From Bureaucracy to Bytes: Digitalization Reshaping Tanzania’s Procurement Future for Economic Growth

By Elmas Arisoy and Tanvir Hossain

Public procurement reform rarely makes headlines.

But when a single digital system begins to demonstrably reduce costs, shorten timelines, and open up contracting opportunities to a wider pool of businesses—all within three years—it is worth examining how it happened and what others can learn from it.

Tanzania’s Public Procurement Regulatory Authority (PPRA) has done exactly that, starting in 2023.

In a context where public procurement has long been associated with delays, limited transparency, and administrative burden, PPRA conceived, built, and rolled out the National e-Procurement System (NeST), a fully homegrown, end-to-end electronic Government Procurement (e-GP) system, drawing on its own institutional expertise.

Powered by artificial intelligence (AI), NeST automates procurement workflows and connects 21 digital government systems under one digital platform such as budget, payment, tax, business registration, central bank et cetera.

The system received the Best Public Procurement System in Africa award and has reduced procurement timelines by up to 155 days.

Among its more notable features, NeST is being used to track and expand job creation opportunities through public contracts, with a projection of up to three million jobs for special groups such as women, youth, and the elderly linked to procurement processes.

By making procurement more transparent and accessible, the system can help more firms—especially small and medium enterprises—compete for government contracts, grow their businesses, and create jobs.

It is also contributing to reductions in paper use and transport costs, with associated decreases in CO₂ emissions, thus aligning with Tanzania’s Paris Agreement commitments to reduce greenhouse gases by between 30 and 35 percent in 2030.

The World Bank Group has supported this effort through technical and financial assistance, and the NeST experience is drawing interest from other countries on the continent.

Why digitalization and AI matter in public procurement

Every year, governments worldwide spend between US$11 and US$13 trillion on goods, services, and infrastructure. Globally, this represents 12-15 percent of GDP.

In Tanzania, public procurement accounts for a significant amount of the national budget, making it one of the country’s most important levers for development.

It affects the delivery of schools, clinics, roads, and public services at every level.

Procurement reform happens at two levels

At the macroeconomic level,

It influences how effectively the annual budget is executed and how public investment translates into actual spending.

At the microeconomic level,

It determines whether individual ministries and projects are using their resources efficiently, with minimal waste and timely delivery.

In both cases, digitalization and AI offer tools to improve transparency, accountability, and outcomes. 

NeST is an excellent example of innovation, demonstrating how digitalization and AI have made significant contributions to cost savings, efficiency, monitoring, compliance, and effectiveness.

Why e-GP matters

A fully operational end-to-end e-GP system matters because it can raise the development impact of every public shilling spent. Paper-based systems are prone to inefficiencies, delays, and elevated corruption risks.

Digital procurement, by contrast, can reduce leakages, widen competition among suppliers, and help ensure that resources reach the people that they are meant to serve.

Countries that have adopted e-GP have generally achieved savings of 5 to 20 percent on procurement spending.

Bangladesh’s e-GP system, for instance, recorded a 6.9 percent cost reduction after transitioning away from paper-based processes.

For Tanzania, even a conservative 10 percent improvement could free significant resources that could be redirected towards other development priorities, such as Small and Medium Entreprises (SME) development, infrastructure, or essential services.

Beyond cost savings, e-GP transforms procurement data into actionable insights.

AI-enabled analytics and real-time dashboards give decision-makers clearer visibility into how budgets are allocated and spent across sectors—an important precondition for better-informed planning and oversight.

PPRA launches NeST

Launched on July 1, 2023, NeST is fully developed, owned, and operated by PPRA, and continues to be improved through in-house technical expertise.

The platform automates every stage of the procurement cycle, from advertising to contract completion, with minimal intervention required.

AI driven red flags throughout the procurement cycle and contract management represent a significant transition from paper-based processes to AI-enabled digital interventions, ensuring effective governance.

NeST’s financial and environmental returns

The financial case for NeST is straightforward.

Tanzania will receive US$15 million over four years from the Public Financial Management (PFM) and Procurement Service Delivery Program-for-Results (PforR) funded by the World Bank.

It has already unlocked US$12.5 million in savings from printing and transportation costs in just two years, with projections reaching US$25 million in total savings over the full four- year program cycle.

Reductions in CO2 emissions associated with the shift from paper-based to digital processes are estimated to generate approximately US$1.75 million in potential carbon-credit revenue.

These benefits demonstrate that investment in digital procurement infrastructure can yield measurable returns, and that the case for e-GP reform is not only institutional but fiscal.

Drawing on the findings from a 2024 Country Procurement Assessment using Methodology for Assessing Procurement Systems (MAPS) tool, the World Bank worked with PPRA to ensure NeST’s full functionality and long-term financial sustainability.

Funds are channeled through the PFM and Procurement Service Delivery PforR, which links disbursements to verified results.

Beyond financing, the collaboration has included continuous hands-on technical engagement, including boot camps with PPRA, focused on enhancing capacities with the ultimate goal being having in place institutionally owned systems rather than those requiring ongoing external management.

The results to date—stronger and sustainable institutional capacity, improved budget management, more robust oversight, and a procurement platform that is actively being used to track job creation and GDP contributions–offer lessons for procurement reformers across the region.

Accolades

NeST won the Best Public Procurement System in Africa during the African Association for Public Administration and Management meeting, in Kampala Uganda, November 2024.

The Authors

Elmas Arisoy is the World Bank’s regional Procurement Manager for Eastern and Southern Africa Region, while Tanvir Hossain, is the World Bank’s Senior Procurement Specialist and Procurement Team Leader for Tanzania, Malawi, Zambia, and Zimbabwe.