A shift to strategic procurement is key to driving South Africa’s reindustrialisation efforts

SOUTH Africa’s procurement mindset must urgently evolve from transactional buying to strategic, long-term procurement if we are to achieve meaningful reindustrialisation, because our reliance on transactional procurement is undermining long-term industrial growth.

- MERVYN NAIDOO

THE lesson for South Africa is clearly that industrial resilience requires deliberate policy choices. Infrastructure spend must be tied to local capacity, procurement must be strategic rather than transactional, and the government must provide the certainty that enables manufacturers to invest for the long term, says the writer.

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By chasing short-term savings, contracts are structured to squeeze suppliers on price and cash flow, leaving them unable to sustain operations.

The recent collapse of transformer manufacturing company SGB-SMIT Power Matla (SSPM) is a case in point. Pushed on pricing, stripped of milestone payments and forced into single-commissioning contracts, the company ran out of cash and entered business rescue. The result is that local manufacturing capacity was wiped out, and prices for imports rose by 10-20%. This is the paradox: transactional procurement destroys domestic industry, only to leave the country paying more for foreign supply. Strategic procurement offers the alternative. It means forward visibility, multiyear commitments and support for working capital so suppliers can invest, expand and deliver sustainably.

Inconsistent and slow procurement pipelines