IRR welcomes Godongwana’s greenlight for state organs to have their own procurement policies

28 October 2022

In his medium-term budget policy statement (MTBP) this week, Finance Minister Enoch Godongwana opened the door to all organs of state to make their own procurement policies in order to maximise value for money.

The IRR, having campaigned in favour of precisely such a merit-based approach to all forms of public service, welcomes this development.

Minister Godongwana said: “The Constitution of the Republic of South Africa says it is the organ of state that procures. Every organ of state must have its own procurement policy, not be getting permission now and again from Treasury. We are giving you the authority, each organ of state, to have its own procurement policies. No one will the say if I don’t deliver on time I’m delayed by Treasury.”

This statement appears to respond to the IRR’s call on Minister Godongawna to use his MTBPS to signal to organs of state his support for value for money in public procurement. The most straightforward way for the minister to facilitate the maximisation of value for money in public procurement is by granting exemptions from racial preferencing in approving purchases and tenders.

However, the minister’s warning that he would prefer his office not to be blamed for any delay in granting such requests and his apparent authorisation on the basis of constitutionality that organs of state must go ahead and establish their own procurement policies is welcomed.

The Constitution clearly envisages that any organ of state that puts value for money over racial considerations in public procurement – whether it be a municipality, a metro or a state-owned enterprise – is engaging in constitutionally protected action. It is manifestly obvious that in this poor country when any organ of state gets more for less, that means that more money is left over for other projects including paying down the national debt and rolling out needs-based social grants which both disproportionally benefit previously disadvantaged South Africans.

Said IRR Head of Campaigns Gabriel Crous: “Minister Godongwana hit the ball into the other court. It is now up to organs of state to figure out whether they want to continue suffocating under the reddest tape of all, namely procurement race law, or whether they want to go forward on a straightforward meritocratic basis that maximises value for money. We urge the latter.”

Maximising value for money in public procurement will be hugely beneficial to the bulk of majority black businesses. As the Zondo report shows, with examples such as Brian Molefe’s mismanagement of Eskom, race laws have been used to punish black businesses that put a greater emphasis on value add. In addition, maximising value add is the only prospect South Africa has of clearing up corruption and developing any accountability.

The Zondo Commission showed the current system creates such great confusion that former Acting Chief Procurement Officer Willie Mathebula pointed out that half the time that irregular expenditure takes place it is by accident and the other half it is on purpose. Corrupt agents in the public and private sectors take advantage of the race law confusion to feather their own nests. The simplest way to stop this and reverse state capture to the benefit of all South Africans is to maximise value for money.

It has become commonplace to talk about a ‘wild dog’ coalition of parties that are willing to defend property rights and relax race laws in opposition to the ANC-EFF move towards “more aggressive” BEE and expropriation without compensation. Minister Godognwana seems to have blown a ‘wild dog’ whistle for pragmatism and non-racialism in procurement.

Issued by Gabriel Crouse, IRR Head of Campaigns, 28 October 2022