South Africa - International Franchise Association

local, provincial, and national — would rise from R978bn in 2011 to R1 trillion in 2012. In
its 2010/11 annual report, the Development Bank of Southern Africa (DBSA) estimated
that a total R3 trillion over a period of five years is necessary to address infrastructure
backlogs.
Due to the economic downturn since 2009, and increased popular pressure to leverage
policies that support broad employment, the SA Government is keen to implement
measures that are seen to make a difference, despite severe structural shortcomings.
Nearly all purchasing (at all three levels of government – national, provincial and
municipal) is done through competitive bidding on invitations for tenders, which are
published in an official state publication, the State Tender Bulletin
(http://www.info.gov.za/view/DynamicAction?pageid=575) and sometimes in leading
newspapers. Although the purchasing procedures of the central government and
parastatal institutions favor products of local manufacturers, an overseas firm is not
precluded from bidding if the firm has an agent in South Africa to act on its behalf. As a
general practice, payment is made to the local agent. Several factors impact the process
of selling to the SA Government and it agencies.
Central Government Procurement:
South Africa has changed its government procurement to a “Supply Chain Management”
process in order to streamline the buying procedures of national, provincial, local, and
state-owned companies. As part of the Public Finance Management Act Regulations of
1999, procurement accountability has now devolved to “accounting officers”. Depending
on their level of responsibility, the accounting officers are allowed to approve
government purchases up to a certain amount.
The basic principles for government procurement in South Africa, in terms of socioeconomic
objectives, are set out in the Constitution: procurement by an organ of State or
any other institution identified in national legislation must, on the one hand, be "in
accordance with a system which is fair, equitable, transparent, competitive and costeffective,"
and, on the other hand, allow for categories of preference and the protection,
or advancement, of persons disadvantaged by unfair discrimination, within a framework
national legislation. Other principles on which procurement must be based in South
Africa are accountability and the just-in-time (JIT) delivery principle.
Purchases are generally by competitive tender for project, supply and other contracts.
Bidders generally need not pre-qualify, but the ability of bidders to supply goods or render a
service generally is examined. Foreign firms can bid through a local agent. The due date for
a bid is usually at least twenty-one days from the publication of the notice. As a general
practice, however, a lead-time of thirty to forty-five days is allowed. Bids for government
tenders must be on a basis of all costs included to the specified delivery point.
Local Content Requirements:
The SAG has since 2010 been ramping up its requirements for local content. The
Department of Public Enterprises (DPE) has formulated the Competitive Supplier
Development Programme (CSDP), aimed at building up the local supply base. This
element of localization has taken on increasing importance in the bidding process,
particularly in bids by foreign firms.