Procurement corruption in the crosshairs

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Procurement corruption in the crosshairs

The Public Procurement Amendment Bill will be tabled in Parliament in March next year and aims to reduce the scope for looting and procurement corruption. The State Capture Inquiry highlighted how the country’s tender system has been abused. President Cyril Ramaphosa – in setting out his plan to implement the recommendations of the Zondo Commission – said: “Apart from the abuse of procurement for the purposes of state capture, the country’s procurement system currently faces challenges of professional capacity, fragmentation and operational flexibility. The introduction of preferential procurement goals, which is an economic and social imperative, adds a layer of complexity that some have used to manipulate procurement outcomes.” On 4 November 2022, Finance Minister Enoch Godongwana gazetted new Preferential Procurement Regulations (2022 Regulations) under the Preferential Procurement Policy Framework Act. These new regulations, which Godongwana says take effect from 16 January next year, are aimed at aligning the regulations with the February 2022 Constitutional Court judgment which ruled Treasury’s 2017 preferential procurement regulations were illegal and unconstitutional. The new regulations omit any mention of BEE or local content requirements and leave it up to the discretion of state entities, which must now draft their own policies. Zondo’s report highlighted the confusion inherent in the current system of procurement. Is it to procure goods and services at the best price or to prioritise transformation? Zondo recommended that procurement officials be advised that “maximum value for money” must be primary. Godongwana said in a statement on Tuesday they “remain wholly committed to transformation and empowerment as envisioned in the Constitution. In fact, organs of state must comply with the BBBEE Act when developing their procurement policies.” – Michael Appel

South Africa readying new anti-graft laws, finance chief says

By Prinesha Naidoo

(Bloomberg) — South African Finance Minister Enoch Godongwana expects lawmakers to pass a new procurement law for state-owned companies and government departments next year, a reform central to efforts to clamp down on the graft that became endemic during Jacob Zuma’s rule.  

“It is my prayer and expectation” that the Public Procurement Bill, to be tabled in parliament in March, will be approved within six months and take effect soon after, Godongwana told reporters in Pretoria, the capital, on Tuesday. 

President Cyril Ramaphosa last month pledged to redesign the country’s entire anti-corruption architecture, including banning ministers from participating in procurement, introducing new laws to regulate state contracts and ensuring whistle-blowers are better protected. The reforms were proposed in response to recommendations by a judicial panel that probed the misuse of taxpayers’ funds during Zuma’s nine-year presidency.

Minister Enoch Godongwana briefs media ahead of his presentation of the 2022 Medium Budget Term Policy Statement at Imbizo Media Centre, Parliament Precinct, Cape Town [Photo: GCIS]

The new rules will give effect to some of the changes announced, said Ismail Momoniat, the acting head of the National Treasury.

The panel led by Chief Justice Raymond Zondo spent four years investigating a practice known locally as state capture. More than 300 witnesses described how government departments and companies were looted of billions of rands by Zuma’s allies, with his tacit consent. Ramaphosa previously said at least 500 billion rand ($28 billion) was stolen. Zuma, who quit in 2018 under pressure from the ruling party, has repeatedly denied wrongdoing. 

“Stop-gap” rules that allow state entities to award contracts in line with the Preferential Procurement Policy Framework Act will take effect from Jan. 16, Godongwana said. Those regulations will ensure they follow the government’s Black economic empowerment and localization policies, he said.

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