Effective e-Government Government-to-business
Written by Pamela Weaver
THE CRITICAL ELEMENTS
THE REGULATION GAME
The relationship between government and business has, for a long time, been symbiotic.
The past 20 years have seen a shift in government’s role from one largely based on service provision to a regulatory one, particularly in the areas of education, healthcare and telecommunications. The recent economic crisis has seen calls for an even greater role for government in the financial services sector as a whole, with many countries forced to effectively nationalise failing financial institutions in an effort to counter the effects of “toxic debt” and dubious practices in some business sectors.
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STRATEGY FOR SUCCESS “Over the next five years, the state must do more to improve the support structures and systems for economic activities that create decent work opportunities on a large scale, above all by identifying opportunities for growth and providing, where required, infrastructure, training, marketing support, efficient regulations and access to start-up capital... Accelerating and strengthening the implementation of a scaled-up Industrial Policy Action Plan (IPAP) by providing necessary human and monetary resources and improving co-ordination to ensure appropriate action among government, business and labour as well as within government among the three spheres, parastatals and development finance institutions.” – Medium Term Strategy Framework A Framework Guide to Government’s Programme in the Electoral Mandate Period 2009-2014 |
In troubled times, the role of government in steadying the ship and driving sustainable growth and recovery has never been more important. As the Organisation for Economic Cooperation and development puts it: “Government has a larger role in the societies of OECD countries than two decades ago. But the nature of the public policy problems and the methods to deal with them are still undergoing deep change. Governments are moving away from the direct provision of services towards a greater role for private and also non-profit entities and increased regulation of markets. Governments’ regulatory reach is also extending into new socio-economic areas.”
Making it count
According to the World Bank, Africa’s economic growth hinges on its ability to “unleash the power of its enterprises to create jobs, expand exports and generate wealth.” To do this, South Africa’s government has to work to make our regulatory and legal climate for business (particularly in the small-to-medium business sector) less costly and more transparent. Equally importantly, investment in infrastructure must be increased – an area that, thanks in no small part to South Africa’s hosting of the 2010 World Cup, has enjoyed a significant boost in recent times, particularly on the transport and telecommunications front.
Indeed, the latter has come in for particular attention in the government’s 2009- 2014 strategy programme, where “the development and utilisation of information and communications technology (ICT)” is identified as a “critical driver of development” in terms of infrastructure development, its contribution to manufacturing and as a platform for transmission and processing of information.
Playing second fiddle
With a few notable exceptions such as the South African Revenue Services (SARS) and Department of Labour, the problem facing South Africa when it comes to government-to-business (G2B) service provision centres largely around a distinct lack of online transaction-based interaction. When it comes to e-government provision, G2B has occupied the Cinderella place on the evolutionary ladder for some time. Businesses – particularly the emerging small-to-medium (SME) sectors – are overwhelmed with bureaucratic paperwork that squanders economically productive time and creates barriers to entry for home-grown, small entrepreneurs while discouraging bigger potential investors. A technology-based lifeline would enable local enterprise to interact more efficiently with government at all levels.
| DEPARTMENT OF LABOUR WORKING ON SERVICE
While it’s fair to say that the bulk of SA government online offerings are high on information and low on transactional ability, the Department of Labour currently offers a happy medium. Worker information on everything from maternity leave rights to UIF and a selection of “Basic Guides” to annual leave are clearly on view alongside data that is organised in the best-practicefriendly subject/interest group format. For employers, there is a clear link to online services offered, including online submission of UIF and BEE declarations. Compensation Fund claimants, meanwhile, can monitor the progress of their applications online by entering their ID number and other application-specific data. |
MOVING BEYOND WORDS
South African government sites are, generally, chock-full of information aimed at the business community. The problem is that in the midst of such word-heaviness, it’s near-impossible to interact with government online. It’s time to move away from the shop-window mentality and actually start tempting customers inside.
The Department of Trade and Industry (Dti) is but one example of this tendency – the site offers access to all manner of reports, data, legislation, regulations and advice to aspiring entrepreneurs or those looking to expand their reach. Links to sites such as the Companies and Intellectual Properties Registration Office (CIPRO) or women’s business networks are useful but ultimately require users to download and print application forms for various programmes. Although CIPRO does allow electronic registration of names for close corporations and trademark services, the offer of a link to credit card payment options repeatedly ended in tears whenever this writer attempted to access it as the link led to a blank page.
