THE ADOPTION OF E-PROCUREMENT IN TANZANIA PUBLIC PROCUREMENT: PROGRESS,

CHALLENGES AND THE WAY FORWARD.

By Alban Mchopa

1.1 Introduction
The increased adoption of the internet for business uses globally, has influenced the function of
procurement to migrate from traditional paper-based processes to e-procurement. The unique
features of the internet and related web-based technologies can potentially support the activities of
procurement, and at the same time provide improvements to the procurement process. It is on this
ground that e-procurement has, in recent years, been used as a means to significantly reduce costs
because its ability to reduce transaction costs and manage the inventory in a more efficient manner.
In its most basic definition, e-procurement is the stream- lining of procurement/purchasing
processes by eliminating traditional paper-based documents such as purchase orders, requisitions
forms, invoices etc and replacing them with electronic based paperless processes. It is a powerful
business tool that can revolutionize the buying function of an organization by streamlining and
automating the labour intensive procurement routines which in return enable employees to gain
direct access to their suppliers' systems, visually confirm technical specifications and view product
pictures, price points, and detailed product descriptions, (Thompson, 2008).

Companies that use e-procurement technologies save 42% in purchasing transaction costs due to
the simplification in the purchase process and the reduction in purchasing cycle time, which in turn,
increases flexibility and provides more up-to-date information at the time of placing a purchase
order. Thus, e-procurement tends to leverage the bargaining power of companies willing to
establish contracts with their preferred suppliers and as a result, the overall maverick buying is
lower (Hawking et al, 2004).

According to Turban et al (2000), many companies and government institutions across the globe
are adopting e-procurement primarily to save costs of operations as procurement consumes up to
75% of the budgetary spending. However, apart from saving costs, e-procurement provides more
benefits to the organisation or government institutions such as reduced purchasing cycle time,
reduced inventory levels and costs, obtaining high quality data on purchasing activities, enhanced
transparency and accountability in the purchasing process, enhanced budgetary control and low
prices due to product standardisation and consolidation of buys.

1.2 Progress reached towards adopting e-procurement in Tanzanian public procurement

The adoption of e-procurement in Tanzania is a new phenomenon although some initiatives have
already being undertaken by few private companies especially owned by foreign investors in large
part. Public procurement is still lagging behind as the initiatives slowly progressing and mostly
things are done manually through following the traditional procurement. This calls for a total
country approach where by the whole procurement system in the country will be integrated
electronically.

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To start with, the country can start with the procurement of routine items which are less costly,
risky and plenty available in the market as there are many suppliers. This will save costs, minimize
unnecessary delays and ensure the achievement of value for money in public procurement.

Towards its efforts to integrate public procurement electronically Public Procurement Regulatory
Authority (PPRA) has established the Procurement Management Information System (PMIS) for all
public Procuring Entities (PEs) to share some data with PPRA. PMIS is a tool to facilitate exchange
of information between PPRA and PEs. PMIS supports the system for checking and monitoring of
procurement activities by enabling online submission of Annual Procurement Plans (APP), monthly
reports and checklist forms (Sijaona, 2010). Other e-procurement interventions in place include e-
sharing of public procurement news and knowledge through website- http://www.ppra.go.tz; e-
sharing of public procurement knowledge through online Tanzania Procurement Forum -
http://forums.ppra.go.tz; and e-advertising of tenders and e-informing of tender awards through
tenders portal-http://tender.ppra.go.tz.

On the other hand, a feasibility study on implementation of full e-procurement in Tanzania was
carried out in April, 2010. The study focused on key issue including readiness of existing legislative
framework, Information and Communication Technologies (ICTs), infrastructure and people
(Sijaona, 2010). The study found out that policy framework, legislative framework, institutional
structures and ICTs are not ready but efforts initiated while the procurement processes are ready
however, additional efforts required. Recommended actions are currently being worked on so as to
achieve the recommended readiness levels prior to implementing full e-procurement systems.

