Nicola Mawson
Although the recent promulgation of both the amendments to the Companies Act as well as the Public Procurement Act aim to enhance transparency, cut down on corruption, and improve South Africa’s status as an investment destination, both require political will to implement.
After signing into law the Public Procurement Act, President Cyril Ramaphosa stated – in his weekly Monday newsletter – that the law stemmed from work to prevent corruption and State Capture found by the Zondo commission.
“The law specifically prohibits any person from interfering with or trying to influence any procurement or trying to tamper with any tender bid after its submission or award,” Ramaphosa said.
Law firm Dentons South Africa yesterday said both pieces of legislation will assist in reducing incidents of corruption, especially the Public Procurement Act.
In combined comment to Business Report, Tony Tshivhase and Thobeka Ntlamba, said that businesses’ confidence could be boosted when they see that government procurement processes are conducted with fairness and transparency.
Moreover, the lawyers stated, the new Companies Act allows for significant improvements in corporate governance, improving transparency in pay across all levels as well as making it easier to do business in South Africa as it “reduces bureaucratic complexity and facilitates smoother business operation”.
According to the IMD World Competitiveness Ranking, South Africa is ranked 60th out of 67 companies measured in 2024.
Busisiwe Mavuso, CEO of Business Leadership South Africa, has stated that the “Public Procurement Act is an ambitious piece of legislation that attempts to establish a single framework for sourcing, buying and paying for goods and services by all organs of state, with a strong emphasis on transformation”.
While noble, she said, there were serious concerns that there may not be enough local capacity to meet demand as determined by the law, especially when it comes to manufacturing.
“There also appears to be a risk that a bidder that meets the act’s requirements is accepted even if it is far more expensive than other bids,” she said.
However, Mavuso said that time will tell whether the law is sufficient to combat corruption.
“I encourage the new government to ensure the checks and balances that accompany tender assessment processes are thorough and efficiently enforced.”
The amended Companies Act aims to tackle inefficiencies, ambiguities, and gaps in the current law, aligning it with modern business practices and international standards, said Lunga Maloyi, director of economic and fiscal policy at Business Unity South Africa.
Calling the law “an important piece of legislation,” he explained it requires disclosure of remuneration, which would improve public access to information, as well as counter money laundering and terrorism.
Maloyi said that, although some of the proposed amendments do provide for a more coherent regulatory environment, the Companies Act does come with challenges, such as allowing open access to complete financial statements, which could then have consequences for commercial competitiveness as these figures would be available to competitors and suppliers.
Yet, political analyst Daniel Silke said that the laws don’t, in themselves, guarantee any kind of stability or positive signs for business.
“I think the point really to make is that, notwithstanding these bills, government has to be clean and transparent,” Silke said.
“The question really is whether our bureaucracy, administration, state departments can wean themselves off the incredibly bad habits over the last two decades of feathering their own nest of patronage-based politics and whether they can act transparently and within the ambit of the law,” he said.
That, said Silke, is the real challenge as there needs to be political will to ensure the laws are properly implemented.
BUSINESS REPORT