President signals watershed in transparency and accountability in public procurement
27 August 2020
The outrage among South Africans over allegations of corruption in the procurement of goods and services for the COVID-19 response has created an opportunity for the nation to strengthen its fight corruption.
Answering Questions for Oral Reply in the National Assembly today, Thursday, 27 August 2020, President Ramaphosa said steps being taken by government to deal with COVID-related corruption left no space for the abuse of “the people’s money”.
“This is a watershed moment that marks the start of a new era in transparency and accountability in the procurement of goods and services by public entities,” said the President.
“The measures that we are taking will definitely lead to procurement reform that will ensure that we find solutions to many procurement maladies, including corruption, and ensure that government does not overpay for goods and services and gets value for money.”
At the commencement of his interaction with the National Assembly, President Ramaphosa paid his respects – also on behalf of the National Executive – to Members of Parliament who have passed away in the last few weeks and months.
The President noted that this was a difficult time for the nation as families lose loved ones to COVID-19 and other causes. Because of the ongoing pandemic, families are often unable to mourn and honour those who have passed on in the manner that they would have wanted.
The President engaged the National Assembly on the following issues:
Gender-based violence and femicide
Before I begin, I would like to use this opportunity to pay my respects and those of the National Executive to those Members of Parliament who have passed away in the last few weeks and months.
This is a particularly difficult time for our nation as families lose loved ones to COVID-19 and other causes. Because of the ongoing pandemic, they are often unable to mourn and honour those who have passed on in the manner that they would have wanted.
We offer their families, friends and colleagues in this House our condolences and sympathies.
The struggle to end gender-based violence and femicide succeed only if society as a whole is mobilised and organised behind a common programme of action.
Following the Presidential Summit against Gender-Based Violence and Femicide in November 2018, and after an extensive consultation process, a National Strategic Plan was adopted by Cabinet.
The implementation of the Plan began on 1 May 2020.
The National Strategic Plan recognises that the struggle against gender-based violence and femicide requires collective, cohesive and strategic leadership.
The strategic plan provides for a governance structure in the form of a multi-sectoral Gender-based Violence and Femicide Council to lead the implementation of the Plan.
However, even as the National Strategic Plan was being developed we had to confront the reality that the violence perpetrated by men against women and children had become a national emergency that required urgent and decisive action.
We therefore began the implementation of an Emergency Response Action Plan, which as you might recall, was presented to a Joint Sitting of Parliament in September last year.
Through the reprioritisation of resources, we were able to allocate around R1.6 billion to implement the Emergency Response Plan in the remaining months of the financial year.
Working with our partners in civil society, we have managed to improve access to justice for victims and survivors and have improved our capacity to investigate and prosecute gender-based violence perpetrators.
For example, we have upgraded 11 sexual offences courts and implemented a system to track the processing of GBVF-related cases.
We have improved the supply of sexual assault evidence kits, which are now available in all police stations.
Three amendment Bills intended to strengthen the response of our criminal justice system have been approved by Cabinet and are in the process of being introduced into Parliament.
Among other things, these Bills aim to tighten bail conditions for perpetrators of sexual offences; strengthen parole conditions and increase minimum sentences; and ensure more severe consequences for contravening a protection order.
Five new Thuthuzela Care Centres are to be established and will be operational by the end of March 2021.
At the same time, a major focus of our work has been on changing norms and behaviour through high-level prevention efforts, such as a mass media campaign and engagements with men’s groups, offenders in prison and youth at risk.
While the emergency response plan sought to address these and other immediate issues, the National Strategic Plan guides the broader changes that we must achieve in the medium to long term.
This will be led by the Gender-Based Violence and Femicide National Council.
After extensive consultation, it has been decided that the National Council will consist of a Board with various technical working units.
In line with Article 4 of the Presidential Summit Declaration, the GBVF Council will consist of a maximum of 13 members, 51% of which will be civil society representatives and 49% government representatives.
The National Council will be inclusive of all South Africans, including women from urban and rural areas, and different cultural, racial and class backgrounds.
The members will be appointed through a transparent process of public nomination and selection.
As a country, we remain determined to uproot the scourge of violence against our daughters, our mothers, our sisters, our grandmothers and our children.
The National Strategic Plan is a vital guide to the many forms of interventions required to make our country a safe place for all, particularly women, children and LGBTQIA+ persons.
As we work to to deeply embed this plan not only across Government, but across society, we will look to the GBV Council to provide vital strategic leadership in our struggle to end this crime against women and children once and for all.
COVID-19 public procurement
The allegations of corruption in the procurement of goods and services for our country’s response to the coronavirus pandemic has caused outrage among South Africans and among us in the executive.
