: 1. Business model: After the initial funding phase, a government should embrace a specific business model to ensure the sustainability of operations, including software/hardware maintenance, 39 See https://openknowledge.worldbank.org/handle/10986/35067. 21 Technical Background Paper: ICT Procurement in Africa promotion/marketing activities, help desk operations, training services, and the continuous evolution of strategic objectives. 2. Systems implementation approach: A government should consider the factors that make a model – SaaS, COTS, or custom-build – suitable for its desired solution. 3. System security: Security is a critical feature of any GovTech system. At a minimum, a given system should meet the implementing country’s established data privacy laws. 4. Hosting solutions: A government should consider cloud services and platform-as-a-service (PaaS) solutions, which enable scalability and reliability at a potentially lower cost than directly managing those services. Step 3: Procurement Strategy Development Procurement strategy development begins with market research. Market research involves the collection, recording, and evaluation of data about a specific market that offers a desired product or service. The primary purpose of market research is to inform the decision-making process, leading to a gain in competitive advantage, reduced risks, and increased productivity in a future investment. Common private sector procurement practices, such as competitive dialogue and pre-procurement market engagement, are critical to developing both the right solution requirements and procurement strategy approach. GovTech solutions may also require nontraditional procurement strategies, such as competitions or funded research programs like Small Business Innovation Research (SBIR), or Public-Private Partnerships (PPPs) to promote new technologies and provide a government-sponsored avenue for micro-, small-, and medium enterprises to participate in GovTech procurement opportunities. Step 4: Implementation and Execution The implementation and execution of GovTech procurement begins with the preparation of tender documents and ends with the integration of the system. After the acquisition is executed, the focus shifts to supplier performance monitoring. Stage 5: Ongoing Management and Technology Evolution Ongoing support, maintenance, and development are critical to long-term implementation and service offering. Contract management is therefore an important lever for a procurement strategy to ensure the long-term results of any GovTech solution. As GovTech solutions progress through the procurement process, it is recommended that solutions focus on total cost of ownership (TCO) over the life of the project and incorporate rigorous service-level agreements (SLAs) to qualify and evaluate suppliers, and manage mission-critical service performance. Additional details on TCO can be found in section 1.3.4. 6.2 Principle of Value for Money The principle of Value for Money (VfM) means the effective, efficient, and economic use of resources, which requires an evaluation of relevant costs and benefits, along with an assessment of risks, non-price attributes, and/or life cycle costs, as appropriate. Price alone may not necessarily represent value for money. Additional factors that should be examined to determine VfM are listed below (Prada and Verbeeten 2014). 1. Cost-Related Factors: Lifecycle, maintenance, operating, upgrade and storage, training, and disposal costs. 2. Non-Cost-Related Factors: Delivery time, technical merits, overall compliance, and supplier reputation and track record. 22 Technical Background Paper: ICT Procurement in Africa 3. Other Factors: Sustainability of use due to geopolitical circumstances, legal exposure to liability, market environment concerns, and client preferences. In order to evaluate VfM, an evaluation framework can be developed which considers five key elements: (i) economy, (ii) effectiveness, (iii) efficiency, (iv) equity, and (v) sustainability. Descriptions of each key element and questions to consider when evaluating the corresponding key element are listed in the table below. VfM evaluations are subjective and therefore difficult to formalize in a single framework, so frameworks may differ based on the circumstances of a particular acquisition. Table IX. Key Elements and Corresponding Questions for VfM Evaluation Key Element Questions Economy • Will the equipment/service support national strategic plans? Does the equipment provide • Will the equipment/service support multiple GovTech program required GovTech services at the targets? lowest total cost of ownership • What is the TCO of the different equipment/service options? (TCO)? • Is it feasible to correctly install, maintain, and operate equipment over its full life cycle? • Do technology assessments support this type of ICT solution? Effectiveness • Will the equipment/service model meet the needs of citizens? Can the equipment effectively • Will the equipment/service model align with existing guidance from contribute to better outcomes? technical partners? • Will the equipment/service model maximize outcomes over other options/investments? Efficiency • Will the equipment/service model benefit multiple programs? Does the equipment/service • Will less complex equipment models/solutions meet requirements? model maximize benefits relative • Are adequate resources allocated to management systems and to equipment or service TCO? alternatives? • Will the equipment/service model facilitate GovTech services? • Will the equipment/service model increase the efficiency of the public service? • Will the equipment/service model minimize risks? Equity • Will the equipment/service model benefit all populations equally? Does the equipment support the • Will the equipment/service model reduce financial, human rights, or needs of all populations? gender-related barriers to services? Sustainability • Are adequate resources allocated to build and sustain service Can a facility, program, or system access? maintain the equipment/service • Is there a strategy to maintain competitive service prices and model long-term? access? A best practice to determine VfM is to assemble a committee of diverse professionals with various backgrounds to carry out analysis, as any assessment requires input from people with varied knowledge, experience, and skills. This approach lends credibility to the procurement process and reduces the potential for corruption. 