Innovative Procurement Practices in Iraq's Social Safety Net Program

Abstract

Well-functioning institutions are critical to reducing poverty and boosting growth. However, fragile and conflict-affected states generally lack the political and institutional structures needed to address pockets of poverty and promote development. One relevant example where the World Bank met this challenge was in the innovation of procurement procedures in a recent Social Safety Net (SSN) program in Iraq. Rather than allowing inefficient bidding procedures to block successful implementation, the team at hand adjusted their approach, and adopted simplified, non-traditional methods: they tested the ability of the local market to supply equipment through numerous smaller-value contracts, and removed constraints that discouraged the participation of local Small and Medium Sized Enterprises (SMEs). After 30 years of conflict and embargo, the Iraqi government sought to strengthen social protection for its citizens by transforming what were traditionally subsidies into a targeted cash-based SSN program. The experience of working in a conflict-affected country led to smaller procurement packages and simplified procedures. An unorthodox and riskier approach at the outset ended up not only saving costs but also strengthening the local private sector and generating jobs in the country.