It is disgraceful that at this time of national crisis, there are companies and individuals who seek to criminally benefit from our efforts to protect people’s health and save lives.
As government, we have taken several measures not only to detect, investigate and prosecute such crimes, but also to strengthen measures to prevent corrupt activities.
To achieve this purpose I have authorised the Special Investigating Unit to probe any allegations relating to the misuse of COVID-19 funds across all spheres of the state.
The work of the SIU is taking place alongside the work of the recently-established special coordination centre, which is called the Fusion Centre, to strengthen the collective efforts among law-enforcement agencies to prevent, detect, investigate and prosecute COVID-related corruption.
The National Treasury has taken effective steps to tighten procurement regulations. These measures will strengthen the ongoing work of the Auditor-General to audit, in real time, all COVID expenditure.
Perhaps the greatest defence against corruption in public procurement is to make the entire process more transparent and open to public scrutiny.
In an important first step towards that goal, Cabinet established a ministerial team to compile and collate a comprehensive report of the details of all tenders and contracts awarded by national departments, provincial governments and other public entities as part of the response to the coronavirus pandemic.
The ministerial team was given the responsibility to ensure that the details of these tenders and contracts be made public.
Earlier this week, the National Treasury started publishing the submissions from these various government departments and entities on their website.
To date 95% of provincial and national departments and state entities have submitted all information regarding Covid-19 procurement to the Ministerial team.
This initiative is unprecedented in our country’s history, enabling members of the public to find detailed information about how public funds are being spent.
We believe that this establishes an important precedent for future expenditure of this nature.
This is a watershed moment that marks the start of a new era in transparency and accountability in the procurement of goods and services by public entities.
The measures that we are taking will definitely lead to procurement reform that will ensure that we find solutions to many procurement maladies, including corruption, and ensure that government does not overpay for goods and services and gets value for money.
The role of the Special Investigating Unit in probing COVID-19-related procurement
Cabinet established a ministerial team to compile details of all COVID-related procurement of all government bodies so that these could be made public.
Cabinet’s intention in doing so was aimed to promote transparency and accountability.
This process is distinct from, and unrelated to, the work of the Special Investigating Unit (SIU) in investigating any unlawful or improper conduct in the procurement of goods and services in any state institution.
The SIU has not made any request to Cabinet for assistance in gathering details of COVID-related tenders and contracts.
According to the proclamation I signed on the 23rd of July, the Special Investigating Unit is authorised to probe any allegations relating to the misuse of COVID-19 funds across all spheres of the state.
The SIU is empowered by the Special Investigating Units and Special Tribunals Act of 1996 to gather all necessary evidence required in the fulfilment of this mandate.
If the SIU finds evidence that a criminal offence has been committed, it is obliged to refer such evidence to the prosecuting authority.
It is also empowered to institute civil proceedings for the recovery of any damages or losses incurred by the state.
Government is determined to ensure that all criminal acts related to our response to the COVID-19 pandemic are uncovered and that those responsible are held to account.
Government debt and socio-economic rights
The effect of the coronavirus pandemic on economies around the world has been severe.
Like most other countries, we have had to confront the effects of a massive global slowdown and a dramatic decline in local economic activity.
As our economy has suffered from the effects of the pandemic and the measures we have taken to contain its spread, we have also had to mobilise additional resources to mount an effective public health response and support companies, workers and households in distress.
The supplementary budget tabled by the Minister of Finance on the 24th of June therefore proposed significant increases in expenditure in the context of falling revenue.
As a consequence of our decisive and absolutely necessary response to this pandemic, Government debt is expected to reach R3.9 trillion in 2020/21.
This does not include the debt of state-owned companies.
If not addressed over the medium-term, the cost of servicing this debt will consume much of the savings accumulated in the economy each year.
This would severely damage private investment and economic growth, reducing the revenues on which government spending plans depend.
This could mean that spending programmes are overwhelmed by debt obligations.
During the current MTEF period, for example, debt service costs are expected to exceed total spending on health care.
Since the economy and the fiscus were already weak prior to the current crisis, the starting point for ensuring fiscal stability is to close the gap between government spending and tax revenue.
In undertaking this task, Government has adopted an ‘active’ approach to managing the country’s debt.
It is committed to an active set of fiscal and economic reforms to raise confidence and growth.
This includes faster implementation of the economic reforms needed to support investment and employment, raise productivity and competitiveness, and lower cost of living and doing business.
These reforms will include the finalisation of electricity determinations, unbundling Eskom and other steps to open up energy markets, the modernisation of ports and rail infrastructure and the licensing of high-demand spectrum.
Under the ‘active’ scenario, which requires a programme of fiscal restraint, we anticipate a small surplus in the primary balance – which is the difference between non-interest spending and revenue – in 2023/24.
