South Africa’s procurement overhaul sparks debate over decentralisation and local economic inclusion

South Africa’s bid to overhaul state purchasing has opened a fresh debate over how far the new system should be centralised, and how much room it should leave for provincial and municipal capacity.

At a stakeholder engagement on Tuesday, the Procurement Performance Institute’s chief executive, Nduduzo Ngema, said the draft rules under consideration by the National Treasury should not simply tighten control from the centre. He argued that a more devolved support model could ...

make procurement easier for local firms to access, while also widening participation in township and rural economies. But, he added, any shift towards decentralisation would have to be matched by stronger oversight, transparency and governance safeguards.

The discussion formed part of a wider joint submission by business, academia, civil society, traditional leadership and organised commerce on the Draft Public Procurement Regulations. Their intervention comes as National Treasury works to give practical effect to the Public Procurement Act of 2024, a piece of legislation intended to replace South Africa’s fragmented procurement framework with a single, unified system for the state.

The draft regulations were first released for public comment in May, and Treasury later extended the deadline to 15 July to allow more time for input. They set out how institutions will be expected to manage procurement methods, bid evaluation, preferential procurement, contract oversight and dispute processes, among other matters.

For the stakeholder group, the central issue is not merely administrative efficiency, but the role that procurement can play in reshaping the economy. In their submission, they described public purchasing as one of the state’s most powerful tools for industrialisation, localisation, supplier development, job creation and black economic empowerment. Because government spending runs into hundreds of billions of rand each year, they argued, the rules governing that expenditure will have major consequences for enterprise growth and broader economic inclusion.

The group said the Constitution’s procurement requirements, which call for fairness, equity, transparency, competitiveness and cost-effectiveness while allowing policies that advance those disadvantaged by unfair discrimination, support a developmental approach rather than a narrow buying function. They want the final regulations to do more than standardise procedures; they want them to help address structural inequality and expand productive participation in the economy.

The submission is organised around eight themes, covering concerns ranging from the developmental aims of procurement policy to infrastructure procurement, preferential measures, strategic categories such as travel and legal services, and the institutional arrangements that will govern the new system. It also revisits the reform ambitions set out in the 1996 Green Paper on public sector procurement, asking whether the current draft preserves the original vision for transformation.

That broader political context remains contested. In May, the Constitutional Court heard a challenge from the Western Cape government and the City of Cape Town over the speed with which the Public Procurement Act was passed, reflecting unease about the quality of public participation and the degree of central control in the new framework. Separate private members’ bills tabled in Parliament in March also signalled that procurement reform is likely to remain a site of political disagreement.

Still, there is wide agreement that the current system needs change. Tshediso Matona, commissioner of the B-BBEE Commission, said the Act and draft regulations presented a significant opportunity to improve governance, efficiency and administration across the public sector. Dr Shevonne Henry, chair of the Policy and Research Committee at the Black Management Forum, said procurement remained one of the state’s most important levers for economic transformation, particularly in a private sector that remains highly concentrated.

For supporters of the reforms, the challenge now is to ensure that standardisation does not come at the expense of development. For critics, the danger is that an overly rigid model could concentrate power, weaken local responsiveness and leave less room for emerging businesses to participate. The final regulations will need to navigate both concerns if they are to win legitimacy and deliver on the promise of a more inclusive procurement system.

Source: Noah Wire Services