For Ghana and rest of Africa to fully reap the benefits of the Africa Continental Free Trade Area (AfCFTA), there is the need to “strategically” move away from short term price-based buying to value and developmental based sourcing.
Strategic sourcing, according to Professor Douglas Boateng, refers to the ‘big picture’ element of supply chain management, with a prime focus on the entire benefits of sourcing to organisation, industry and society.
“There are many existing structural inefficiencies that have threatened the success of the Agreement but thankfully, we are gradually removing them. But this will not yield the intended results if we continue to stick to the old, and evidently flawed approach to the sourcing factors of production,” Professor Boateng stated in an extensive session with the B&FT.
Strategic sourcing has come into renewed focus following the advent of COVID-19, as individuals, companies and governments sought value pricing due to unprecedented disruptions to global supply chains.
Prof. Boateng, however, emphasised that whilst “maximizing” spending remains one of the principal goals of strategic sourcing, it does so by taking into consideration the total acquisition cost of ownership incurred over the medium-to-long term. “Strategic sourcing is not about the cheapest price, but rather about value pricing and attainment,” he re-emphasized.
According to Professor Boateng, oftentimes decision makers have been carried away by the notion that the best value for money purchase is the one where they pay the least amount of money upfront. However, the global evidence from extensive research and experience shows that, it is not necessarily the case.
Africa’s first-ever appointed Professor Extraordinaire for supply and value chain management, governance and Industrialisation, former non-executive chairman of the Public Procurement Authority and currently chairman of Ghana’s Minerals Income and Investment Fund also advised if Africa can focus on developing its supply chain infrastructure, it would not only allow for improved intra-continental trade but would see the region emerge as a major player in the global trade.
Already, the continent’s infrastructure investment deficit according to the African Development Bank will be as much as US$170 billion a year by 2025, with an estimated gap of around $100 billion a year with transportation networks being one of the areas in which this is most pronounced. Road networks in the continent’s 16 landlocked countries are woefully inadequate, coupled with poor port administration, and underdeveloped rail and waterway systems.
In addition to measures being undertaken to overcome some of these challenges, Prof. Boateng called for individuals, businesses and nations to think outside of their local and national contexts and to make use of enabling information technologies to foster continental networking and information flows.
“Large political and socio-economic issues need to be tackled as a collective to break down artificial trade barriers. In time, African economies can move away from country-specific initiatives to ‘Proudly African’ initiatives – for example, a product might be labelled ‘Made in Africa,’ produced in Ghana or South Africa or Kenya etc.
Through this, the definition of ‘buying local’ automatically changes to strategically sourcing continental-wide produced goods and services. Such a move has positive implications for AfCFTA,” Prof. Boateng explained.
He also recommended that strategic sourcing becomes a mandatory feature across the education spectrum as well as in the procurement policies of businesses and the central governments.