Debt would stabilise at around 87.4 percent of GDP, after which it would gradually decline.
The active scenario prevents debt service costs from continuing to rise faster than all other items of spending for the foreseeable future.
In this way, it prevents an outcome where South Africa’s debt costs are higher than all other expenditure, a sovereign debt crisis causes investors to leave the country, and the country has to seek large bailouts from official lenders.
To the degree possible with limited resources, government continues to support the implementation of the seven priorities outlined in government’s Medium-Term Strategic Framework 2019-2024.
New and urgent government priorities have been funded through the reallocation of budgets within and across functions.
Improving efficiency – meaning that government will have to do more with less – is a necessity. For example, more will need to be done using communication technology instead of spending money on accommodation and subsistence and travel costs.
Government remains committed to improving education and health outcomes, and reducing poverty, as shown by the size of allocations to the learning and culture, health and social development functions over the medium term.
The economic recovery and reconstruction plan that is being developed by government alongside its social partners will ensure that resources are directed to infrastructure and employment creation programmes in particular.
Alongside urgent structural reforms, such investments will lay a firm foundation for a return to economic growth and job creation.
This, in turn, will increase public revenue, allowing government to reduce the budget deficit and lower its exposure to debt.
Participation in the economy by foreign nationals
The unemployment crisis in our country has been dramatically deepened by the economic effects of the global coronavirus pandemic.
We are therefore called upon to use every means at our disposal to rebuild our economy, protect existing jobs and create new jobs.
This means, among other things, that we need to look at issues of migration, employment and economic activity.
As we do so, we should avoid the populist temptation to blame our unemployment crisis on foreign nationals working in our country, either legally or illegally.
By the same measure, we need to understand and respond to the frustrations of many South Africans at the violation of immigration laws and other regulations by those companies that employ foreign nationals illegally.
To ensure a coherent and sustainable solution to these challenges, Cabinet has recently established an Inter-Ministerial Committee (IMC) on the Employment of Foreign Nationals.
Convened by the Minister of Employment and Labour and co-chaired by the Minister of Home Affairs, this IMC will deal with the migration of foreign nationals for employment and related opportunities.
The IMC will provide guidance on matters such as existing labour supply agreements, trade relations and transportation agreements. It will also address criminality and related security matters across our borders.
The IMC will also review decisions on special dispensation work permits, amendments to our Immigration Act and Employment Services Act and Labour Migration Management.
The Committee will also need to ensure that our approach to the employment of foreign nationals provides the scarce and critical skills that we need to grow our economy.
Rooting out unlawful conduct in the public sector
One of the greatest challenges we are confronting as a country is the theft of public resources by those given responsibility to manage and safeguard them.
A priority at this moment is to address the concern that has been raised by our people about the involvement of political office bearers and public servants in the unlawful awarding of tenders and contracts to relatives and acquaintances.
While most public servants are dedicated, diligent and law abiding, we nevertheless find that such practices are found in all spheres of government and in many public entities.
State capture is this form of corruption on a grand scale, where criminal networks are used to control public entities to unlawfully enrich private individuals and companies.
This corruption took place alongside a deliberate effort to weaken and disable the country’s law enforcement capabilities.
Therefore, a critical part of our efforts to root out all corruption – both in the public and private sectors – has been to rebuild our law enforcement agencies, to restore their integrity and credibility and provide them with the means to act against corruption.
Over the last two years, significant progress has been made in strengthening institutions like the NPA, the Hawks, SARS, the SIU and others so that they are able to detect, investigate and prosecute all acts of corruption.
At the same time, we have worked to strengthen the measures inside government to minimise the potential for corrupt activities.
In 2016, Government reviewed the Code of Conduct for Public Service employees to, among other things, prohibit public service employees from conducting business with the State, be it in a personal capacity or as a director in a company that conducts business with the State.
In 2019, I extended this provision to the whole of the public administration, when Section 8 of the Public Administration Management Act, 2014 was brought into effect by means of a proclamation.
This criminalised the act of public administration employees conducting business with the State.
To ensure action against those who transgress these laws, systems have been put in place through the Personnel Salary System – PERSAL – and the Central Supplier Database to identify public servants who tender for contracts with the State.
In the last month, the Ministers for the Public Service and Administration, of Police and of Justice and Correctional Services have drafted a memorandum of understanding to better coordinate efforts that will lead to the investigation and the prosecution of those employees who were found to be conducting business with the State.
While all wrongdoers must face the full might of the law, our priority is to ensure that corruption does not occur in the first place. We are therefore strengthening financial, human resource and other management systems to reduce the risk of unlawful conduct by any person in the public service.
Issued by Tyrone Seale, Acting Spokesperson to the President, 27 August 2020