Developmental procurement balances jobs, prices and competition

African governments spend an average of 17% of GDP on public procurement, making it one of the most powerful levers for economic development, industrial growth and job creation (World Bank, The Expanding Role of Public Procurement in Africa’s Economic Development).

As localisation efforts accelerate across Africa, procurement is increasingly being used to strengthen local industries, support small businesses and create jobs.

Yet, while developmental procurement has become a central policy objective across Africa, the challenge remains finding the right balance between economic development goals, competition and value for money.

“Procurement has evolved far beyond a purchasing function,” says Paul Vos, regional MD of the Chartered Institute of Procurement & Supply (CIPS) Southern Africa. “Governments increasingly recognise that procurement spend can influence where investment flows, how industries develop and who participates in economic activity.”

Across Africa, localisation policies, preferential procurement requirements and supplier development programmes are helping local manufacturers, SMMEs and historically disadvantaged businesses access opportunities that were previously beyond reach.

The rationale is straightforward. The World Bank identifies public procurement as a powerful tool for stimulating private sector growth, creating jobs and advancing economic development. However, Vos argues that developmental procurement should not be measured simply by how many contracts are awarded to local suppliers.

“The real objective is to build businesses that become competitive, sustainable and capable of succeeding beyond preferential procurement programmes,” he says. “Success comes when suppliers can compete on quality, innovation and capability, not only because they qualify for a particular policy preference.”

Critics have long argued that poorly designed localisation requirements can increase costs, reduce competition and create market distortions. According to Vos, the solution is not choosing between localisation and value for money but designing procurement frameworks that achieve both.

“Developmental outcomes may sometimes involve short-term trade-offs, but those trade-offs should be transparent, measurable and proportionate,” he says. “The objective is not protectionism, but building more competitive local industries over time.”

Striking the right balance between developmental impact, competition and value for money remains one of the defining challenges of developmental procurement. For Vos, the answer lies less in protecting suppliers and more in making them competitive.

Building supplier capability remains one of the biggest challenges. For many smaller businesses, access to contracts is only part of the equation Funding constraints, infrastructure gaps, limited market access and workforce development needs can all restrict growth.

Vos believes supplier development should be viewed as a shared responsibility between government, corporates and procurement professionals. The most successful developmental procurement programmes combine clear developmental objectives with long-term supplier partnerships, ensuring procurement spend translates into sustainable economic impact.

“Businesses become more competitive when they have access to mentorship, knowledge transfer and greater certainty around future demand,” he says.

This shift requires organisations to move beyond compliance-focused procurement approaches that prioritise scorecards and reporting requirements. “Too often success is measured by whether targets were achieved on paper rather than whether suppliers became stronger businesses,” says Vos. “Compliance is important, but it should be the starting point, not the end goal.”

Instead, organisations should evaluate whether procurement programmes are creating lasting employment, helping suppliers expand, improving productivity and enabling businesses to participate more effectively in wider supply networks.

One of the most important measures, Vos argues, is whether suppliers continue to thrive long after the original contract has ended. If businesses remain dependent on a single programme or customer, the developmental impact is limited. “The true test is whether they can compete successfully long after the original contract ends.”

Looking ahead, Vos says the next phase of developmental procurement should focus not only on strengthening domestic industries, but also on preparing suppliers to compete across African markets as regional trade integration accelerates under initiatives such as the African Continental Free Trade Area (AfCFTA).

“The focus now needs to shift from compliance-driven localisation towards capability-driven localisation,” he says. “The ultimate measure of success will not be how much money was spent locally, but whether procurement created stronger businesses, more resilient industries and sustainable economic participation.”

This outcome-focused approach reflects a broader shift in how public procurement is viewed globally, not simply as a purchasing function, but as a driver of economic development.

“The real legacy of developmental procurement is not the contract itself, but whether it helps create businesses that continue to grow, employ people and contribute to the economy long into the future.”

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