Service delivery lies at the centre of all the spheres of government South Africa. Municipalities in particular are considered to be closest to citizens, providing key basic services. They achieve this obligation through the procuring of goods and services from suppliers in the private sector using practices that are guided by the Municipal Financial Management Act (MFMA).
Prior to the introduction of the MFMA (and Public Financial Management Act (PFMA) for provincial and national government) in the early 2000s, the procuring functions of the state were centralised under the State Tender Board Act of 1986 which granted powers to the Minister of Finance to appoint a board of his/her choosing to preside and regulate the state’s procuring of goods and services.
Decentralisation in the early 2000s
In the early 2000s, the state procurement function was decentralised to state entities as a first step towards the modernisation of the public procurement function in a manner that would also cater for the economic empowerment of the previously disadvantaged. Further justification of this move came in the form of efficiency. In theory, modernised legislation would offer improved service delivery, as municipal accounting officers were best placed within their geographical regions to understand and provide for the needs of their communities. Naturally, the decentralising of such a crucial expenditure function, whose budget exceeds R500 billion annually, needed to be accompanied by a framework to protect public interests, hence the introduction of the MFMA and PFMA.
Under the MFMA, municipal accounting officers, who would be considered chief executive equivalents in a corporate context, were afforded substantial independence when it comes to the management of the supply chain management (SCM) function in line with legislation. Further modernisation efforts were introduced in 2015 with the launch of a presiding office for public procurement located at National Treasury. The Office of the Chief Procurement Officer (OCPO) was created to provide a uniform supplier database (the central supplier database, CSD) and a centralised tender publication portal (the eTender portal). In 2017 National Treasury also introduced the Municipal Standard Chart of Accounts (mSCOA) framework to achieve uniformity and enhance the management of and reliance on data to facilitate accurate decision-making. mSCOA prescribes a standardised reporting framework for all municipal finances.
Are we getting there?
As the name suggests, the purpose of the CSD was to create a central information database of all government supplier information to reduce compliance pain points associated with exchanging paper documentation and the general costs of doing business with government by enabling electronic registration and vetting processes. Under the guidance of the OCPO, the eTender portal is being evolved into a detailed publication portal for public procurement related data. At present, state institutions are required to publish data pertaining to each stage of the public procurement process including, but not limited to, procurement planning, tender advertisements, and contract awards. This suggests an encouraging shift towards improving transparency.
National Treasury’s commitment to the professionalisation of public procurement has been further strengthened by the recent pilot arrangement with the internationally recognised open contracting partnership (OCP). The OCP’s core offering is the Open Contracting Data Standards (OCDS), which is a set of prescribed standards that enable the disclosure of data and documents at all stages of the contracting process by defining a common data model. The OCDS was created to support public organisations to increase contracting transparency and allow deeper analysis of contracting data by a wide range of users. The OCDS has been widely applied by leaders of state procurement transparency and innovation such as Ukraine, Sweden and Belgium.
A myriad of issues − prevent, detect, or correct?
This begs the question of whether or not we are focusing on the correct problem areas in our public procurement environment. Upon closer inspection, one realises that the recent developments in the eTender portal place much of the emphasis on the structure and quality of data at the output level. A closer look at the reported shortcomings of public procurement in South Africa, as reported annually in the Auditor-General’s MFMA’s reports, suggests a more comprehensive approach and that perhaps a different area of focus may be required.
These are some of the issues that serve as contributing factors to the alarming figures of irregular expenditure year-on-year, and the challenges of effective public procurement:
- Non-compliance with SCM legislation
- Poor record-keeping
- Overall weak control environments within municipalities
The above issues raise concerns over the integrity of data, or more simply, the area of data input. Whilst it is important to adhere to international standards of transparency in the publishing of procurement data, our future efforts could be better placed by being directed towards instilling effective control environments within municipal SCM departments.
Our state institutions are in dire need of preventive control mechanisms that will facilitate lawful spending of the fiscal procurement budget, allow less onerous record-keeping and improve the capacity of municipal SCM departments’ ability to have oversight and control of their procurement activities − without hindering efficient service delivery. An urgent review of the slow rate of digitisation in the public sector could go a long way towards achieving this. Another initiative supporting the need to speed up digitisation is the suggestion by the Zondo Commission to establish a public procurement monitoring board. Ultimately, to provide effective oversight of the state of public procurement in South Africa, this board will need to be empowered with reliable and accurate data from the state’s procuring entities. The digitising of public procurement management in South Africa is an area that is ripe for a digital solution, now more than ever. Only once we have fixed our issues with the integrity of data collection, will we truly reap the rewards of the reliable publishing of procurement data.
Concluding remarks
Public procurement fulfils an important role in the South African economy, and public expenditure is a critical indicator of the effectiveness of the government because it is a central aspect of public service delivery. Without a doubt, even with all the reforms to date, public procurement in South Africa still has a long way to go, casting a lot of doubt on the capability of the state to deliver to the citizenry.
Public procurement reform in the South African context is a necessary project and is fundamental for the effective functioning of the country. There are currently many deficits in the capacity of public procurement functions in the country, both at the regulatory and operational levels. It is also worth mentioning that public procurement is subject to political interference or, at a minimal, influence. Effective procurement that prevents, detects and corrects issues can propel the country to great heights and give hope to many. Digital technology can play a critical role in improving government’s mandate to deliver − and intelligently digitalised processes that rely on advancing technologies, focusing on preventing issues, primarily would represent a major step towards the right direction for our public procurement.
Author
Siqiniseko Buthelezi, CA Entrepreneurship Trainee at VAT IT