1.3 Challenges on adopting e-procurement in Tanzania public procurement

In the public procurement context, there are various organisational, technical and governmental
challenges on the ground that defies the full integration and adoption of e-procurement in public
procurement. Once these challenges are addressed effectively, the country will make good progress
towards full application on e-procurement especially in public procurement. The challenges include
but not limited to poor technological infrastructure, inadequate funds for capital investment, risks,
unsupportive legal framework, shortage of technical knowhow, incapable suppliers, changes of
responsibilities, shifting the mind-set of people. Also there is shortage of technical support, security
of data transaction, poor network infrastructure and unstable power supply. For example, Duru
(2008) made a study on the challenges facing e-procurement implementation in Tanzania taking a
case of TANESCO. The study found out that staff are interested to operate electronically but
currently they have made a little progress whereby they communicate with suppliers via e-mails,
telephones and faxes thus, e-procurement is still at infancy stage. However, this is hindered by
several challenges that include inadequate financial resources for capital investment, shortage of
skilled manpower/experts in e-procurement and incapable suppliers.

1.4 The way forward

In Tanzania, most people think that purchasing of vehicles online is e-procurement by itself but the
truth is far from that as it is only one among the many approaches to reach full e-procurement
application at a country level.

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E-procurement is successfully implemented through business to business (B2B) level of transaction
i.e organisation (Procuring Entity) to organisation (Supplier) and not at individual level (consumer
to organisation-C2B) such as purchasing vehicles online. However, this progress can not be ignored
as it enlightens and exposes individual procurement experts to some practical knowledge on e-
procurement such as the Electronic Data Interchange (EDI), e-sourcing, e-payment and risk
management. Hence, when the e-procurement revolution comes they will be a little bit prepared. At
the country level, we have made little progress towards full application of e-procurement and more
efforts are required in order to fast track the process. Hence, the government has to be more
committed and needs to provide its full support. Hence, as the way forward, the following
framework should be adopted for adopting e-procurement effectively in public procurement.

Figure 1: Framework for adopting e-procurement in Tanzania Public Procurement

Presence of
Legal Support

Supplier Adoption of E- Capital

Capability Procurement in Investment on
Tanzania Public Technological
Development
Procurement Infrastructure

E-Procurement
Experts
Development

Source: Author’s Construct (2012)

Presence of legal support. The inappropriate introduction of e-procurement carries high risks of
market fragmentation. The legal, technical and organisational barriers that may result from
procurement online are one of the greatest challenges for policy makers (Commission of the
European Communities, 2004). Despite that, the Public Procurement Act 2004 (PPA 2004) and ICT
Policy of 2003 do not provide adequate legislative framework for the application and
harmonization of e-commerce and e-procurement in the country. However, the newly enacted
Public Procurement Act 2011 (PPA 2011) has included some provisions mandating PPRA to initiate
e-procurement in the country but they are not adequate enough to fast track the process.

For this reason, e-procurement needs legal support on how the exchange of information will be
secured, payment system and exchanges of bidding documents harmonized electronically while
data confidentiality and authentication maintained in the country. Therefore, the current legal
frameworks in the country in terms of laws, regulations and policies have to be changed by the
government in order to support the efforts geared towards the adoption of e-commerce and e-
procurement in the country.

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For example, the new PPA 2011 and Public Procurement Policy (PPP) that are still on preparation
should come up with the mechanism to regulate key activities of procurement such as sourcing,
payment and tendering proceeding from manual operation to e-sourcing, e-payment and e-
tendering where tender documents will be issued, submitted and evaluated online while
maintaining confidentiality, data security and authentication.

