The FBIK editorial team concludes its series of articles on the largest public procurements of Kazakh departments in 2024.
What do heating oil, executive-class cars, server equipment and diving services have in common? All are public procurements by Kazakh ministries. Over several months, the FBIK editorial team has been investigating how and where departments spend budget funds, systematically analysing the largest contracts of each department. Now it is time to summarise.
Our analysis has revealed several key patterns which can be seen in almost all departments. The first and most obvious is the large-scale digitalisation of the state apparatus. Tens of billions of tenge are spent annually on creating information systems, updating computer hardware, software and digital infrastructure. Notably, this trend is observed even in ministries that seem far removed from the IT sector. The Ministry of Agriculture, for example, spent around 1.9 billion tenge on digitalisation, while farmers are still suffering from unpaid subsidies totalling 359 billion tenge.
This paradoxical situation calls into question the effectiveness of digital transformation: money is spent on technologies that should simplify and speed up processes, but the basic problems of the industries remain unresolved. For instance, the Ministry of Finance, which leads in spending on digitalisation, is simultaneously in the top three for the number of employees convicted of corruption. It is clear that technology alone cannot solve systemic problems without corresponding changes in management culture and control mechanisms.
The second pattern that emerges from the analysis of public procurement is the lack of transparency in intra-agency financial flows. Many ministries channel significant funds to subordinate organisations, creating a kind of closed financial loop. A prime example is the Ministry of Internal Affairs, where almost 18 billion tenge returns to the system through the ministry's "Information and Production Centre". A similar practice is observed in the Ministry of Justice, where the "Institute of Legislation and Legal Information" becomes the recipient of numerous contracts.
This concentration of state funds within departmental structures creates risks of inefficient use of budget funds and complicates external oversight. In the absence of competition, it is difficult to assess the fairness of prices and the quality of services provided, which can lead to inflated contract costs and opaque distribution of resources.
The third trend relates to the prioritisation of representation expenses. Despite declared programmes of savings and cost optimisation, significant sums are still directed towards the upkeep of administrative buildings and transport services for management. The Ministry of Transport, for example, allocated a large share of its budget to maintaining the "Transport Tower" building and providing management with executive cars, while the Ministry of Energy spent 85.7 million tenge on transport services for management.
These expenses particularly contrast with savings in social spheres. While hundreds of millions of tenge are spent on maintaining administrative buildings, many social programmes remain underfunded. Such a distribution of priorities raises questions about the effectiveness of budget use and whether spending matches the real needs of society.
Hidden behind the general trends are also significant differences, largely determined by the specific nature of each department's work. The Ministry of Energy, for example, directs most of its funds towards purchasing fuel, which is logical for a body responsible for the country's energy security. The Ministry of Healthcare focuses on staff training, the Ministry of National Economy concentrates on developing public-private partnerships, and the Ministry of Tourism and Sports gives priority to sports development.
These differences reflect not only the objective needs of the sectors, but also the subjective priorities of ministry leadership, and sometimes political directives. Interestingly, for example, in the year of the Paris Olympics, funding for sports development far exceeded support for the tourism industry, despite the development of domestic tourism being declared a priority task of economic policy.
The issue of pricing in public procurement deserves particular attention. Analysis of contracts shows significant variations in the cost of similar goods and services, not only between different ministries but also within a single department. Thus, the cost of heating oil in different batches for the Ministry of Energy varies without obvious reasons. The average cost of a computer at the Ministry of Foreign Affairs is 615,000 tenge, which is significantly higher than market prices for similar equipment.
Such discrepancies can be explained both by special requirements for the purchased goods and services, and by the imperfections of the public procurement system, which allows unjustified price inflation. In the absence of effective control and transparent pricing mechanisms, the risks of misuse of budget funds increase significantly.
Another interesting trend is the growing gap between declared goals and actual spending. Many ministries proclaim the priority of long-term strategic programmes verbally, but in reality, most funds go towards current operating expenses and maintaining the administrative apparatus. For example, the Ministry of Ecology, despite ambitious plans for environmental protection, is mainly focused on monitoring and research, rather than specific conservation measures.
The gap between official promises and actual ministry spending can be explained by several reasons. Firstly, budget processes themselves are quite inertial — even if there is a will to change things quickly, it is not possible. Secondly, there is often resistance within the system — not all officials are ready to support change. Finally, the state has objective financial limitations. Nevertheless, it is public procurement that allows us to see what priorities are actually on the agenda — beyond nice slogans and public statements.
What can be expected in the future? If current trends continue, we will observe further digitalisation of the state apparatus with a gradual transition from simple process automation to the introduction of elements of artificial intelligence and analytical systems. The Ministry of Digital Development is already directing significant funds towards developing digital infrastructure, and this trend is likely to intensify.
At the same time, the growing public demand for transparency and efficiency in government spending may lead to a reassessment of priorities towards a more balanced distribution of funds. This particularly applies to representation expenses and funding of subordinate organisations, which are increasingly becoming objects of public criticism.
Climate change and related risks could also affect the structure of government spending. The Ministry of Emergency Situations is already investing in the modernisation of technical equipment with a focus on aviation and diving gear, indicating preparation for potential natural challenges. The Ministry of Water Resources is paying significant attention to the environmental component, allocating around 8 billion tenge for compensatory environmental releases.
However, the most important factor determining the future of public procurement remains the effectiveness of public oversight. It is civil society, independent media and the expert community that can provide the counterbalance to ensure more rational and targeted use of budget funds.