23 Technical Background Paper: ICT Procurement in Africa 6.3 Framework Agreements Framework agreements can be defined as a “contracting mechanism in which long-term contracts provide the terms and conditions under which smaller repeat purchasing orders (or call-off orders) may be issued for a defined period of time” (Arney et al. 2014). Framework agreements may go by several different names, including blanket purchase agreements (BPAs), long-term agreements (LTAs), call-off contracts, or umbrella contracts. Framework agreements make it easier for a procurement organization to fill the requirements for products that are routinely purchased over a specified period of time; for ICT, this could include hardware, software, and cloud and SaaS services. The process of acquisition via framework agreement occurs in two stages. In the first stage, all suppliers in a market can be engaged to respond to a buyer’s (request for proposal RFP. Proposal analysis is then performed, and a downselected list of suppliers is added to a framework agreement. The second stage is initiated when a purchase needs to be completed. The buyer will then issue requirements to the suppliers who have signed on to the framework agreement, and receive quotes for review and supplier selection. Once the supplier is selected, an award is made and structured via a call-off contract. Figure VIII below 40 illustrates how a framework agreement works. Figure VIII. Framework Agreement Illustration Source: Adapted from Consip 2017. There are a number of key advantages to implementing framework agreements, including: • The administrative burden is reduced as the sourcing process is shortened, resulting in saved time and resources—for example, reduction in supplier research and issuance of RFPs. • The shortened sourcing process leads to financial efficiency as time is shaved off of each acquisition, and the buyer has the ability to purchase products as they are needed, reducing product holding costs. 40Adapted from Consip 2017. https://thedocs.worldbank.org/en/doc/642051487794464624- 0310022017/render/ConsipFrameworkAgreementsSriLanka.pdf. 24 Technical Background Paper: ICT Procurement in Africa • Under a framework agreement, suppliers compete for each procurement, resulting in a transparent and fair procurement process. • Cost savings can be captured via economies of scale and competition among suppliers. The figure below shows how efficiencies are gained via the use of framework agreements and call-off orders (Arney et al. 2014). Many of the steps in a standard procurement process are skipped when completing a call-off order, because they were already achieved when the framework agreement was concluded. As such, greater efficiencies are gained as more call-off orders are executed. Figure IX. Framework Agreement Efficiency Illustration Source: Framework agreements have been successfully deployed within a number of countries and non- governmental organizations (NGOs) to address challenges with ICT procurement. A notable example is Ghana, where the Ghana Public Procurement Authority, as part of its policies, released “Guidelines for Framework Agreements” initially drafted in 2008 and updated in 2018, that establish when, why, and general rules for the use of framework agreements. 41 Another example comes from Nigeria, where the Kaduna State Public Procurement Authority served as the lead purchaser and represented a group of purchasers to procure an SaaS eGP suite.42 The framework agreement was structured for award to a single vendor for a period of three years. By using the framework agreement approach, the purchasing group was able to streamline the procurement procedure for all 36 states in Nigeria. As a result, instead of each state running its own individual procurement process, all Nigerian states can sign call-off contracts with the winning vendor. 41 Seehttps://ppa.gov.gh/online-documents/policies/. 42See Kaduna State Procurement Authority, “Request for Bids, Framework Agreement(s) for Procurement of Information Service – Software as a Service,” December 18, 2019, https://lagosppa.gov.ng/wp-content/uploads/2019/12/SaaS-e-Procurement- Solution-Invitation-for-Bids-IFB-Final-Version.pdf. 25 Technical Background Paper: ICT Procurement in Africa 6.4 Total Cost of Ownership Total Cost of Ownership (TCO) can be defined as an estimate of the total costs associated with a solution over the whole of the operational life, including final disposal. TCO takes into consideration the purchase price, any initial fees, all other costs, and any benefits received. As part of a procurement process, a buyer can compare tenders or proposals in light of TCO. As a methodology, TCO incorporates acquisition principles such as VfM, efficiency, economy, and fit for purpose (World Bank 2019). It is particularly important and beneficial to consider using a TCO approach when planning to procure ICT equipment, as TCO includes an accounting of both direct and indirect costs of equipment ownership (ADP and PATH 2020). Direct costs are apparent and easy to assess while indirect costs can be more difficult to identify, quantify, predict, and control. In Figure X below, direct costs associated with medical equipment are illustrated as those above the surface while indirect costs are illustrated below the surface. Making purchase and funding decisions using only purchase price and delivery costs will lead to the unlikely achievement of maximum VfM. In order to maximize VfM, indirect costs such as regular maintenance, repairs, spare parts, energy costs, and supportive management systems must be accounted for. Figure X. Visual Representation of Direct and Indirect Costs Associated with ICT Equipment For example, the World Bank provides a list of direct and indirect costs (Table X) that should be included in a TCO evaluation: Table X. Description of ICT TCO Costs Cost Category Costs to Consider Purchase Price Duties and Taxes Delivery and Transportation Costs Installation Costs Initial Purchase Costs Integration Costs Facility Modifications Initial Training Initial License Costs Trade-In Lease Payments License Costs Residual Lease Payments 26 Technical Background Paper: ICT Procurement in Africa Maintenance Agreements Schedules/Preventative Maintenance Decontamination and Waste Disposal Maintenance Costs Service/Repairs Outside of Maintenance Agreement Spare Parts Other Maintenance Costs Staffing Costs Accreditation and Certification Supplies and Consumables Ongoing Training Facilities and Infrastructure Operating Costs Software Upgrades Utilities Insurance Licenses Other Operating Costs Repairs and Unscheduled Maintenance Upgrades and Refurbishments Repair Costs Spare Parts and Accessories Other Repair Costs Planned Maintenance Outages – Additional Costs Downtime Costs Unplanned Outages – Additional Costs Unplanned Outages – Lost Revenue Decommissioning or Deconstruction Costs End of Life Disposal Cost of Transportation of Equipment Costs Disposal Costs Resale / Salvage Value of Equipment Disposal Income Resale / Salvage Value of Parts Resale / Salvage Value of Operational Items Although there is no universal formula for calculating TCO, a simple formula can be represented as: Several key steps are recommended to estimate TCO for ICT, including: 1. Assemble a team whose membership can accurately identify and estimate ownership costs and compare benefits. 