Opinion | 19 September 2023
The Congress of South African Trade Unions (Cosatu) welcomes the Public Procurement Bill currently before the National Assembly. The federation has campaigned for many years for this critical bill to reach Parliament.
This is a long-overdue progressive bill that will lay the foundation for a single public procurement system across the entire state, e.g. departments, municipalities, entities and state-owned enterprises.
Currently and amazingly, there is no single public procurement framework and, as a consequence, the situation in state institutions is akin to the Wild West with many doing as they please and little space for the legislatures or the public to hold them accountable.
The existing legislative gaps were exposed by the 2022 Constitutional Court finding that the Treasury lacked the legislative power to set local content and broad-based black economic empowerment (B-BBEE) public procurement criteria.
This resulted in the scrapping of the preferential procurement regulations the government had put in place to support B-BBEE and locally produced goods.
The Zondo Commission heard countless evidence of how our leaky public procurement systems enable industrial-scale corruption and wasteful expenditure.
Cosatu and organised business engaged extensively with the Treasury on the bill at the National Economic Development and Labour Council (Nedlac). We are pleased that we reached consensus on many key interventions and the majority of the bill’s provisions. Cosatu’s support for the bill is premised upon its:
– Establishing a single public procurement framework for the entire state. This will establish common standards across fragmented and chaotic government institutions. This is fundamental if we are to be hold the state accountable.
– Requiring public procurement processes to support local content and B-BBEE. This is key to supporting and creating local jobs, transforming our still racially skewed economy, and growing our fragile manufacturing sectors and creating badly needed jobs.
– Creating a single portal where all tender information will be available to the public, thus shining a massive spotlight on the murky world of tenders and helping expose corruption.
– Enabling the centralised procurement of certain key items to save the fiscus badly-needed funds, e.g. allowing it to purchase vehicles or medical supplies in bulk at negotiated reduced prices.
– Empowering the Treasury’s Chief Procurement Office to halt procurement falling foul of the law. This will be a powerful tool to tackle corrupt tenders.
While the federation supports this critical anti-corruption bill and looks forward to its passage through Parliament, we believe the bill and its regulations need to be strategically strengthened to:
– Elevate local content into a requirement for public procurement. This is key to nurturing local industries and badly needed jobs. Currently the bill simply provides for points to be allocated for local procurement. This is insufficient and, in effect, makes it optional.
Some argue that the state should not be required to support locally produced goods if cheap imports are available as this will save it money. The problem with this short-sighted approach is that imports are often cheaper because they have been subsidised by their own governments.
Our number one crisis is our dangerously high 42.1% unemployment rate. Supporting locally produced goods is the fastest and most sustainable way to grow local businesses, value chains and jobs.
Money spent on locally produced goods circulates within the economy and much is returned to the state through taxes. Money spent on imports is immediately repatriated to that country.
– Incentivise whistle-blowers who expose corruption. This will be key if we are to turn the tide in this existential battle.
Public procurement and its R1 trillion annual expenditure are the heart of state capture. The police are woefully under-resourced to defeat this cancer eating at the heart of the state. The public is paying the price for this.
Incentivising persons to blow the whistle on public procurement corruption by offering them a percentage of the money recovered will provide a powerful incentive for persons with actionable information on corruption to take the risk and blow the whistle. This would be a game-changer for South Africa.
– Require the disclosure and recording of any relatives of politically influential persons who receive tenders as a way of preventing the abuse of public procurement by politicians.
The bill takes a bold stance against state capture and nepotism by its ban on public representatives, political party leaders and state officials from doing business with the state. It prohibits their immediate relatives from doing business with the state institutions where their relatives are employed. It requires these persons to disclose the details of these relatives when applying for tenders.
To take these progressive requirements to their logical conclusion, it is critical that a register be kept of such persons, and it be publicly accessible.
As we enter the final stretch of the 6th administration, Parliament must strengthen and expedite this progressive bill into law. We cannot afford any further delays in rebuilding our public procurement system.
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.