South Africa finance minister Pravin Gordhan. © Press Association Images
South Africa finance minister Pravin Gordhan. © Press Association Images

South Africa reforms public procurement to save R25bn

26 February 2016

South Africa’s finance minister has set out reforms to public purchasing processes that it is hoped will save the government R25bn out of an annual procurement spend of R500bn.

Pravin Gordhan announced in Wednesday’s budget for 2016-17 that it will become mandatory for all government procurement of goods and services to be undertaken through centrally negotiated contracts.

The government is holding talks with its top 100 suppliers to reduce prices and renegotiating contracts for banking services, ICT infrastructure, health technology and learner support materials, he added.

In addition, the procurement process must now be managed through the eTender portal, and no tenders can be submitted on paper. The automated process is expected to reduce corruption by lowering the risk of human intervention to override established protocols, Gordhan claimed.

According to the National Treasury, the eTenders portal has published 2,500 tenders worth R35bn since its inception in 2015. “Transparency has improved, and advertising and administrative costs have come down significantly,” it said.

Under the reforms it will also become compulsory for all companies bidding for business with the South African government to be registered on the central supplier database from 1 April 2016 for transactions with national and provincial government and their entities, and from 1 July 2016 for municipalities.

A national travel and accommodation policy for public sector workers who travel for work will also be developed, which the government hopes will save R1.6bn in the medium term.

The reforms follow a consultation last year with more than 7,000 suppliers and 2,500 supply chain practitioners, and collaboration between government departments.

“It is clear that we can achieve considerable savings to the government, while also ensuring that procurement processes are streamlined and service providers are paid on time,” Gordhan said.

Meanwhile, the South Africa government will finalising the Public Procurement Bill in the first half of 2016.

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