2. Define and document the TCO estimation process and assumptions, including medical equipment/service needs, end users, maintenance providers, monitoring and management systems, anticipated lifespan, quantity, and the TCO formula to be used. 3. Gather available cost data or, when appropriate, estimate representative costs. 4. Apply the formula and cost data to estimate TCO. 27 Technical Background Paper: ICT Procurement in Africa When implementing a TCO approach to proposal evaluation (World Bank 2019), acquisition staff should ensure that: • Potential suppliers know that the proposal evaluation will take place using a TCO methodology. • Requirements are clear so potential suppliers can produce accurate TCO information. • All parties are given sufficient time to prepare a detailed, comprehensive TCO calculation. • There is a proper period for questions about TCO to be responded to in a timely manner where all potential suppliers are provided with the same information. 6.5 Procurement of Disruptive Technology Disruptive technologies are emerging technologies that result in a step change in the cost of or access to products or services, or that dramatically change how people gather information, make products, or interact. By definition, disruptive technologies are markedly different from current technologies; whereas current technology is iterative over time, disruptive technology is repeatedly revolutionary, representing a fundamental change for its targeted users or customer base. In order to capture the positive value creation of disruptive technologies, countries and governments need to understand how to implement disruptive technologies in their own unique operating environments. However, disruptive technologies in general present a procurement problem as procurement standards and specifications are tailored for iterative current technological progress and not for disruptive technologies. Procurement requirements in this case can be classified as conformance or performance specifications. Conformance specifications are used when a thorough understanding of the requirements already exists, and there is little desire for a supplier to innovate. Performance specifications are used when the understanding of what is required in terms of outcomes can be described, but it is less certain as to the best process or method to deliver the requirements, or there is a desire for suppliers to innovate. It should be noted that disruptive technology can be further subdivided into disruptive existing technology and greenfield technology. Existing disruptive technology often serves as an add-on to current infrastructures or systems, enabling control or monitoring. For example, smart meters on a city’s water supply infrastructure can allow relevant entities to remotely monitor water quality and water table levels and control discrete components of the infrastructure that previously required direct manual inputs. Similarly, utilizing existing network infrastructure to connect traffic infrastructure enables a higher degree of visibility and control over traffic than legacy technologies. IoT solutions could be characterized as existing disruptive technology. Greenfield technology, on the other hand, supplants existing infrastructure by enabling wholly new solutions. For example, drones can be used to simultaneously monitor and fertilize crops, obviating the need for legacy farming equipment while also enabling greater control over a given farming area. Conformance specifications are largely inapplicable to disruptive technologies. Because disruptive technologies are by definition new and innovative, procuring entities have not developed a thorough understanding of new requirements that disruptive technologies could meet. Disruptive technologies do not meet conformance specifications because they are designed to reform and revolutionize those very specifications. At the same time, it should be noted that existing disruptive technologies may be able to meet performance specifications while greenfield technologies demand performance requirements. 28 Technical Background Paper: ICT Procurement in Africa For example, if a local governing entity wants to update its legacy water infrastructure monitoring system, it may consider disruptive existing technology, such as IoT smart meters, over traditional alternatives. In this way, these smart meters can meet existing performance specifications. On the other hand, if a local governing entity wants to procure a solution to deliver pharmaceuticals to its rural citizens, conformance specifications, such as handling instructions and deliverer qualifications, would fail to positively rate greenfield technology opportunities, such as utilizing autonomous drones to accomplish delivery. In this scenario, performance specifications are more appropriate to capture the full possibilities and solutions of greenfield technology applications. If procuring entities want to adopt disruptive technologies, their procurement requirements should be tailored to performance specifications. Performance specifications serve to remove limits on innovative technological applications and maximize innovation possibilities. For complex contracts that may come from the use or deployment of disruptive technologies, the use of competitive dialogue should be considered. Competitive dialogue is an interactive multistage selection process that facilitates dynamic engagement between buyers and suppliers. In 2017, the World Bank issued procurement guidance entitled, Competitive Dialogue: How to Undertake a Competitive Dialogue Procurement Process (World Bank 2017), which outlines that this kind of dialogue is most suitable for undertaking procurements where: 1. A number of alternative solutions that satisfy requirements may be possible, and the detailed technical and commercial arrangements required to support those solutions require discussion and development between the procuring organization and the supplier. 