PHOENIX
I have always relied on the Financial Mail to provide me with cutting edge journalism, and Tim Cohen, in his Backchat column, certainly never disappoints. He always hits the nail on the head, and one particular article in July 2026, was beyond spot on:
Rethinking procurement
There is growing agreement that the government’ s preferential procurement policies have produced broadly poor outcomes. The disagreement is over why: is it implementation or concept?
South African GDP growth has been subdued for 15 years, much lower than countries of similar economic development and even smaller than Namibia, which also suffered under an apartheid system. Some great new enterprises have resulted from BEE efforts, I know, and large numbers of black South
Africans have become shareholders, and politically it might have helped stabilise South Africa in the postapartheid period. But now, South Africa desperately needs more growth, especially in manufacturing, to reduce its unemployment. All procurement policies need to be reconsidered.
The government passed the Public Procurement Act in the dying days of the previous parliament. The legislation notionally creates an efficient framework. But it also adds a raft of new compliance requirements. Audited financial statements, solvency, tax status, professional accreditation, misconduct and debarment history and anti-corruption compliance are all now part of the system. That’ s a lot of new administrative burden and paperwork at a time when South Africa needs rapid response enabling for industrial companies and manufacturing entities to create muchneeded jobs.
South Africa has a significant industrial and manufacturing base. It needs to be revived. Preferential procurement is one tool to do that. But why isn’ t the government more serious about supporting the main manufacturing employer in South Africa: the automotive industry?
Government is trying to create new preferential procurement policies, but its record on buying locally made vehicles for the government’ s large vehicle fleets isn’ t signalling a localisation intent. South African-made bakkies and passenger vehicles should be what the South African Police Service and all other government departments with large fleets buy, operate, and service. Stimulating the local automotive industry. But if you analyse fleet procurement at the small municipal level and the larger national government level, some very odd brands and models are being bought. Why?
The Centre for Development & Enterprise has done a useful analysis of the regulations and called on the National Treasury to withdraw the preferential procurement provisions.
Procurement by the government is worth around R1 trillion a year. Do government departments know their ability to procure will be massively constricted? Has the government factored in the likely cost increases from the new regulations? Has it even tried to calculate them?
OCTOBER 2026 3 WORDS IN ACTION