Assessing the effects of the Procurement Act (663) on public financial management in Ashanti Region

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The government has since 2001 made various efforts to correct the uncontrolled expenditure of public funds that characterised the national economy and led to a rather unstable economic climate. The government therefore set itself the task of regulating expenditure and instilling discipline in public finances through Public Procurement Act (663) and Financial Administration Act (654). According to Osafo-Marfo (2003) government embarked upon an exercise to reform the Public Procurement System in 1996 as an integral part of a wider Public Financial Management Reform Programme (PUFMARP). Public procurement accounts for about 50% to 70% of total government expenditure, represents 14% of Gross Domestic Product (GDP) and accounts for about 24% of total imports (Ministry of Finance, 2003). This study sought to find out how far the Public Procurement Act has achieved transparency in the use of state resources, causes of delays in the procurement process and effects of the Procurement Act on government expenditure. Geographically, Ashanti Region was the focus of the study, the reason being that, there were a lot of agitations in the region about lack of transparency in procurement activities and long delays in payment of contractors and suppliers. Explanatory research design was used to explain and analyse causal relationship between the Public Procurement Act and public financial management in Ashanti Region. The study relied on both probability and non probability sampling techniques. The study revealed that procurement activities and procedures were transparent in that decisions on procurement activities followed the rules and regulations of the Act and these decisions were available and accessible to the public. The study again revealed that contractors were not paid on time after execution of contracts and this affected their organizational management. It was concluded that the Procurement Act had reduced government expenditure considerably in the sense that the Procurement Act has reduced wastage and leakage of financial resources through effective auditing, expenditure monitoring and cost effectiveness and competition which has brought value for money. It was therefore recommended that Procurement entities comply with the contractual agreement with contractors/suppliers by honouring prompt payment upon completion of contracts/projects. In addition, Government should endeavour to review the Act to limit the number of steps in the procurement process so as to reduce the delays in the procurement process.
A Thesis submitted to the School of Graduate Studies, Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirements for the degree of Master of Science in Development Policy and Planning.