In 2009, as in 2008 and unfortunately 2007 before it, the trend is still very much one that involves the filling out and faxing/posting/hand delivery of scads of paperwork. Given some of the G2G challenges raised in a previous chapter, it’s only fair to assume that paperwork delivered in this way also finds its way slowly through a similarly half-digitised bureaucratic process.
Keeping citizens informed via websites is a springboard for other e-government strategies. Real progress is made when this foundation is built on to offer form completion and submission online – along with the capacity to offer progress reports. These will only be possible in a meaningful way when the G2G challenges of skills, standardisation and integration and infrastructure are overcome.
BROADENING THE ACCESS BANDS
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THE PARTNERSHIP PRINCIPLE “The government’s focus on increasing its own capital investment is very welcome. The large capital deficits and backlogs in a number of government-driven areas are a definite impediment to higher growth. However, the lack of capacity in various parastatals and local government, and the relatively low priority given to public-private partnerships, or the use of the private sector as a delivery agent has implications for the delivery of cost-effective, timely and efficient outcomes. Business Unity South Africa (BUSA) believes that partnerships can deliver better outcomes.” – BUSA |
According to the World Bank, broadband has “considerable economic impact at all levels of individuals, firms and communities.” The Bank’s “Extending Reach and Increasing Impact” document points to the centrality of broadband in furthering education/skills and therefore increasing employment opportunities for citizens. From a business point of view, it states that “When fully absorbed, broadband drives intense, productive uses of online applications and services, making it possible to improve processes, introduce new business models, drive innovation and extend business links.”
The report goes on to describe how research undertaken by Clarke and Wallsten showed that in 27 developed and 66 developing countries, a 1% increase in the number of Internet users correlated with a boost of 4.3% in exports. World Bank figures, meanwhile, have shown that in 120 countries surveyed, every 10% increase in broadband penetration correlates with a 1.3% increase in economic growth. According to the World Bank, the “growth effect of broadband is significant and stronger in developing countries than in developed countries and it is higher than that of telephony and Internet... Because broadband networks have the potential to contribute so much to economic development, they should be widely available at affordable prices and should become an integral part of national development strategies.”
With the above in mind, the new undersea cable initiatives represent a welcome commitment to change, however late some may claim it to be. Equally, the Industrial Development Corporation’s (IDC) recent announcement that it will invest over R7 billion over the next five years in ICTs demonstrates that all eyes are on the future. In the past, the IDC has invested in, among other things, second national operator Neotel’s fibre-optic cable initiative as well as a telecommunications satellite. The organisation has also set-up a Technology Industries division to focus on growing the sector, this despite the recession-induced cut of 50% in funding it allocates to technology industries.
PUBLIC-PRIVATE PARTNERSHIPS
With the move away from hierarchical, bureaucratic relationships described in the chapter on G2G provision, private enterprises, third-party organisations and non-profits are increasingly becoming involved in the complex mix that makes up a modern democracy. In this new environment, governments are positioned to offer leadership and management skills, partnering with the private sector to provide enhanced services from roads to education, healthcare and administration services.
Locally, Public-Private Partnerships (PPPs) are seen as, among other things, an ideal solution to the challenges that beset local government in particular, where skills shortages have seen a lack of capacity to deliver regardless of the quality of infrastructure or size of budget. They’ve been around since 1999 and are underscored by structures such as the Municipal Infrastructure Development Unit (MIIU), a joint initiative between the South African government and USAID to offer technical and funding assistance to municipalities seeking to utilise private sector services and skills.
According to the National Treasury’s PPP Unit, South African law defines a PPP as “a contract between a public sector institution/municipality and a private party, in which the private party assumes substantial financial, technical and operational risk in the design, financing, building and operation of a project.” According to the legislation, two types of PPP are specifically defined, namely the private party performs an institutional/municipal function, and the private party acquires the use of state/municipal property for its own commercial purposes. A PPP may also be a hybrid of these types.
Payment in any scenario involves one of three mechanisms, namely the institution/ municipality paying the private party for the delivery of the service, the private party collecting fees or charges from users of the service, or a combination of these.
