/ 24 May 2024

Parliament adopting Public Procurement Bill a sign that state corruption is being fought

A record number of 14 parties will take up the 400 seats in the National Assembly.
Parliament’s adoption of the long-awaited Public Procurement Bill is not only a positive sign of the government tackling what has been the epicentre of state capture and corruption. (David Harrison/M&G)

Parliament’s adoption of the long-awaited Public Procurement Bill is not only a positive sign of the government tackling what has been the epicentre of state capture and corruption, namely procurement in the state. It is a signal that efforts to cleanse the state of corruption are gaining momentum.  

More importantly, we are not relying on the goodwill of public procurement participants, but rather are putting in place stronger legislation, transparency requirements and more checks and balances to help us fight the war against the cancer of corruption and state capture.

The Zondo Commission of Enquiry into State Capture and Corruption heard countless and daunting evidence of how our leaky public procurement systems enable industrial-scale corruption and wasteful expenditure. The bill is a move forward to combat this cancer.  

The bill critically provides a powerful tool to nudge the state to do more to support local procurement and emerging businesses and sectors. It will boost the saving and creation of thousands of local manufacturing jobs.

Cosatu has been involved in the development of the Public Procurement Bill during extensive discussions at the National Economic Development and Labour Council (Nedlac)  and during the public hearings in both the National Assembly and the National Council of Provinces.

We have campaigned for many years for this Bill, which will soon hopefully be assented to by the president, Cyril Ramaphosa.

This long overdue progressive bill lays the foundation for a more unified public procurement system across the entire state — departments, municipalities, entities and state-owned enterprises. More work needs to be done to ensure it is binding on municipalities.  

Currently there is not a single public procurement framework. As a consequence, procurement in state institutions has often been akin to the Wild West, with many doing as they please, and it is difficult for legislatures or the public to hold them accountable.  

The legislative gaps were brought to the fore by the 2022 constitutional court finding that the treasury lacked certain powers, such broad-based black economic empowerment (BBBEE) public procurement criteria.  This resulted in the scrapping of the preferential procurement regulations the government had put in place to support BBBEE and locally produced goods.

Cosatu and business are in extensive discussions with the treasury on the bill at Nedlac.  We reached consensus on many key interventions and the majority of the bill’s provisions.  

Our support for the Bill is premised on its:

  • Establishing a single overarching 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 hold the state accountable. 
  • Requiring public procurement processes to support local content and broad-based BEE. 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.  

While the Democratic Alliance among others prefer to believe the market on its own will somehow eradicate the deeply skewed racial legacies of the past, international experience has shown the need for the state to play a nurturing role and support emerging businesses and sectors, in particular parts of society who had been deliberately disadvantaged by previous laws and actions of the state.

  • Creating a single portal where all tender information will be available to the public, thus shining a spotlight on the murky world of tenders and helping expose corruption.

Transparency is our most powerful weapon as society to deter and prevent, expose and tackle corruption.  Requiring the state to establish an online site where all tender information will be publicly available will help expose dubious tenders, show trends where certain people accumulate large tenders and enable the media, unions and society to blow the whistle on dodgy deals. The state needs the assistance of society to win this war.

  • Requiring 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 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, the government must, as legislated,, maintain a register of such people, and it be publicly accessible.

  • Enabling the centralised procurement of certain key items to save the fiscus badly needed funds, for example allowing it to purchase vehicles or medical supplies in bulk at negotiated reduced prices.

Centralised procurement of certain large-scale items will help the government negotiate better rates as well as reduce the space for corruption.

  • Empowering the treasury’s chief procurement office (CPO) to halt procurement falling foul of the law.  

This will be a powerful tool to tackle corrupt tenders where the CPO will be able to intervene to stop a corrupt contract in a department or an entity and compel the relevant officials to explain themselves and where corruption is clear, to call in law enforcement.

  • Elevating local content into a requirement for public procurement.  

This is key to nurturing local industries and badly needed jobs. Some argue 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.  

South Africa’s number one crisis is our dangerously high 41.8% unemployment rate. Supporting locally produced goods is the fastest and most sustainable way to growing 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. Much spent on imports is immediately repatriated to that country.

Cosatu has proposed an additional provision be included in the bill to encourage whistleblowers to expose corruption. While we were not able to insert such a provision in the bill we have made submissions to address in the department of justice’s current review of the Whistleblowers’ and the Protected Disclosures Acts. 

Encouraging people 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 and key if we are to turn the tide in this existential battle.

Although we were not able to win every single argument that we tabled at Nedlac and parliament, we are pleased that on the majority of issues we have found each other and the bill is now awaiting the president’s pen.

We welcome the agreement reached at parliament for a further review of the law to be done within 24 months to ensure that any gaps are addressed, as well as for the treasury to expedite the tabling of regulations to implement the Bill at Nedlac and parliament once the bill has been enacted. These enable further work to be done on a matter that government, business and labour agree is urgent.

It is natural in a democracy to be sceptical of governments, it is to be expected that with our experience of state capture and corruption to be irritated by the state. Yet here we have a government led by President Cyril Ramaphosa and the ANC acting to solve the problems identified in the findings by the Zondo commission, and extensively engaging with business, labour and civil society on how public procurement can be overhauled to remove corruption and boost the economy.

The end result is a good bill, and a good review process to improve it over the medium term based on learnings and lessons. It is a sign that we are turning the corner as a country and workers, society, the economy and the state will be better for it.

Zingiswa Losi is the president of labour federation Cosatu.