The R1 trillion mess that government is trying to mop up

A recently published independent report, commissioned by the National Treasury, has flagged some serious endemic issues that persist within South Africa’s public procurement processes.

These include:

• A fragmented legal framework;
• Lack of planning;
• Limited e-procurement use;
• Transparency issues;
• Inadequate professional development;
• Poor contract oversight;
• Payment delays;
• Restricted access to procurement data;
• Minimal civil society involvement;
• Weak internal controls;
• Ineffective anti-corruption efforts; and
• Insufficient whistleblower protection.

In 2023, the National Treasury enlisted the Organisation for Economic Co-operation and Development (OECD) to evaluate South Africa’s public procurement system using the internationally recognised Methodology for Assessing Procurement Systems (MAPS).

The assessment was a collaborative effort involving the OECD, World Bank, African Development Bank, National Treasury, and various public, private, and civil society organisations.

This call came as it is estimated that the South African government spends approximately R1 trillion annually on procurement through tenders, making it the largest buyer in the country.

However, sticky fingers and corrupt ‘tenderpreneurs’ run rampant in South African procurement, with Chief Justice Raymond Zondo describing issues in public procurement as “the centrepiece of state capture”. 

“The name is corruption, but the game is procurement,” former Eskom board chair Jabu Mabuza told the state capture inquiry back in 2019.

In his commission findings, Zondo made recommendations on how to address the corruption within the procurement of goods and services by the government – particularly to do with the “fragmentation” of the procurement system.

Report findings

At the launch of the report, Treasury director-general Duncan Pieterse said that “improvements in our procurement system are at the core of enabling a public sector that can deliver services economically, effectively and efficiently.”

“Unfortunately, the current system is fraught with inefficiencies that make it uneconomical, cumbersome and open to abuse,” he said.

Looking at the key inefficiencies, National Treasury said that “these findings underscore the need for improvements in these critical areas.”

Treasury said that they are taking steps to address this by:

• Introduce the Public Procurement Act and its regulations;
• Develop a sustainable public procurement strategy;
• Strengthen publication of procurement information;
• Improve transparency of procurement data;
• Enhance the control and audit framework;
• Overhaul the digital procurement system;
• Increase use of open contracting data standards;
• Implement a professionalisation roadmap for Supply Chain Management;
• Contribute to a robust anti-corruption strategy;
• Strengthen whistleblower protection; and
• Develop a framework to monitor and evaluate the action plan’s implementation.

“These reforms aim to enhance compliance, streamline our processes, and strengthen oversight in procurement,” said National Treasury.

While Treasury acknowledged that these are serious issues that need to be addressed, they added that it is not all doom and gloom.

“While the report points out some challenges, it also emphasises the significant progress made and the robust foundation in place,” said National Treasury in a subsequent statement.

The report highlights the progress made with the Public Procurement Act, signed into law by President Cyril Ramaphosa on 23 July 2024.

Following the assent of the Act, Ramaphosa said  that the Act makes public procurement in the country, which features endemic corruption, “far more transparent.”

Broadly, the Act outlines that all state departments and public entities must use a standardised, preferential framework when procuring goods and outlines that those who work for the state are excluded from submitting bids to the state.

It looks to consolidate various procurement provisions into a single framework, streamlining the system and addressing previously identified gaps to reduce complexity.

“This law eliminates the problem identified by Chief Justice Zondo of fragmentation in procurement laws by creating a cohesive regulatory framework,” said Ramapohsa.

In addition, the Act tackles issues such as procurement through international funding, preferential procurement, and the promotion of a differentiated approach to procurement.

It also includes measures to prevent system abuse, objectives for sustainable development, ICT-based procurement systems, public access to procurement processes, and the creation of an independent Public Procurement Tribunal.

The Act has been met with a mixed reactions, with some labeling it as key in the fight against corruption, whilst others (including Western Cape Premier Alan Winde) argue that “the act will impose significant costs on the procurement process as well add to the administrative burden involved in procurement – it will be a handbrake on all systems and processes [and ultimately] impact service delivery.”

Going forward

“While the report identifies several areas that need additional attention, we view these findings as opportunities for continuous growth and improvement,” said National Treasury.

It said that it “is deeply committed to the ongoing improvement of procurement systems,” and the MAPS report will serve as a roadmap to uphold the highest standards of efficiency, accountability, and value for all stakeholders.

“The National Treasury welcomes the opportunity to collaborate with partners and stakeholders as it implements these recommendations as part of the department’s broader Public Procurement Improvement Programme [and] progress updates will continue to be shared,” added Treasury.

The full MAPS Assessment can be found here.

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