Fighting Procurement Corruption in Africa with Digital Tools: The Case of South Africa�Prof Sope Williams�28 March 2025

Photo by Stefan Els

Law | EyezoMthetho | Regsgeleerdheid

Overview

• Introduction to public procurement in SA
• The corruption problem in SA
• The extent of procurement digitalization
• The challenges with procurement digitalization
• The future of procurement digitalization

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This Photo by Unknown Author is licensed under CC BY

This Photo by Unknown Author is licensed under CC BY

Law | EyezoMthetho | Regsgeleerdheid

Introduction to public procurement in SA�

• Public procurement in SA accounts for around 15% of GDP – approx. 48billion euros.
• Procurement is decentralized and contracting authorities are required to purchase goods and services for their own account and for the public they serve.
• In SA, procurement has an elevated status as it is enshrined in section 217 of the Constitution and is also used as a means of redressing the economic disparities caused by apartheid.

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Introduction to public procurement in SA�

• Section 217(1) of the Constitution requires that when an organ of state contracts for goods and services, it must do so in accordance with principles of fairness, equity, transparency, competitiveness, and cost-effectiveness.
• Section 217(2) further states that subsection (1) does not prevent the organs of state or institutions referred to in that subsection from implementing a procurement policy providing for (a) categories of preference in the allocation of contracts; and (b) the protection or advancement of persons, or categories of persons, disadvantaged by unfair discrimination.
• Section 217(3) states that national legislation must prescribe a framework within which the policy referred to in subsection (2) must be implemented.

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Introduction to public procurement in SA

• Apartheid was a system of white minority rule that dispossessed black people of economic assets and relegated them to poverty.
• Apartheid ended in 1994 with democratic elections, where black people were permitted to vote.
• Apartheid left SA with great economic inequality along racial lines. It has the largest income inequality in the world by the Gini index.

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Introduction to public procurement in SA

• 0 is the most equal country- meaning everyone has the same income. 100 is the most unequal means 1 person has all the wealth and 99% have none. Less than 25 is considered a fairly equal country.
• SA’s Gini index is 63- so 37% have all the wealth and the rest have “none”.
• Italy’s Gini index is 34.8%
• 64% of black South Africans live in poverty.
• 1% of white South Africans live in poverty.

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Introduction to public procurement in SA�

• Since 1994, the SA government has been trying to redress the economic inequalities created between black and white South Africans created by apartheid.
• it has done this by requiring that procurement contracts are awarded to firms owned by ”historically disadvantaged individuals”.
• The government used a formula where 20 or 10 points we allocated to HDI status and 80 or 90 points allocated to price.
• This formula is now under review.

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Introduction to public procurement in SA�

• Procurement is regulated by the Office of the Chief Procurement Officer created in 2013.
• The OCPO issues guidance documents and manages the e-procurement portals.

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The corruption problem in SA�

• Corruption in public procurement is a huge problem. In 2017 the Chief Procurement Officer indicated that 50% of the procurement spend was lost to waste and corruption.
• This amounts to 24billion euros a year.
• There are many reasons for the prevalence of corruption.

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The corruption problem in SA�

• The procurement landscape is very fragmented and confusing different requirements for construction and goods/services.
• Little contract management oversight
• Most procurement is paper-based, and it is easy to manipulate documents for an illegal purpose.
• Limited compliance with rules and limited consequences.
• High degree of poverty, making procurement a good avenue for wealth generation and making bidders desperate.

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The extent of procurement digitalization�

• SA has not relied extensively on digital tools in procurement.
• There is a “e-tenders” portal where contracting authorities are required to publish contract opportunities.
• There is also a central supplier database where potential government contractors are supposed to be registered, but no verification of information.

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The extent of procurement digitalization�

• Since COVID-19, there is work being done to collect procurement data using the Open Contracting Data Standard (OCDS).
• The OCDS was developed by the Open Contracting Partnership and is a globally recognized framework for structuring and publishing procurement data across all stages of the procurement lifecycle, from planning to implementation.
• The OCDS offers a schema to unify procurement documents and records across systems.
• The OCDS enables disparate data fields or models to be translated, mapped, and organized in a consistent manner, making it easier to tailor red flag indicators to specific contexts.

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The extent of procurement digitalization

• Key data points in the OCDS include:
• The number of bidders per contract.
• The procurement method used (open, restricted, or direct award).
• The identities of procuring entities and suppliers.
• Modifications or cancellations to contracts.

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The challenges with procurement digitalization �����The reliability of any corruption measurement or red flag detection is directly tied to how well the data fields are populated and the percentage of contracts covered. ��Incomplete or poor-quality data severely limits the usability of datasets for detecting corruption risks, making it difficult to draw accurate conclusions.��In SA, there is an issue with the quality of procurement data, which varies significantly depending on the contracting authority. ��

• Quality of data

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The challenges with procurement digitalization ���Analogue/ paper-based procurement��Most of the procurement processes are paper-based and there is no system for real e-procurement.��This makes data collection very difficult.

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The challenges with procurement digitalization ���Legacy systems in interoperability in procurement��There are challenges with integrating new digital procurement systems with existing financial management and accounting systems.��This makes change very difficult.��

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The challenges with procurement digitalization ���Technical capacity and legal uncertainty��There is a lack of technical capacity in the public sector. �Reliance on paper-based systems.�

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The future of procurement digitalization in addressing corruption

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• AI can analyze large procurement datasets to identify irregularities such as bid rigging, duplicate payments, or inflated contract prices.
• Machine learning algorithms can detect suspicious patterns in bidding behaviour, reducing the risk of corruption.
• AI-powered data analytics tools can track real-time procurement spending, making information accessible to auditors and the public.
• AI can assess suppliers based on their past performance, compliance records, and pricing history, ensuring fairer and more data-driven decisions.
• AI can continuously monitor procurement contracts, ensuring compliance with legal frameworks and anti-corruption policies.

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The future of procurement digitalization ��

• There is ongoing work and political will to use digital tools to address procurement corruption.
• Recently, the Minister for Public Works approved the of tech and AI to track fraud and corruption in the Department of Public Works (to combat the construction mafia issue).
• This project is new and will take some time to be completed.

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Photo by Stefan Els

Thank you

Enkosi

Dankie

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