End of another state monopoly in South Africa

The gazetting of new IT procurement rules means that government departments and state companies can finally access top-shelf services without being forced to use the State Information Technology Agency (SITA).

According to Business Leadership South Africa (BLSA) chief executive Busi Mavuso, this is a huge step in allowing the government to build a capable state and breaks down another state monopoly.

Minister of Communications and Digital Technologies, Solly Malatsi, recently gazetted allowing government departments to conditionally procure services outside of SITA.

SITA provides IT services to the government and is the backbone of its centralised systems. However, several departments have complained about the agency’s quality of service.

The new regulation 17.8, which took effect on 1 June 2025, allows a government entity to switch service providers if SITA cannot satisfy their requirements.

A department can give written notice to SITA if it finds a provider that can provide services faster and at a lower cost.

The notice must set out the business case, the user requirement specifications, and the period within which the department requires information technology goods or services.

After receiving the notice, SITA must respond within 10 working days to determine whether it can procure the information technology services required by the department within the specified period.

If SITA does not respond or cannot meet the department’s requirements, the department may acquire information technology goods or services from other providers per the relevant laws.

If SITA can procure the information technology goods or services required, and the department does not want to use other providers, the department must notify SITA to proceed with procurement.

“The new rules are a victory for common sense and effective governance,” Mavuso said, adding that departments like Home Affairs and the SAPS can finally get the IT services they need.

She said the potential for transformation is “enormous”, citing state agencies like the South African Revenue Services (SARS), which have world-class systems that help them be highly efficient.

“Imagine if Home Affairs could operate with the same efficiency. Citizens have endured years of frustration with system failures that turn simple tasks like renewing an ID or applying for a passport into day-long ordeals,” she said.

“With the flexibility to access world-class IT systems, Home Affairs could transform these experiences. The same applies across government – from the police service accessing real-time crime data to social services delivering benefits efficiently.”

End of a monopoly

However, a key to the regulations is that they do not sideline SITA, merely break its monopoly and stranglehold on state IT.

Mavuso said that, because of how the regulations are presented, SITA still has the opportunity to be in the picture, but it has to up its game and compete, instead of relying on its monopoly position.

“SITA will now have to compete for government business on merit rather than relying on its monopoly position,” Mavuso said.

“This should drive the agency to address the corruption, mismanagement and poor service delivery that have plagued it for years.”

If SITA transforms into an efficient, competitive service provider, the public sector will benefit from multiple high-quality options.

If it can’t, departments won’t be trapped by its limitations, Mavuso said.

The government has historically not been keen to break its monopolies in various sectors. It took years of litigation before the state was forced to open South Africa’s telecoms space in the early 2000s.

More recently, the government was again forced to open up the electricity market after Eskom’s monopoly and failings resulted in the collapse of the energy grid and almost two years of permanent load shedding.

The fact that the state’s monopoly on government IT services could be broken through sensibly drafted regulations amid political opposition is a positive sign for future governance.

“This is what evidence-based governance looks like – identifying problems, presenting solutions, and implementing reforms that put service delivery first,” Mavuso said.