Challenges must be met

AN AMOUNT of $11 trillion (about R206trn) was spent by governments across the world in 2018 to purchase public goods and services. Public money, raised through taxes and duties and distributed through contracts with private sector companies, $11trn of a global GDP of nearly $90trn.

In South Africa, public procurement spending was R926 billion in 2018, according to the National Treasury – that represents 20% of the country’s GDP.

In addition to securing value for money and procuring public goods and services that best meet the needs of the people, procurement spending is an instrument by which the government can provide opportunities to expand the marketplace and advance equality and social justice. And, given the amounts involved, a very powerful instrument.

A recent Policy Dialogue, hosted jointly by the South African government and the EU and organised by the Department of Women, Youth and Persons with Disabilities (DWYPD), brought together a range of experts and practitioners, both local and international, to explore what needs to be done to ensure that women-owned businesses (WoBs) get a fair share of the procurement pie.

President Cyril Ramaphosa promised 40% for WoBs; how to make that promise a reality was the core of the dialogue.

Dr Nkosazana Dlamini Zuma, Minister in the Presidency: DWYPD, noting that no country has successfully developed without considering women’s empowerment, spoke of the need to mainstream gender across all aspects of the budget and for stronger enforcement of the government’s gender equality commitments.

Creating fiscal space for women’s empowerment is imperative. Not only that, but an approach that sees women’s empowerment as an investment rather than a cost will result in guaranteed returns to the Treasury as well as the economy.

Because of the size of the procurement purse, governments have become significant actors in the market. In the same way that private companies have a responsibility to their shareholders, the government has a responsibility to the public, whose money they are injecting into the market.

South Africa pursues a transformative agenda towards inclusive economic growth and development. Given public procurement’s share of GDP, it is clearly one of the most strategic instruments for socio-economic transformation. The government’s objective is not merely to transfer ownership of assets or opportunities to contract with the state, it is to change the structure of the economy.

Minister Dlamini Zuma spoke of the need to “re-order the economy” with its “patterns of ownership and control”. At the outset of the dialogue, the minister warned participants that their deliberations throughout the day would be “unsettling”, such is the nature of the task.

Unsettling is one way to characterise the reaction to the new 2022 Preferential Procurement Regulations (PPR), with the removal of the use of pre-qualification criteria in the tendering process. This was the mechanism that provided the application of pre-qualification criteria “to advance certain designated groups”, including black people, women, persons with disability and small enterprises.

This provision is embedded in Preferential Procurement Policy Framework Act, 2000 (PPPFA).

The new regulations seem to signal a departure from that goal in terms of the advancement of equality and social justice goals.

The new regulations took effect in January this year and are intended as interim guidance while a new Public Procurement Bill passes through Parliament. Will the regulations change again when the new legislation is in place? Certainly, the Minister of Finance will be empowered to craft new or revised regulations.

The Preferential Procurement Framework is essential to the workings and ethos of the public procurement system. It is essential also that the regulations are comprehensive and robust enough to facilitate the realisation of the 40% mandate for WoBs. The mandate will not be fulfilled by wishful thinking, nor by encouraging public officials to take account of gender equality as a specific goal, nor by aspirational statements and policy positions.

If advancing gender equality and women’s empowerment is part of the South African government’s agenda to redress historical discrimination, particularly economic deprivation, then there is work to be done. There is work to be done in reforming the processes of PP in terms of transparency, accountability and skills development at every stage of the supply chain.

A sound system of PP is a prerequisite for equitable outcomes. And there is work to be done to bring gender knowledge into the procurement processes. It’s not only about getting a few more – or even a substantial number – of WoBs through the system. It is about understanding the systemic challenges that render women at a disadvantage in accessing the system in the first place. Research shows that the gender dimensions of entrepreneurial activity are poorly understood by policymakers.

Consequently, policy action is mostly about relatively small projects, addressing one particular issue and one subset of entrepreneurs – micro and small-business owners.

It will require a strategy, bringing together the relevant players consulting with emerging and established women entrepreneurs, and investing in capacity building – both for entrepreneurs and procurement officials – engaging gender equality expertise, expanding the capacity for gender budgeting across the public sector, and embedding the promise of 40% for WoBs in sound and enforceable regulations.

It will also require the application of the principles and methodologies of gender mainstreaming to government-contracted service providers, enjoining them to create and adhere to sound gender-equality policies within their workforce, their suppliers and in all their business functions.

It is unrealistic to consider that the work is anything less than an ambitious and challenging one. With the best will in the world, even the best political will, there are challenges that need to be reckoned with and reckoned with strategically.