South Africa’s government procurement system is operating at enormous scale but its economic impact on small businesses is undermined when suppliers are left waiting for payments.
Public Service Commission (PSC) Commissioner Anele Gxoyiya recently noted that the non-payment of invoices by government departments within 30 days remained a grave concern, especially since it violated the Public Finance Management Act (PFMA).
Public procurement accounts for about 19% of consolidated government spending, totalling well over a trillion rand every three years.
That makes procurement one of the most significant mechanisms available to government to influence economic activity, supplier development, and job creation.
Yet the flow of money through the procurement system frequently does not translate into the flow of cash through the businesses that supply it.
National Treasury reported that at the end of the third quarter of the 2025/26 financial year, 90 856 invoices owed by national and provincial departments were more than 30 days old and remained unpaid, with a combined value of R15.5 billion.
A further 89 499 invoices worth R10.8 billion were paid after the 30-day period during the quarter. Provincial departments accounted for 98% of invoices that were more than 30 days old and unpaid.
While a delayed payment can be a frustrating working-capital issue for a large company, it can decimate a small supplier.
The stakes are extremely high because some researchers estimate that SMMEs make up 91% of formalised businesses, provide employment to about 60% of the labour force, and total economic output accounts for roughly 34% of GDP.
Yet the businesses making this contribution continue to face significant barriers to finance.
According to Zama Titi, CEO of South African supplier liquidity and trade finance platform MOMULA, this is where the conventional understanding of procurement needs to change.
“We have enormous procurement expenditure moving through government, SOEs, and large corporates, but we also have an economy where thousands struggle to convert economic opportunities into sustainable businesses,” Titi says.
“This creates a paradox. A business can win contracts and still fail.”
The problem, he argues, is the gap that exists between being awarded work and actually receiving payment. “Because the business cannot finance the journey between winning the work and getting paid, there is a structural problem within the procurement structure.”
Titi is firmly of the view that procurement professionals need to take greater responsibility for supplier resilience.
However, supplier resilience itself raises the question of what happens to the supplier after the purchase order is issued but before the payment arrives.
This becomes particularly important in an economy where access to conventional credit is limited.
“I come from banking, but banking can’t solve the problem,” Titi says.
“Traditional banking is generally structured around assets, liabilities, balance sheets, historical financial performance, collateral, and credit behaviour. Those criteria can be extremely difficult for smaller businesses to satisfy.”
The answer, he says, is to look at procurement through a different economic lens. Rather than viewing a supplier’s balance sheet as the only indicator of its ability to secure funding, more attention should be paid to the strength and verifiability of the underlying transaction.
This would mean building financial infrastructure that can recognise the value embedded in procurement events, such as a legitimate contract, an approved purchase order, verified delivery, and an invoice awaiting payment.
In other words, procurement should be considered economic infrastructure in its own right.
That also changes the way technology should be viewed, Titi adds.
He points out that there is a danger that organisations respond to concerns about fraud, control, and accountability by continually adding more layers of administration.
“When you don’t trust the system, you add another approval, another form, another signature, another control. Eventually we build an enormous system designed to compensate for one thing: ‘I don’t trust you’.”
His suggested alternative is not to remove controls but to make transactions more transparent and traceable by using technology to create a digital history around critical procurement events.
This would show who created a transaction, who changed it, who approved it, what was delivered, what was verified, and who was ultimately paid. That kind of traceability is not simply digitisation, but “digital governance”.
Operational problems at government level have dire economic consequences for SMMEs, whose owners have salaries to pay, stock to purchase, vehicles to operate, and subcontractors to settle, regardless of whether an approved invoice has been paid.
This is why Titi argues that procurement should be measured by more than financial savings.
“Procurement creates much more value when an SMME survives, when a local supplier becomes a national supplier, when a community develops its own economy,” he says.
That definition of value is particularly relevant in South Africa, where SMMEs account for the majority of formal businesses.
It also places greater importance on what happens after a business wins a contract.
Winning government business can create revenue. But predictable payment can create the working capital needed to fulfil the next contract, employ more people, invest in equipment and move from being a small supplier towards becoming a sustainable, larger business.
That is where payment and funding need to work together.
Titi believes the short-term future lies in creating an “interim interface” between procurement and finance which can translate the underlying strength of a verified transaction into a basis for responsible liquidity without weakening governance.
“South Africa needs to consider how procurement can become an engine of supplier development rather than simply a mechanism for buying goods and services.
“The system has sufficient scale to influence much more than departmental budgets. It can influence whether small businesses survive, whether jobs are sustained, whether local suppliers develop into national businesses and whether economic opportunity spreads beyond established players.”
For Titi, that requires a rethink of the role of the procurement professional.
The emergence of AI and automation will undoubtedly alter how procurement operates, but technology is not the ultimate question. Rather, it is “what do we want procurement to do for society?”
Titi’s answer is to put trust, transparency, accountability, opportunity, and shared prosperity at the centre of the procurement conversation.