2. Due to the nature and complexity of the procurement, the procuring organization is not objectively able to: (i) Adequately define the technical or performance specifications and scope to satisfy its requirements; or (ii) adequately specify the legal and/or financial arrangements of the contract. The tests used by the World Bank to establish if a competitive dialogue is the optimum fit-for-purpose procurement approach include: • Are the needs clear, but the means of delivering these needs undefined? • Does the procuring organization want to encourage and allow innovation and refrain from defining the means through which the needs should be delivered? • Could the needs be met through several different solutions? • Are there several potential options that could be adopted to provide the commercial element of the overall solution? • Is the contract unique or unusual, that is, no previous procurements have been undertaken by the procuring organization for similar requirements? • Is the procuring organization sure that other procurement selection methods and arrangements do not allow for the required level of collaboration between the procuring organization and supplier to enable the development of an acceptable solution? • Does the procuring organization have sufficient resources to devote to an intensive procurement process that may last 12–18 months and requires a high level of inputs, resources, and costs— especially in relation to preparation, rounds of dialogue, and proposal evaluation)? • Is there the potential for a high level of market interest and therefore strong competition? 29 Technical Background Paper: ICT Procurement in Africa • Have other procurement selection methods and arrangements, such as the use of an RFP, with a negotiation stage, been assessed and discounted as not appropriate for the contract? The application of the competitive dialogue “tests” described above provide a strong indication that this is a viable arrangement for the procurement. The process is defined by six stages as summarized in Figure XI below. Each stage contains a number of steps and additional considerations that should be adequately addressed. As with an RFP, the procurement arrangements for competitive dialogue need to be combined with pre-market engagement, the choice of specification type (performance), the pricing and costing mechanism, the TCO methodology, and the evaluation methodology, in order to complete the full contract strategy. Figure XI. Six Stage Competitive Dialogue Process for ICT Procurement The World Bank has identified competitive dialogue as an appropriate procurement method for ICT Procurement. These contracts meet the requirements for competitive dialogue due to their complexity. The competitive dialogue procurement method should be combined with activities such as pre-market engagement and selection of the appropriate pricing mechanism to form a complete acquisition strategy. 30 Technical Background Paper: ICT Procurement in Africa 7 ICT Procurement Progress Across the African Continent To assess the extent to which formal procurement policy and laws are currently in place in Africa for a defined set of procurement best practice areas, data from the World Bank’s Global Public Procurement Database (GPPD) 43 was downloaded and analyzed. The GPPD was created via a World Bank initiative that aims to promote procurement reform and innovation by improving transparency and knowledge- sharing. Use of the GPPD is expected to allow public procurement stakeholders to perform efficiently, effectively, consistently and based on best practices. The GPPD is also expected to contribute to the modernization and strengthening of public procurement systems worldwide. As of the writing of this paper, the GPPD contained data from 195 countries and 23 territories. The GPPD data that is summarized below was pulled for all African countries. Table XI below presents the five procurement practice areas for which data was pulled. Table XI. Best Procurement Practice Area Definitions from the World Bank GPPD GPPD Term Definition Total Cost of Ownership TCO calculates the complete cost from purchase to disposal, including expected (TCO) costs to be incurred during the lifetime of the product, such as service, repair, and insurance. Lifecycle Costing (LCC) LCC is the sum of all recurring and one-time (non-recurring) costs over the full life span or a specified period of a good, service, structure, or system. It includes purchase price, installation cost, operating costs, maintenance and upgrade costs, and remaining (residual or salvage) value at the end of ownership or its useful life. Value for Money (VfM) VfM should not be calculated solely on cost; it should also include the efficiency and effectiveness of the purchase. Sustainability Sustainable procurement is the adoption and integration of Corporate Social Responsibility (CSR) principles into procurement processes and decisions while also ensuring that they meet the requirements of the acquiring organization and its stakeholders. The six core subjects listed by ISO 26000 44 are: human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement and development. Most Economically His is the bid evaluation process by which the successful bid is ascertained on the Advantageous Tender basis of combining technical and financial characteristics of the bids. (MEAT) Table XII below summarizes data from the GPPD for the year 2018 that illustrates the number of African countries that have procurement policies and laws for the respective procurement practice area. The data shows that VfM (40%) and MEAT (38%) are the most common procurement practice areas in which African countries have implemented procurement policies and laws. Because the GPPD definitions for TCO and LCC are similar in scope, some country respondents recorded a single policy or law as being applicable to both procurement practice areas. A complete list of key terms and definitions from the GPPD is included in Annex I. 43 See https://www.globalpublicprocurementdata.org/gppd/ . 44 See https://www.iso.org/iso-26000-social-responsibility.html. 31 Technical Background Paper: ICT Procurement in Africa Table XII. Count of African Countries in the GPPD with Procurement Policy and Laws Most Total Cost of Life Cycle Value for Economically Country Ownership Costing Money Sustainability Advantageous (TCO) (LCC) (VfM) Tender (MEAT) Angola X X X X Benin X Botswana X Cabo Verde X X X Cameroon X Ethiopia X X X Ghana X X X X X Kenya X X X Kingdom of Eswatini X X X X Lesotho X X Liberia X X Madagascar X Malawi X X X Mauritius X X X Mozambique X X X Namibia X X Nigeria X x Rwanda X Seychelles X X X Sierra Leone X X Somalia X X X South Africa X South Sudan X X Tanzania X X X Tunisia X X Uganda X X X Zambia X X X Zimbabwe X X Total 6 5 22 14 21 % of Countries (55) 11% 9% 40% 25% 38% Additional country-specific information from the GPPD dataset for Africa can be found in Annex II. Countries that do not have official laws or policies related to procurement practice areas should allow the Ministry responsible for ICT or the GovTech authority to create and implement procurement policies and procedures such as TCO and VfM that promote acquisition efficiency which can lead to cost savings. 