PPP and achieving BEE objectives
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GETTING E-PROCUREMENT RIGHT IN IRELAND The Irish government has won acclaim for its government procurement portal, which offers a centralised, one-stop shop for businesses. The portal handles tender submission and vendor registration along with a simple, easy-to-follow “Getting Started” section as well as clear information on what is involved in working with the government. Businesses can subscribe to receive email alerts whenever new, relevant opportunities are published. |
Among the reasons offered by the Treasury for this are the following:
• Clearly-defined risks and costs so participants know exactly what they’re committing to.
• They assist with the formation of “special purpose vehicles” (SPVs), facilitating longterm, beneficial partnerships between new black enterprises and experienced, resourced companies at project management and sub-contracting levels
• Where government is buying a service and that service is provided to agreed standards, there is a steady revenue stream to the business, reducing risk to new black enterprises.
• Through subcontracting and procurement mechanisms, PPPs can involve a broad spectrum of businesses, from large to small.
Conditions are right
Many commentators question the ethics of outsourcing government services to private contractors, but when efficiency is the name of the game and there’s a skills crisis confronting you, the decision has to be taken to simply get things done even while you’re trying to fix other problems. When it comes to PPPs in South Africa, the ball is firmly in the private sector’s court when it comes to fostering the trust and confidence necessary for them to succeed. Central to this is a full understanding of the needs of government agencies and departments – PPPs can be complicated and, of late, seem to end regularly in a mess of shifting responsibilities, finger-pointing and cancelled or delayed projects.
Generally speaking, for a PPP to be successful, it must meet three conditions: the project should be affordable, offer good value for money and should effect the transfer of appropriate technical, operations and financial risk to the private party. As USAID puts it, “these conditions help determine the success of the PPP project cycle: inception, feasibility, procurement and PPP management and auditing.”
In highly-publicised failures, Deloitte points the finger towards governments attempting to use the traditional hierarchical controls over what is really a networked, horizontally-structured service model. Too often, departments view PPPs as an opportunity to make their woes someone else’s problem – lacking the desire or capacity to fix something, they simply pass it on. A better approach is needed and Deloitte suggests the following, among other issues:
• Deciding what to outsource: Don’t just stick a pin in a list of things your department doesn’t do well – put some thought into what you’re trying to accomplish and how you think a contractor can help.
• Building new walls: Outsourcing to a variety of small contractors can lead to the recreation/replacement of existing inter-agency boundaries with new ones between vendors. Large, integrated service contracts can help prevent conflicts and long-term coordination problems.
• Common sense over enforcement: Rather than worry about under-bidding contractors increasing charges once they’re entrenched, governments should adopt a flexible approach, enforcing the spirit of the contract but adjusting the specific terms to fit the situation.
• Finding new management skills: Government leaders have traditionally succeeded by advising on policy issues or managing a hierarchy of government employees – not by negotiating deals and managing external service providers. Success in a networked environment requires a whole new set of skills, literally changing what it means to be a public employee.
In South Africa, the ICT sector has come in for a lot of stick around government project implementation and complaints that the government takes too long to process and approve ICT partnerships and projects is not unwarranted. The ensuing wait gives everyone involved enough time to get cold feet or pick holes in agreements – or move on for a better offer. As things stand, even in the most advanced countries, PPPs are handled with care – especially larger projects which are difficult to structure and have a lot riding on their success. When things do go wrong, governments should bear in mind that outsourcing and hand-washing are not the same thing – they cannot always expect the private partner to accept all the accountability for failure to deliver on a project in which the government itself has been closely involved.
OPENING FOR BUSINESS
South Africa’s e-government focus has for the most part focused on the need to open up access to government for marginalised citizens through the use of information portals or improving citizen services such as voter registration, social grant delivery or easier tax return filing. Indeed, the SARS e-filing initiative remains the outstanding success story of online citizen-government or business-government interaction locally. For the enterprise sector, however, interaction with government continues to be largely a paper-based, bureaucratic and lengthy experience – a source of frustration to a sector long used to interacting with global business partners on the free-flowing digital highway.
