State urged to fast-track procurement rules to unlock opportunities for black business

By Mpho Sibanyoni
mphos@sundayworld.co.za

The Black Business Council (BBC) has urged the National Treasury to urgently finalise regulations underpinning the Public Procurement Act, warning that delays are preventing black-owned businesses from benefiting from procurement reforms designed to transform South Africa’s economy.

The council says the absence of regulations, more than two years after President Cyril Ramaphosa signed the Public Procurement Act into law on
July 18, 2024, has stalled the implementation of provisions such as set-asides for black-owned enterprises, women and youth.

According to the BBC, the delay is allowing established businesses to continue dominating multimillion-rand government contracts while meaningful economic transformation remains out of reach.
The federation, which represents organised black business, argues that set-asides are central to broad-based black economic empowerment efforts and are intended to reserve portions of public sector contracts for historically disadvantaged groups.

Their concerns follow the National Treasury’s publication of draft General Public Procurement Regulations, 2026, for public comment in April.
The draft regulations propose mandatory subcontracting of at least 25% of contracts worth R100-million or more to designated groups.
The draft regulations also prescribe minimum procurement targets, including 30% for black people, 15% for black women, 18% for women, between 18% and 30% for small enterprises, and additional targets for youth, co-operatives and geographically defined categories.

Although the public comment period closed on June 15, implementation of the act faces further uncertainty after amaBhungane, the DA-led Western Cape government and the City of Cape Town challenged the legislation in the Constitutional Court.
The applicants argue that the law was adopted without adequate public participation, compromises institutional independence and encroaches on provincial and municipal procurement powers.

The Constitutional Court has reserved judgment.
The BBC believes the continued absence of set-aside regulations is enabling established businesses to secure lucrative state contracts while transformation objectives are delayed.
“The current procurement legislation doesn’t favour black business in general,” said BBC chief executive Kganki Matabane. “Now we have the Public Procurement Act of 2024, and with that act we are trying to say if we have a big procurement project like the ones that Eskom and Transnet have, we can then to set aside a certain percentage for black people, women, youth and people living with disabilities. “That can only be done through legislation.

Unfortunately, currently there is no legislation [to enforce that].”
Matabane said that in the absence of the regulations, state-owned entities and government departments continue to award tenders without the transformation measures
envisioned in the new law.
“If you have the right legislation and officials in SOEs, government departments and municipalities fail to implement it, then you can take them to court. But with the current legislation, you won’t win if you try to set aside something for black people because they are more focused on the PPPFA and only a bit on BEE,” he said.

“National Treasury is the one delaying the finalisation of the regulations. And in the Public Procurement Act, the set-aside provision is included, but it cannot be implemented until the regulations are ready.”
Matabane warned that under the current procurement framework, a 100%-owned and managed white company could still outcompete a similarly structured black-owned business for state tenders.
Meanwhile, BBC president Elias Monage said state-owned companies should play a
greater role in stimulating local industrialisation through procurement.

“When Transnet procured the previous set of locomotives, black businesses were largely excluded because most of them were sourced from [Asia],”
he said.
“Where we don’t have capacity, Transnet needs to share its forecasts so that we can prepare and plan how to build capacity as a country. Transnet needs to go out into the market and help develop capacity for different components so that we can grow a sustainable rail supply industry in South Africa,” he said.

Monage warned that failure to leverage public procurement for industrial development would mean missed opportunities in strategic sectors.
“You then look at the R8-billion that Eskom will spend on battery storage. Most of those batteries are imported, and that is a major problem,” he said.

Mpho Sibanyoni