32 Technical Background Paper: ICT Procurement in Africa 8 Recommendations for Improving the Procurement of ICT Recommendation #1: Review and Implement Best Practice Procurement Techniques that are Suitable for ICT Procurement • GovTech Procurement Framework. This is a five-step framework that provides a strategic and holistic plan for the design, procurement, and implementation of GovTech solutions, with key activities and deliverables for each step. Additional details are provided in section 6.1 of this paper. • Principle of Value for Money. The principle of Value for Money (VfM) means the effective, efficient, and economic use of resources, which requires an evaluation of relevant costs and benefits, along with an assessment of risks, and non-price attributes and/or life cycle costs, as appropriate. Additional details are provided in section 6.2 of this paper. • Framework Agreements. This type of agreement can be defined as a “contracting mechanism in which long-term contracts provide the terms and conditions under which smaller repeat purchasing orders (or call-off orders) may be issued for a defined period of time” (Arney et al. 2014). Framework agreements make it easier for a procurement organization to fill the requirements for products that are routinely purchased over a specified period of time; for ICT, this could include hardware, software, and cloud and SaaS services. Additional details are provided in section 6.3 of this paper. • Total Cost of Ownership. TCO can be defined as an estimate of the total costs associated with a solution over the whole of the operational life including, final disposal. TCO takes into consideration the purchase price, any initial fees, all other costs, and any benefits received. Additional details are provided in section 6.4 of this paper. • Use of Competitive Dialogue in the Procurement of Disruptive Technology. For complex contracts that may come from the use or deployment of disruptive technologies, the use of competitive dialogue should be considered. Competitive dialogue is an interactive multistage selection process that facilitates dynamic engagement between buyers and suppliers. Additional details are provided in section 6.5 of this paper. Recommendation #2: Conduct Market Research to Inform Procurement Strategy Market research is an important first step in developing a procurement strategy. Market research involves the collection, recording, and evaluation of data about a specific market that offers a desired product or service. The primary purpose of market research is to inform the decision-making process, leading to a gain in competitive advantage, reduced risks, and increased productivity in a future investment. Conducting market research increases the awareness of the involved stakeholders and assists them in understanding a market’s presence, capacity, product or service offerings, and associated costs. A successful undertaking of market research contributes to the definition and refinement of product or service requirements and to a better understanding of the available vendors and their offerings. By conducting market research, governments can better position themselves to successfully execute a public procurement action. In 2016, the World Bank issued a strategy and guidance paper entitled, “Guidelines for Conducting Market Analysis for e-Procurement Systems” 45 which highlights several methods available for market research as summarized below in Table XIII. The method to use is selected depending on such factors as the availability of information (e.g., via internet research), the amount of time a buyer has to accomplish the task, and 45 See http://eprocurementtoolkit.org/sites/default/files/2016-10/Market_Analysis-Rapid_e-Procurement_Toolkit.pdf. 33 Technical Background Paper: ICT Procurement in Africa the availability of financial and personnel resources to complete the research activities. Although completing a single approach may provide enough information for decision-making purposes, completing multiple approaches will provide the most comprehensive insight into a market. Table XIII. Market Research Methods Method Description Involves investigation and analysis of information that is readily available and easily accessible, mainly through the internet. Sources of information that can be used Desk-Based Research include published reports, industry/government/supplier websites, interviews with industry experts, and discussions with institutional representatives in other countries. This method is both time and cost effective. Surveys and questionnaires are effective means to collect information when other methods (for example, desk-based research) do not yield the required information. Surveys/ Surveys and questionnaires allow for quantitative measurements for processing, Questionnaires such as the number of potential local vendors that support a specific requirement. Also, web-based surveys are easily distributed, and respondents can reply via e-mail or directly online. System demonstrations allow vendors to present the functionality of their system to the potential buyer in an interactive manner. Demonstrations may be performed in System Demonstration face-to-face meetings or remotely, such as by WebEx or Zoom. Demonstrations also help buyers understand a systems graphical user interface (GUI), usability, translation capabilities, and help features. Direct communication with vendors is a powerful technique in performing market research. Several processes and tools can be used to formally or informally communicate with vendors, as follows: Formal communication methods include issuing a request for an expression of interest (EOI) and a request for information (RFI) to collect information on the vendors and their ability to deliver a desired solution. Issuing a request may also Communication stimulate interest in potential vendors. Methods with Vendors Informal communication methods include e-mail communications, advertisements in publications, and social media (for example, Twitter, Facebook, LinkedIn), which can be used to leverage any interest in and familiarization with potential vendors regarding the advertised project. In this context, potential vendors are informed about a country’s intention to procure a product or service and can closely follow any future announcements related to the project. Involvement and/or External consultants and specialists can typically complete some or all market Full Assignment to research activities in a timely and accurate manner. Use of consultants and External specialists may not be as cost effective as completing market research activities with Consultant/Specialist internal resources. The primary activities involved in completing market research include developing a product or service profile, researching suppliers, and identifying key market indicators. Conducting market research also involves gaining an understanding of industry trends and analyzing industry forces. A number of research analyses and tools used extensively in industry are referenced below in Table XIV. The resulting analysis of these market components can be used to gain an understanding of the external environment in which specific products are produced and sold and will enable the creation of a comprehensive and in-depth supply market strategy. 