Globally, the trend for countries with highly developed e-government systems has been towards the provision of one-stop-shop, interactive platforms for businesses in need of government information or transactions. The UK’s businesslink.gov.uk portal, for example, saved 805 small businesses 2.9 million hours in 2007 by clearing away red tape and offering free access to advice and information online, eliminating the need for lengthy queues, phone calls or paperwork. A parliamentary report on the service estimated the value of the time saved at £61 million; the free advice: £94 million.
Lightening the burden
In contrast, South African businesses regularly cite the high costs of regulatory compliance and red tape as a burden on doing business. Many organisations, while accepting the need for transformation at all levels of society, cite the costs (both financially and in terms of productivity hours) involved in compliance with BBBEE Codes of Conduct as a major inhibitor of growth. Meanwhile a survey undertaken by the Small Business Project (SBP) found that, although bigger enterprises face the greatest costs, it is the small businesses that take the most strain – compliance costs represent 8.3% of turnover for enterprises with sales of less than R1 million per annum and 0.2% for those with turnover in excess of R1 billion. The SBP also found that compliance costs per head for firms with fewer than five employees were 10 times higher than for those with 200. While it does stand to reason that firms with larger turnover can spread their costs more easily, the fact that many SMEs are feeling the regulatory pinch underlines a need for regulations that are produced specifically with them in mind.
The government has made positive steps towards this – in 2007, Cabinet approved the introduction of Regulatory Impact Analysis (RIA) through a two-year pilot phase. At time of writing, data on the outcomes of this phase was not available but the RIA itself is designed to facilitate government and regulators in assessing the direct and indirect costs and benefits of proposed regulations to various stakeholders. According to the Treasury, which conducted the investigation into RIAs prior to the pilot implementation, “this will contribute to lowering the costs of doing business, increase certainty of the policy environment for investors and promote efficient regulation.”
Light at the end of the tunnel, perhaps, but as BUSA points out, steps must be taken to make required paperwork shorter and clearer, eliminate multiple requests for the same information and, where possible, reduce the number of times annually that any returns have to be made. Clearly, the SME sector is crying out for a government-led initiative along the lines of the UK’s business link portal. Ongoing monitoring and evaluation initiatives will also go a long way towards addressing these challenges.
BEATING DOWN CORRUPTION
Corruption is regularly cited as a key inhibitor to business growth in South Africa. The Department of Justice has estimated the cost of white collar crime (including fraud and corruption) to be anywhere from R50-150 billion annually. To become more competitive in a tough economic climate, enterprise needs to be able to eliminate the additional costs of crime and corruption. In 2004, the Institute for Security Studies found that corruption was the second most common crime in South Africa. The UN, conducting research on behalf of the South African government found that 15% of business had been approached to pay a bribe (7% had paid one).
Sixty-two percent of businesses claimed that bribery was becoming an accepted business practice and the most common services for which bribes were paid were government ones: clearing goods through customs (75%) and procurement of goods for government (75%). With 60% of companies claiming they could bribe police to halt investigations, it’s clear that the fingers point in both the public and private directions.
The World Bank suggests that e-government projects can improve governance by reducing corruption and abuse of discretion – therein making a valuable contribution to the development aims of many emerging economies. The bank cites India as an example, where a survey found that fewer users were required to pay bribes to accelerate service delivery when using e-government channels than manual systems and that the frequency of paying bribes to officials had also decreased. The land registration system in the state of Karnataka was estimated to have cut bribes by around $18 million annually.
Positive measure
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PILLARS OF PROCUREMENT South African government procurement regulations are built upon five pillars: 1. Value for money |
The DPSA’s website dedicated to “Anti Corruption Capacity Requirements” offers access to documents such as the Public Service Anti-Corruption Strategy, Minimum Anti-Corruption Capacity Requirements (ACCC) and the Public Service Code of Conduct. In addition, the National Anti-Corruption Forum (NACF) offers information on blacklisting and advises citizens on whistle-blowing and reporting corruption in the public service, most prominently via a “hotline” (0800 701 701).
The NACF operates in tandem with the National Anti-Corruption Programme (NAP) to drive initiatives forward and engages fully with both business and civil society. It held its third “Anti-Corruption Summit” in 2008 under the theme “Towards an Integrated National Integrity Framework: Consolidating the Fight Against Corruption.”
