Foreign participation in public procurement and firm performance : evidence from sub-Saharan Africa

Abstract

This paper exploits a firm-level dataset for nineteen sub-Saharan African countries that provides information on the share of total sales to government entities to provide new insights into the relative importance of participation in public procurement activity for different types of firms. The data suggest that foreign-owned firms often account for a large share of total public procurement, illustrating the importance of FDI as a channel to contest procurement markets. Participation in public procurement is positively associated with different measures of firm performance. This is most strongly the case for domestic firms, especially small companies, and firms engaged in manufacturing activities. The positive association increases with the share of foreign firms in total public procurement, suggesting more open policy environments enhance local competitiveness.