34 Technical Background Paper: ICT Procurement in Africa Table XIV. Key Market Research Components Market Component Description Category Supplier An overview of the supplier market detailing different characteristics and their Summary varying impact on the overall market. Insightful conclusions should be drawn based on a full understanding of the researched data. Market Overview/ Summary and descriptions of market characteristics and conditions, company Segmentation market position, potential challenges, industry success factors, industry cost structure, etc. Five Forces Analysis Methodology and diagram detailing five competitive forces that shape each industry: rivalry among existing competitors, bargaining power of suppliers, threat of new entrants, bargaining power of buyers, and threat of substitute products or services. Market Trends Analysis addressing such topics as general market conditions and potential supplier impact (e.g., technology advancements, capacity issues); competitor analyses (for example, entrance of new industry players); economic impacts; economic demand for a product/service; market trends and forecasts; financial analyses and reports on issues such as overall market revenue or profit margins; government regulations. Supplier Chain/ Investigation of different distribution channels; supplier market size; distribution Distribution Market landscape; product/service alternatives. Value Chain/Cost Analysis identifying the cost of each activity within a company and determining the Structure importance of each activity through the entire process—for example, manufacturing, transportation. Additionally, the value chain details the overall cost of sourcing a product/good and helps to identify links between activities. Major Players Detailed list of industry leaders as well as their financial profiles and product/service offerings. Profiles of Major Company profiles include general company overview (e.g., mission, headquarters, Suppliers flagship products/services), financial profile (profits, historical performance, assets), company capabilities, company leaders. The GovTech Procurement Practice Note provides additional information on how to properly conduct market research process and should be used as a reference. 46 Recommendation #3: Maintain Direct Contact with Vendors Procurement officials cannot be expected to stay current on the happenings within the ICT industry from afar. In order to gain insight into current and upcoming ICT technologies and trends, procurement officials should maintain direct contact with vendors across ICT categories. Market research is a good substitute for direct contact when the latter is not feasible. However, when direct contact is possible, whether through the establishment of “Vendor Days” or some other type of event, it should be pursued. In the age of COVID-19 and advancements in technology, video calls should adequately serve as a substitute for in- person meetings and events. 46 See https://openknowledge.worldbank.org/handle/10986/35067. 35 Technical Background Paper: ICT Procurement in Africa Recommendation #4: Reduce the Vulnerability of ICT Procurements to Corrupt Practices There are several actions that governments can take to reduce the vulnerability of ICT procurements to corrupt practices. These actions include: 1. During the planning phase of an ICT procurement, close scrutiny should be paid to requirements, deliverables, and costs associated with ICT procurement. 2. Closer scrutiny on agent fees. 3. Wider use of eProcurement systems that can standardize procurement processes while simultaneously improving transparency around the process as a whole. 4. More aggressive “Client Management” within the World Bank. Possible irregularities in World Bank-funded ICT procurements should be promptly reported using the appropriate channels, and quickly addressed. 36 Technical Background Paper: ICT Procurement in Africa 9 Bibliography The Access and Delivery Partnership (ADP) and PATH. 2020. Value-Based Procurement of Medical Equipment. https://adphealth.org/upload/resource/VBP_Guide_EN_June2020.pdf. Arney, L., Prashant Yadav, Roger Miller, and Taylor Wilkerson. 2014. “Strategic Contracting Practices to Improve Procurement of Health Commodities.” Global Health. Science and Practice 2(3): 295–306. Consip. 2017. "Framework Agreements for Centralized Procurement: Consip’s Experience." Paper presented at the South Asia Region Public Procurement Conference. Colombo-Kandy, Sri Lanka, February 20-23, 2017. https://thedocs.worldbank.org/en/doc/642051487794464624- 0310022017/render/ConsipFrameworkAgreementsSriLanka.pdf. Ghana Public Procurement Authority. 2018. “Guidelines for Framework Agreements.” https://ppa.gov.gh/online-documents/policies/. Global Connectivity Index. 2020. “Shaping the New Normal with Intelligence Connectivity.” https://www.huawei.com/minisite/gci/assets/files/gci_2020_whitepaper_en.pdf?v=20201217v2. International Telecommunication Union (ITU). “ICTs to Achieve the United Nations Sustainable Development Goals.” Geneva: ITU. https://www.itu.int/en/mediacentre/backgrounders/Pages/icts- to-achieve-the-united-nations-sustainable-development-goals.aspx. Kaduna State Procurement Authority. 2019. “Request for Bids, Framework Agreement(s) for Procurement of Information Service – Software as a Service,” December 18. https://lagosppa.gov.ng/wp-content/uploads/2019/12/SaaS-e-Procurement-Solution-Invitation-for- Bids-IFB-Final-Version.pdf. Prada, Gabriela and David Verbeteen. 2014. Innovation Procurement for Medical Devices: Driving Health System Improvement. 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Doing Business 2020: Comparing Business Regulation in 190 Economies. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/32436. _____. 2020b. Enhancing Government and Transparency: The Fight Against Corruption. Kuala Lumpur: World Bank. https://openknowledge.worldbank.org/handle/10986/34533. _____. 2020c. GovTech and Fraud Detection in Public Administration. Washington, DC: World Bank. https://documents1.worldbank.org/curated/en/887311603104832916/pdf/Finding-Fraud-GovTech- and-Fraud-Detection-in-Public-Administration.pdf. _____. 