IN SEARCH OF PROCUREMENT PERFECTION
A Framework for Supply Chain Management is geared towards greater accountability and the elimination of corruption in the public procurement process. The Public Finance Management Act holds officials accountable for unauthorised expenditure, but ongoing investigations (some more high-profile than others) suggest that the full force of the government’s vision has yet to filter through to all levels. In addition, many point to the weak penalties – particularly for parliamentarians – for those found guilty of breaches, however small, as a sign that commitment needs to be strengthened.
The Institute for Security Studies has pointed out that, notwithstanding the efforts being made, “audit report after audit report... indicate that the troublesome interface between government and the private sector has not yet been regulated effectively.” The Institute sees a need for the involvement of the broader public “in all the critical stages of public contracting” in addition to legislative provisions because “public involvement would mean less discretion and monopoly, more accountability and ultimately less corruption.” For the Institute, the presence of civil society representatives on decision-making panels deters bureaucrats from monopolising the process easily.
Government’s online procurement of goods and services from the private sector could have immense economic benefits. Apart from time saved and the reduction of paperwork, all interactions could be fully traced and audited, helping – as the World Bank has pointed out – to reduce opportunities for corruption. Electronic government procurement (e-GP) is viewed globally as an important process in fostering transparency in purchasing cycles. Supported by the African Development Bank and World Bank among others, there is an e- GP portal offering tools, case studies and best practice advice at www.mdb-egp.org.
Seeing-through processes
E-government procurement policies are proven to increase transparency and savings in countries that implement them correctly, stimulating and driving productivity not only within government but also for large and medium businesses. According to the World Bank, an e-GP portal is a powerful tool for reform and anti-corruption vigilance, enabling a more client-oriented, accountable, efficient and empowered procurement process. By facilitating demand aggregation across government departments and functions, buying power is enhanced, transaction costs lowered and value for money is easier to ensure. Additionally, when international ICT standards such as this are adopted, governments can drive consistent, interoperable relationships with international trading partners.
E-tendering functionality is relatively simple and inexpensive to implement, yet provides a massive boost in value to businesses. Functionality can be increased on an incremental basis and often includes the following:
• A single website detailing information on all tendering opportunities
• Online registration for businesses
• Online search tools
• Online, open access to all original documentation
• Electronic bid submission
• Customisation options for agencies.
None of this is without its challenges, however. Security – in the form of cast-iron log-in/passwords/digital signatures/confidentiality – will always be a challenge. Strict adherence to and support for requirements such as receipt validation, bid opening and negotiation procedures have to be built into any system. As with so many transversal government systems, there is complexity involved in tying the business-facing side of the project to back-end systems – in this instance, matching orders with financial and inventory systems. If these are in a mess, achieving the ideal of automatically-checking a purchase order against both inventory and budget is impossible. Workflows and transactions must be seamlessly integrated to ensure success.
Function at the front end
If the back-end systems are properly in place, e-purchasing functionality for users can be addressed. This can be complex, calling as it does for the integration of workflows and transactions as well as requiring the capacity to manage a variety of purchases and information workflows for many buyers and many sellers. Some basic functionality options include: • Online registration
• Online purchasing policies
• Buyer authorisation management
• Online quotations and information flows
• E-purchasing transactions
• Financial management integration
• Data warehousing
• Reverse auctions
• Online catalogues
All of the above require investment from the vendor side – making leadership, commitment and proof-of-concept from the government side a vital factor in success. This is particularly relevant when it comes to encouraging SMEs to participate in the tender process.
BRINGING EVERYTHING TOGETHER
The government-business relationship is vital to sustainable economic success and, as such, is a symbiotic one. Government’s ambitious plans to use ICTs to achieve its social upliftment objectives require the support of the business community – both as suppliers of technologies and services and as social partners engaged in rolling out the sort of infrastructure that drives economic growth.
The role of business as a key contributor to state coffers through taxation as well as employment provision and generation hardly needs stating, but it is vital that e-government policies and objectives are developed with a firm eye on this reality. To this end, initiatives such as Regulatory Impact Analysis should have a positive impact on the government-business relationship in the coming years.
With issues surrounding corruption and crime high on the agenda, government is well positioned to get the best out of what ICTs offer in the elimination of these threats to a vibrant business environment. By rolling out clean, integrated transversal systems, government can ensure high levels of transparency and accountability while driving the kind of monitoring and evaluation processes that are necessary to any e-enabled democracy.