Investing in the Consolidation of Public Procurement

Public procurement forms 19% of GDP and 50% of the national budget, which gives it key importance in the current circumstances of Afghanistan. The new government of Afghanistan has brought extensive reforms in the procurement process to meet international standard to decrease corruption and create economic opportunities for private investment.

In strengthening investments and small and medium enterprises, the public procurement systems have created the following opportunities for strengthening private and public private investments.

The National Procurement Authority (NPA) up until now has received 3,717 procurement projects out of which 1,485 are related to goods, 1,345 are related to constructions, 103 are related to consultancy services, and 784 are related to non-consultancy services.
 

The value amount of these projects is as follows:

NO Project Type Value (AFS) % in Total Procurement Projects
1 Goods 87,102,383,765 33%
2 Construction 89,138,428,833 33%
3 Consultancy Services 80,559,917,747 30%
4 Non-Consultancy Services 9,801,233,018 04%

1 USD = 68.40 Afs as of 10 April 2016

Source: National Procurment Authority

 

The NPA has developed an electronic procurement system, for the registration of private companies to make the procurement process timely and informational on every project to all companies. Based on the information received from NPA, the estimated annual procurement value is close to USD 2 billion.

The NPA has policy to give preference to domestic firms as following:

NO Project type Value (AFN)
1 Preference given to domestic manufacturing over foreign manufacturing 15%
2 Preference given to domestic companies over foreign companies(resident/non-resident) 10%
3 Preference given to foreign company residents over foreign company non-residents 5%
4 Preference given to joint ventures 5%

Source: National Procurement Authority

 

Sector Wise – Procurement Projects:

The Afghan government’s new strategy is to consolidate the procurement of the public goods. Annually the government purchases billions of dollars worth of goods such as food supplies, pre-fabrication construction materials, and for public institutions and the military. The strategy is to outsource procurement to big companies with the obligation to manufacture the goods in Afghanistan.
 

The sector wise projects distribution is as follows:

NO Sector NO. of Projects % of Total Projects Projects
1 Security 19275 52%
2 Economic Governance & Private Sector Development 94 02%
3 Good Governance, Rule of Law, & Human Rights 178 05%
4 Agriculture & Natural Resources 439 12%
5 Health 212 06%
6 Social Protection 74 02%
7 Education & Culture 459 12%
8 Non-Sectorial 80 02%

Source: National Procurement Authority