2020d. GovTech Launch Report and Short-Term Action Plan. Washington, DC: World Bank. https://documents1.worldbank.org/curated/en/213131609824669955/pdf/GovTech-Launch- Report-and-Short-Term-Action-Plan.pdf. _____. 2021. GovTech Procurement Practice Note. Equitable Growth, Finance and Institutions Insight Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/35067. World Economic Forum. 2019. “Executive Opinion Survey 2019.” Geneva: World Economic Forum. 38 Technical Background Paper: ICT Procurement in Africa ANNEX I: GPPD Key Terms and Definitions Term Definition Gross National Income GNI measures the total domestic and foreign value added claimed by residents and comprises GDP plus net (in USD) receipts of primary income (compensation of employees and property income) from nonresident sources. Gross Domestic Product Gross Domestic Product (GDP) is a broad measurement of a nation’s overall economic activity. GDP is the (GDP) monetary value of all the finished goods and services produced within a country's borders in a specific time period. Public Procurement Agency The government agency that is responsible for establishing a national public procurement policy and overseeing its implementation among all public sector entities. It occasionally holds the power to approve contract awards of large value. Central Purchasing Body A central purchasing body is a contracting authority that acquires goods or services intended for one or (CPB) more contracting authorities or concludes framework agreements for works, goods, or services intended for one or more contracting authorities. Region covered by the CPB: National: covers whole country - National* Regional: covers large geographic region of the country - Regional* Local: covers small geographical region of the country, for example, municipalities. - Local* Total Cost of Ownership TCO calculates the complete cost from purchase to disposal, including expected costs to be incurred during (TCO) the lifetime of the product, such as service, repair, and insurance. Life Cycle Costing (LLC) LLC is the sum of all recurring and one-time (non-recurring) costs over the full life span or a specified period of a good, service, structure, or system. In includes purchase price, installation cost, operating costs, maintenance and upgrade costs, and remaining (residual or salvage) value at the end of ownership or its useful life. Value for Money (VfM) VfM should not be calculated solely on cost, but also on the efficiency and effectiveness of the purchase. Most Economically Bid evaluation process through which the successful bid is ascertained on the basis of combining technical Advantageous Tender and financial characteristics of the bids. (MEAT) Sustainability Sustainable procurement is the adoption and integration of Corporate Social Responsibility (CSR) principles into your procurement processes and decisions while also ensuring, they meet the requirements of your company and its stakeholders. The six core subjects listed by ISO 26000 are human rights, labor practices, the environment, fair operating practices, consumer issues, and community involvement and development. SMEs & Micro, Small And An enterprise which employs a small number of employees (e.g. fewer than 250 persons) and has a small Medium-Sized Enterprise annual turnover or balance sheet, for example, not exceeding USD 50 million. (SME) Bid (submission) Technical and financial offer of a private sector entity for a specific public procurement competition. Complaint Expression of objection against a decision, outcome, or procedure of a public procurement competition. Standstill Period Period starting from the moment bidders of a competition are informed of its results, during which they are allowed to express their objections on such results. Procuring entities cannot proceed to sign contracts with the winning bidder until this period elapses and all expressed complaints are resolved. Goods Objects of every kind and description including raw materials, products and equipment and objects in solid, liquid or gaseous form, electricity, and services incidental to the supply of the goods, if the value of those incidental services does not exceed that of the goods themselves. Works All works associated with the construction, reconstruction, demolition, repair or renovation of a building, structure or works, such as site preparation, excavation, erection, building, installation of equipment or materials, decoration and finishing, as well as services incidental to construction such as drilling, mapping, satellite photography, seismic investigations and similar services provided pursuant to the procurement contract, if the value of those services does not exceed that of the construction itself. Services Services of intellectual and consulting nature and any other services not covered by the terms “goods” and “works.” Bid Validity Period The period during which the bids submitted for a public procurement competition remain valid. Contract Award The result of a public procurement competition, in terms of winning bidder(s) and contract budget. Disclosure threshold Disclosure of contract awards is subject to a minimum budget threshold below which disclosure is not required. Tender threshold Disclosure of tenders is subject to a minimum threshold below which disclosure is not required. Advertisement Notice by which a procuring agency announces the commencement of a public procurement competition. Direct Contract Public procurement method whose main distinct feature is the absence of competition, since the invitation to present a bid is addressed only to one bidder. 39 Technical Background Paper: ICT Procurement in Africa eProcurement system The electronic platform used to manage various aspects of the public procurement process, for example, advertisements. eProcurement functionalities - eProcurement Plan: eProcurement system module to create and publish annual procurement plans at the supported beginning of each fiscal year. This module commonly allows bidders to be aware of the nature, timing, and -- eProcurement Plan volume of the planned public procurements. -- ePublishing/Notification - e-Publishing/Notification: eProcurement system module to support the publication of public procurement -- eTendering/eQuotation advertisements so that these are available to any interested party. -- eEvaluation/Awarding - eTendering / eQuotation: eProcurement system module to provide online support for the submission of -- eReverse Auctions bids . -- eContract Management - eEvaluation/e-Awarding: eProcurement system module to support the electronic opening (decryption) of -- eCatalogues bids, their partial or complete