Public procurement is key to the effective functioning of governments and public entities around the globe. Whether it’s a city council seeking to build a new road or a public hospital seeking to source COVID-related supplies, procurement helps public entities and authorities at every level to better serve their constituents and beneficiaries.
But how much weight does public procurement have in the global economy? Our team has gathered 10 facts that show how important public procurement is today:
- Pre-COVID, public procurement accounted for 12% of the GDP in OECD countries and almost 30% in developing countries, accounting for more than 30% of total government spending (OECD 2019).
- Global expenditure on procurement is estimated at nearly 9.5 trillion US dollars per annum. In 2021, the World Bank will disburse more than $4 billion for the procurement and deployment of COVID-19 vaccines to 51 developing countries. (World Bank 2021).
- The lack of an e-procurement system was reported as a critical constraint for 59% of countries surveyed by the World Bank in 2020. Countries with an existing e-procurement system had to introduce less drastic changes to adapt to the new circumstances resulting from the COVID-19 pandemic. (World Bank 2020).
- Health expenditures represent the largest share of public procurement spending, accounting for around 30% in OECD countries and over 40% in some European countries, except for the US, Hungary and Latvia. (OECD 2019).
- In 2019, $12.3 billion of UN funds were spent in developing countries, countries with economies in transition and least developed countries. Overall, this amount makes up 62 per cent of the UN's total procurement spend for its operations around the world. (Annual statistical report on UN procurement).
- 39 UN organizations reported a collective $19.9 billion spent in the procurement of goods and services in 2019. These 39 organizations increased their procurement by a combined $1.1 billion, or 5.9 per cent, compared to 2018 (Annual statistical report on UN procurement).
- In the last six years (2015 - 2020), a total of around $16 billion has been spent in Africa on the procurement of goods, services, and works, with works alone accounting for around $12 billion. (African Development Bank Group 2021).
- In OECD countries, 29% (4.2 trillion EUR) of government expenditure goes to public procurement, but between 10-30% of this amount is lost to corruption and mismanagement practices, with public procurement contracts accounting for 57% of all bribery cases in the region. (OECD 2019).
- Countries with less than 5% of their GDP invested in public procurement, show a general trend of being poor, and politically unstable, showing a direct correlation between very low percentages for public procurement as a share of national GDP and level of development or political and social stability. (World Bank 2020).
- SDG indicator number 12.7.1 cites sustainable public procurement as a necessity to achieve the Sustainable Development Goal 12: Responsible Consumption and Production (Sustainable Development Goals 2015).