Paving the way for female entrepreneurs to win government tenders

Economic empowerment of women is one of the key objectives of United Nations' Sustainable Development Goals (SDGs). Goal five covers gender equality, with 5c specifying a goal to "adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels".   

Creating equal opportunities for women in public procurement is an overlooked aspect under this goal that needs to be addressed. Women owned businesses (WoBs) are typically small and have insufficient network support or connections to influence public policies. Women are underrepresented in public procurement and in tender committees. But inclusion of WoBs can benefit public procurement and help achieve SDGs. 

Public procurement is a significant part of government expenditure. There are specific policies in place that seek to prevent misuse of taxpayers' money. In order to ensure transparency, Bangladesh government's procurement through e-GP has been gradually increasing, which is the national e-Government procurement portal that provides an on-line platform to carry out all the procurement activities by government agencies. In 2002, the Central Procurement Unit (CPTU) was established to oversee the process. 

Government expenditure constitutes about 30% of the GDP in developing countries. In the member countries of OECD – the intergovernmental economic organization consisting of 38 member nations, mostly from North America and Western Europe – the number is about 12%. 

In Bangladesh about 45% of the national budget is spent on public procurement every year. There are 1,365 procuring agencies in the country. By August 2021, a total of 1,362 agencies were registered with the e-GP system. The number of bidders registered with e-GP stood at 90,000 to date. Even though data is not available on how many of these are WoBs, anecdotal and circumstantial evidence suggest that the number is insignificant.

Women owned businesses, however, are clearly growing. Women engineers, for instance, among other highly qualified women professionals, are opening up consulting firms. They are getting success in private procurement and are willing to participate in public procurement. But for that policy support is needed. 

As per Global Public Procurement Database (GPPD) of the World Bank, global expenditure in procurement is estimated to be approximately $9.5 trillion. The gender imbalance is starkly visible from data that shows that women-owned businesses account for only one percent of public procurement globally. 

An analysis of Bangladesh's Public Procurement Act, 2008 and the Public Procurement Rules 2013 by the Public Procurement Research Centre of the International Trade Centre (ITC) show that there is no specific reference to women, youth, persons with disabilities or any other disadvantaged groups in these laws. 

Essentially, this means that Bangladesh needs to consider creating a gender-responsive public procurement policy that will facilitate the participation of women-owned businesses in the procurement process. In addition, the government could establish a solid legal ground to include women, youth and persons with disabilities in the procurement process. In achieving this objective, the government of Bangladesh should decide whether it wants to increase the participation of women-owned businesses in the procurement process or whether it wants to make sure that women win more tenders. 

International Trade Centre's (ITC) SheTrades Initiative (Geneva) and BUILD, a Bangladeshi public-private dialogue platform that works in the area of private sector development, jointly initiated a number of activities such as stakeholders' consultation through a workshop to gather inputs and to agree on a plan of actions. 

Insights gained from the feedback show that WoBs face mainly six barriers that create constraints in being a successful tenderer. These are: Inadequate legislation and policies, misfit tender design, excessive requirements, poor practices by the government, lack of information shared with women-owned businesses, and limited capability of women-owned businesses. With a level playing field, women can participate and contribute significantly, ensuring competition and transparency in public procurement. 

Increasing the successful participation of women is imperative for growing confidence among entrepreneurs. The e-GP system is a very helpful platform for women entrepreneurs, and it can play a very significant role, given that crucial information is disseminated on time and procedures are streamlined. Currently, about 63% of the tenders are acquired through the e-GP.

Thankfully, the Central Procurement Unit (CPTU) is working to put in place a measure that will determine the gender of participants in the procurement process. It also proposed that there should be regulations governing the disposal of assets. 

With the introduction of e-GP system, average procurement lead time for invitation to contract has been reduced from 94 days to 50 days, percentage share of awarded bid within original bid validity period increased from 10% to 90%, rejection of bids reduced from 8% to 3%. 

All of these changes together amounted to savings of about $600 million, decreased 153,559 tons of CO2 emissions, and saved a huge amount of paper. These are all very big achievements for bringing transparency in the procurement process and can play a vital role in higher participation of WoBs.

One of the obvious first steps toward WoBs winning more contracts would be to increase the low percentage of women participating in public procurement. Requirements for proof of experience when participating in tenders discourage women entrepreneurs from participating, and relaxing the requirements for WoBs can ensure higher participation. 

The stakeholder workshop asked for opinions of participants on whether there is a need for a separate policy for WoBs. Majority of participants believed that a revision of the public procurement rules is necessary instead of creating a new gender-responsive policy at this stage. There is also the need to have a functional definition for women-owned business, they also identified. However, Bangladesh Bank considers any business as women-operated if at least 51% share is owned by women. Proof of registration with joint stock companies is one means by which this is verified.

A persistent problem is lack of knowledge among WoBs. The workshop participants showed that even those who are otherwise capable and meet the eligibility requirements for getting contracts, are not clear about the overall tendering process in the respective fields. Website information is mostly inadequate. 

Formulation of a preferential procurement policy for WoBs, at least at the initial stage is needed, similar to policies in other countries, such as in Chile, where quota for women participating in the public procurement system was introduced in 2015, which eventually helped women participation to reach 36.5% in the country. This corresponds to more than 21,345 women quoting, offering or receiving purchase orders. The country amended its regulations so that women-owned businesses could be hired directly for procurement under $600. The Gambia spends an estimated 1% of its public procurement budget on women-owned businesses.

In Bangladesh, despite efforts by government organisations, building capacities for WoBs to be successful tenderers is not seen as a priority yet. The issue is absent in the central policy planning, budgetary allocation. 

With strong enough political commitment, policies can be reformed, targeting SDGs and ensuring equal opportunities. In order to encourage WoBs, the first intervention should be in the form of removing experience and turnover as the main criteria, and giving preference instead to quality of work, uniqueness, transparency and accountability. Banks also need to be aligned with the procuring policies so that funding can be available. A clear road map with a targeted action plan can contribute to the improvement of the situation.

Ferdaus Ara Begum is the chief executive officer of BUILD, a public-private dialogue platform that works in the area of private sector development.