Development of experts on e-procurement. The implementation of e-procurement techniques

requires personnel who are experts in the e-procurement issues at the country level and
organizational level both in the procuring entities and the supplier entities (Veit et al, 2011). Hence,
to be successful in the application of e-procurement at the country level there is a need of having
adequate e-procurement experts at PPRA, supplier organisations and PEs who will be in charge of
the day to day implementation activities and harmonization of the e-procurement system. The
country has inadequate experts on the subject matter; therefore efforts should be taken by the
government and the respective entities to train their experts on e-procurement techniques and
technologies so that they may become competent and conversant on e-procurement and in return
participate actively on the whole process of installing e-procurement infrastructure.

Capital investment on technological infrastructure. E-procurement application requires good

and supportive soft and hard technological infrastructure across the country for it to be effectively
applied (Veit et al, 2011). To mention a few, there should be stable power supply, undisputed
network infrastructure, e-procurement software, adequate servers and backups. A country e-
procurement readiness report evidenced that few of these do exist in the country but the
Government is trying to make changes such as the installation of the national broadband. Therefore,
adequate funds should be set aside in the Government budget that will be specifically utilized for
capital investment on e-procurement technological soft and hard infrastructure in the country (Veit
et al, 2011). Hypothetically, it is believed that there is a direct relationship between supportive
technological infrastructure and the application of e-procurement in the country, hence priorities
towards capital investment should be changed and be channeled towards constructing e-
procurement technological infrastructure.

Development supplier capabilities. In order for e-procurement to be effectively applied in the

country, there should be a common system that will be harmonizing the procurement transactions
between the buying organisations and the selling organisations. Therefore, both ends of the
procurement system should be adequately equipped with the necessary e-procurement technology
and techniques.

Currently, most suppliers are not well capable of being integrated into the e-procurement in terms
of competent personnel and technological well being. Hence, initiative should be taken to develop
our local suppliers technologically so that when the right time comes they can be able to access
procuring entities inventory reorder levels and stock updates online, obtain requests for quotations
and submit them online, receive payments online, review and assent procurement contract online
and share other data through EDI.

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1.5 Conclusion
E-procurement has, in recent years, been used as a means to significantly reduce costs, because it
typically reduces transaction costs and manages the inventory in a more efficient manner. This has
been the motive for its adoption in many countries; however the same has not been fully done in
Tanzania. This shows that the application of e-procurement does not happen abruptly but it takes a
series of stages and commitment in terms of government commitment, management commitment,
capital investment, policy and legal framework support, competent manpower, capability
development and technological integration between key players. When all these and other drivers
for e-procurement are properly integrated the benefits of e-procurement such as cost reduction,
harmonisation of procurement proceedings and minimisation of lead times can be realised by the
respective country or public institution.

REFERENCES
Commission of the European Communities (2004). Action plan for the implementation of the legal
framework for electronic public procurement available on line at
http://ec.europa.eu/internal_market/publicprocurement/docs/eprocurement/actionplan/actionpl
an_en.pdf retrieved on 10.09.12

Duru. H. A., (2008). Challenges facing e-procurement implementation in Tanzanian organisations, a

case study of TANESCO headquarters. Unpublished Msc. PSCM Dissertation, Mzumbe University.

Hawking. P., et al (2004). E-Procurement: Is the ugly duckling actually a swan down under, Asian
Pacific Journal of Marketing and Logistics, volume 16 (1), pp 3–26.

Sijaona. K. (2010). E-Procurement in Tanzania, paper presented at the 3rd East African
Procurement Forum –White Sands Hotel, Dar es salaam, Tanzania – 29th Sept-1st October, 2010.

Thompson S.H. et al (2008). Adopters and non-adopters of e-procurement in Singapore: An

empirical study. Omega International Journal of Management Science. The article is available online
at www.elsevier.com/locate/omega

Turban, E., et al (2000). Electronic commerce: a managerial perspective. Prentice Hall Inc

Veit, J. D., et al (2011). E-Procurement Adoption at the Municipal Level: Influence of Organizational,
Technological and Environmental Factors, available on line at
http://www.researchgate.net/publication/221182652_E-Procurement_Adoption_at_the_
Municipal_Level_Influence_of_Organizational_Technological_and_Environmental_Factors