Government purchases from local IT sectors can stimulate economy, UN reports

Credit: UNCTAD

23 April 2013 – Local purchases of goods and services in the information technology sector by government offices has untapped potential for stimulating domestic economic progress, particularly in developing countries, the United Nations reported today.

According to the study, Promoting Local IT Sector Development through Public Procurement, while local IT firms contribute to increased productivity, employment and innovation, these local businesses in developing countries are often constricted by low domestic demand.

The study, by the UN Conference on Trade and Development (UNCTAD) and the German Federal Ministry for Economic Cooperation and Development (BMZ), argues that public procurement can boost demand for their products.

“Leveraging public procurement for IT-sector development is a complex challenge, but can be a powerful policy tool when successfully applied,” said Anne Miroux, Director of UNCTAD’s Division on Technology and Logistics.

According to the study, the participation of local IT firms in public tenders is often hampered by a lack of trust and awareness, by the technical complexities of IT procurement, by inadequate procurement frameworks and capacities and by an absence of relevant IT standards and interoperability frameworks.

Drawing on country reviews of Kenya, Senegal and Sri Lanka and citing other evidence, the study suggests governmental actions that can promote local IT-sector development through public procurement.

The case of Sri Lanka illustrates how the process can take place. Sri Lanka’s national agency for information and communications technology (ICT) has established a framework of transparent and competitive tender procedures, using a range of strategies and tools to make it accessible to local firms, according to UNCTAD.

Among the results cited by UNCTAD, Sri Lanka provides targeted preferential marks to local firms, encourages joint ventures between local and international enterprises and promotes technological capacity development among local firms.

“A competitive local IT sector is essential for developing countries to reap full benefits from the world’s rapid evolution in ICT,” according to UNCTAD.


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