The recent signing of the Public Procurement Bill into law by President Cyril Ramaphosa is aimed at transforming the country’s supply chain industry towards enhancing the economy.
This also signalled the groundbreaking move poised to transform procurement practices. While providing substantial opportunities and advantages for supply chain professionals, businesses, and communities throughout South Africa.
Group CEO of ATCOM, Mervyn Naidoo, said that one of the key objectives of the law is to prioritise local suppliers and promote free competition.
Supply chain, aftermarket support
Naidoo said that through localising the supply chain, this will also ensure aftermarket support for products.
“This approach is expected to have a significant impact on the broader economy by creating jobs. Also by fostering entrepreneurship, and driving innovation within the country.
“The new procurement legislation potentially offers supply chain professionals, businesses, and communities several other opportunities and benefits. This by enabling state-owned entities to migrate from transactional to strategic procurement.
“In the long term, this will create more predictability for suppliers and therefore bankability on investment,” said Naidoo.
As the Bill has been signed into law, this will also ease business operations. It will remove the red tape that has been a blockage for businesses to access opportunities. As this will enable processes to be followed towards that. And facilitate the migration from transactional to strategic procurement.
Transactional procurement is typically done on a short-term basis. This means that there is no predictability in terms of demand. It hampers investment and the long-term growth and sustainability of businesses.
Naidoo said that the bill will inevitably remove some of the bureaucracy that existed in the past.
Remove bureaucracy, unlock investment
“This in turn has the distinct benefit of facilitating strategic and public-private partnerships. Unlocking investment from the private sector will culminate in the improved efficiency of systems. Also of companies, and logistics, and have a positive impact on the economy.
“At the same time, when companies start to invest in capital goods and expand their operations, they will need to employ more people. This will trigger much-needed job creation and the need for skills.
“As a result, organisations will have to embark on training and skills development initiatives. These further provide scope to partner with schools and tertiary institutions to align their curricula based on projected skills set demands. Upskilling the country will certainly create more employment opportunities. And this will benefit the entire vertical supply chain,” he said.
It is noted that the Bill will also address the challenging issue of a historical lack of policy clarity. This around product designation and localisation. And as it will effectively prioritise local suppliers and support product designation to strengthen industrialisation. This by providing certainty around investments through a forward view of product demand and upcoming projects.
Based on Naidoo’s analysis, a focus on local procurement will also ensure that there is certainty in terms of demand. This in the medium to long term, which in turn attracts investment into the country. And also allows businesses to procure new technologies.
Skills development, supplier development initiatives
He pointed out that these longer-term investments will impact the entire supply chain positively. As small, medium and micro enterprises (SMMEs) that supply larger corporations will benefit from this financing. Which will inevitably drive supplier development initiatives.
“SMMEs are crucial to job creation. And supporting them through supplier development programmes will see the rise of entrepreneurs and innovation.
“By stimulating economic growth, creating employment opportunities, and hence broadening the tax base, the …Bill will also improve the efficiency of the state. This as it will create an economically active population, and thus lighten the social burden.
“Therefore, improving procurement practices will lead to more efficient public service and a more functional country. This will invariably result in a better quality of life for citizens,” he concluded.