evaluation, and the notification of the outcome of the process. -- ePurchasing/P2P - eReverse Auction: eProcurement system module to provide an online real-time purchasing technique, -- Vendor Management enabling bidders to successively submit bids of lower value. This module features mechanisms for the -- eComplaints automatic evaluation of bids. - eContract Management: eProcurement system module to support the management of contracts. This module commonly includes features to manage contract documentation, contract amendments, key performance indicators (KPIs), tasks, and deliverables. - eCatalogue: eProcurement system module to support the creation of catalogue workspaces and the ability to browse electronic catalogues and create/ manage cart of items to procure. - ePurchasing: eProcurement system module to support the preparation of requisitions and the management of purchase orders. Occasionally this module is also referred to as Purchase-to-Pay (P2P) - Vendor Management: The management of profiles, attestations and/or performance of suppliers, contractors, constructors, bidders, etc. conducting business with public sector entities. - eComplaints: eProcurement system module to receive and manage complaints. eSignature functionalities Functionalities: -- Advanced electronic - Advanced electronic certificate authentication: use of electronic certificates for supporting the user certificate authentication authentication process (i.e. login). -- Document electronic - Document electronic signing: use of electronic certificates for supporting the electronic sign off of signing documents uploaded onto the eProcurement system, for example, bids. -- Action electronic signing - Action electronic signing: use of electronic certificates for supporting the electronic sign-off of crucial actions performed within the context of the eProcurement system, for example, contract award. Commercial-off-the-Shelf Non-developmental items (NDI) sold in the commercial marketplace; in the context of public procurement (COTS) this term is usually relevant for COTS eProcurement systems (i.e. systems based on platforms developed by private sector entities). Business model for Business model for eProcurement: eProcurement - Government owned and operated: eProcurement system owned and operated by the government, which -- Government owned and is built by its own ICT team. Alternatively, external partners may be consulted during the development or operated the support phases of the project, but these partners have no rights to any part of the system. -- Government-managed - Government-managed service: eProcurement system owned, operated, and supported by a third-party service partner; the government retains ownership of all hosted data and all supporting services, such as a user -- Public-private partnership helpdesk and training. (PPP) - Public-private partnership (PPP): eProcurement system owned and operated by a third-party service -- Shared service provider. The intention of this model is that at some time in the future and specified in the public-private partnership agreement, the service will be transferred to the government. In the interim, the service provider is compensated either through a fixed monthly/annual fee or transactional revenues based on the usage of the system. - Shared service: eProcurement system provided by a third-party service provider and is used by multiple public sector entities or other clients. Spend Taxonomy Classification used for systematically characterizing procurements to serve improved visibility of competitions and more effective reporting mechanisms. Most usually are UN/SPSC and CPV. Tender The procedure by which a public sector entity can acquire goods, services and works. Occasionally referred to as Call for Tenders, Public Procurement Competition, or simply Tender. Non direct Contract Public procurement method involving competition and bidding process (i.e. opposite Direct contract). Framework Agreement Contractual agreement for a fixed period between procuring entities and selected supplier(s), concluded following a public procurement competition, which sets the conditions for future, repetitive purchases. Lowest Price Technically Bid evaluation process based on which the procuring entity determines the winning bid by eliminating Acceptable (LPTA) ineligible bidders and technically inacceptable bids and then selecting the lowest priced bid for award. Bidder A private sector entity interested in a public procurement competition, or submitter of bid for a public procurement competition. Procurement procedure The procedure by which a public sector entity can acquire goods, services and works. Occasionally referred to as Call for Tenders, Public Procurement Competition, or simply Tender. 40 Technical Background Paper: ICT Procurement in Africa ANNEX II: African Countries with Procurement Law Clauses by Procurement Practice Area Source: GPPD High Income Countries – GNI per capita of $12,236 or more (2018) Region Country TCO LCC VfM Sustainability MEAT Middle East and North Africa Malta X X Sub-Saharan Africa Mauritius X X X Seychelles X X X Upper-Middle Income Countries – GNI per capita range of $3,956 – $12,235 (2018) Region Country TCO LCC VfM Sustainability MEAT Sub-Saharan Africa Botswana X Namibia X X South Africa X Lower-Middle Income Countries – GNI per capita range of $1,006 – $3,955 (2018) Region Country TCO LCC VfM Sustainability MEAT Middle East and North Africa Tunisia X X Sub-Saharan Africa Angola X X X X Cabo Verde X X X Cameroon X Ghana X X X X X Kenya X X X Kingdom of Eswatini X X X X Lesotho X X Nigeria X X Zambia X X X Zimbabwe X X Low Income Countries – GNI per capita of $1,005 or less (2018) Region Country TCO LCC VfM Sustainability MEAT Sub-Saharan Africa Benin X Ethiopia X X X Liberia X X Madagascar X Malawi X X X Mozambique X X X Rwanda X Sierra Leone X X Somalia X X X South Sudan X X Tanzania X X X Uganda X X X 41 GOVERNANCE AND THE DIGITAL ECONOMY IN AFRICA MAIN REPORTS VOLUME 1 Digital for Governance: Reaching the Potential for the Digital Economy in Africa—Digital Tools for Better Governance VOLUME 2 Governance of Digital: Regulating the Digital Economy in Africa— Managing Old and New Risks TECHNICAL BACKGROUND PAPERS • ICT Procurement in Africa • Adoption of eGP in Africa • Vulnerabilities of ICT Procurement to Fraud and Corruption • Regulating Digital Data in Africa • Taxes and Parafiscal Fees on Digital Infrastructure Services in Africa • Corporate Governance and Transparency of State-Owned and State-Linked Digital Enterprises in Africa • State-Owned Enterprises in Digital Infrastructure and Downstream Digital Markets in Africa • Competition Advocacy for Digital Markets in Africa • Competition Policy in Digital Markets in Africa