South African government procurement 'important' to black economic empowerment

Will Green is news editor of Supply Management
27 February 2014

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27 February 2014 | Will Green

The South African finance minister has said public sector procurement should support local industry and black economic development in his budget speech.

Pravin Gordhan told parliament a database of local products and black-owned businesses was required to enable the government to support them.

“We are mindful of the importance of government procurement in supporting local industry and black economic development,” he said. “This requires a database of South African products and black-owned businesses so that the system can foster economic empowerment and dynamically contribute to growth. And further, tougher measures are being considered to enforce the rule that small businesses in particular are paid within 30 days.”

Gordhan announced a National Development Plan (NDP) that included “steps to professionalise the public service and overhaul procurement and supply chain management”.

He told MPs the administration had established a Chief Procurement Office which had “made progress on several fronts” including the “creation of an inspectorate to monitor procurement plans and audit tender documents”, “standardisation of infrastructure procurement processes and documentation” and “analysis of the business interests of government employees”.

A standard lease agreement has been developed to “address defects in government property transactions”, processing of vendors’ tax clearance certificates has been improved “to ensure compliance”, and procurement of health equipment and drugs has been centralised, said Gordhan.

He added: “Forthcoming regulations will strengthen the National Treasury’s oversight of public entities by requiring compliance with reporting requirements for expenditure, revenue borrowing and performance”.

MPs were told the NDP included accelerated public infrastructure investment, support for special economic zones and manufacturing incentives, tax stimuli to encourage youth employment, and the “phasing-in of national health insurance”.

“Black economic participation remains incomplete,” said Gordhan. “The economy must provide many more opportunities and the state and the private sector a lot more support to enterprises and entrepreneurs.

“The structure of the economy also needs to transform in order to meet the demands of a 21st century global economy and a fast evolving continent.

“In some instances, governance has been weak, corruption has taken hold, and service delivery has faltered. We have heard your pleas and we will improve our service delivery mechanisms.”

A general election takes place in the country in May.

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