Abstract
This chapter focuses on tensions and regulatory gaps impacting public procurement reform in the private sector (supply chain) doing business with government in South Africa. Through a careful examination of supply chain practices based on fieldwork, Von Broembsen documents opportunities that public procurement legislations create for black suppliers and demonstrates that formal rather than substantive empowerment is being met. Analysis of the operative dynamics of the “law-politics-business” matrix shows it is not the absence of hard law, but the reality of asymmetric bargaining power between parties, that subverts policy objectives in preferential procurement in South Africa.
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Notes
- 1.
See the Green Paper on Public Sector Reform in South Africa (RSA Ministries of Finance and Public Works), 1997.
- 2.
See Christopher McCrudden. “Using public procurement to achieve social outcomes.” Natural Resources Forum Vol. 28, (2004): 257–267.
- 3.
GPA Agreement, see http://www.wto.org/english/docs_e/legal_e/gpr-94_01_e.htm.
- 4.
The 1994 plurilateral agreement was reviewed in 2006 and a provisionally agreed revision is in place that extends the coverage of the 1994 agreement.
- 5.
The General Agreement on Trade Tariffs (GATT) preceded the WTO.
- 6.
Historically Disadvantaged Individual (HDI) means a South African citizen (1) who, due to the apartheid policy that had been in place, had no franchise in national elections prior to the introduction of the Constitution of the Republic of South Africa, 1983 (Act 110 of 1983) or the Constitution of the Republic of South Africa, 1993 (Act 200 of 1993) (‘the Interim Constitution’); and/or (2) who is a female; and/or (3) who has a disability provided that a person who obtained South African citizenship on or after the coming to effect of the Interim Constitution, is deemed not to be an HDI (Procurement Regulations definition, 1).
- 7.
The author interviewed the MD and the Marketing Manager of this black-owned firm on 4 October 2011 with the understanding that the firm’s name would not be revealed.
- 8.
In November 2010 the author undertook an empirical survey of 21 small businesses in the craft and agribusiness sector for the Trade Industrial Policy Strategy (TIPs). Interviewees that supply to the big retailers identified these transaction costs. These costs were brought up again in an interview conducted in September 2011 with Francois Naude, the CEO of the Western Cape Fine Foods Initiative, which has a membership of 80 businesses. Thus while the article refers to one case study, these transaction costs are representative of contractual terms between the big retailers such as Pick’n Pay, Woolworths, Shoprite Checkers, and their suppliers.
- 9.
1 South African Rand is about 0.071 euros and 0.097 US dollar.
- 10.
Agencies are accredited by the National Accreditation body, SANAS.
- 11.
See Cynthia Estlund. Regoverning the Workplace (2010) for a discussion on how the practices of the HR profession shaped the application of affirmative action legislation, and thus the regulatory regime applicable to corporate employee contracts.
- 12.
See Clifford Shearing. “A Constitutive Concept of Regulation” J Business Regulation and Australia’s Future edited by P. Gabrosky and J. Braithwaite., Australian Institute of Criminology, 1993. 4; James Burk.Values in the Marketplace: The American Stock Market UnderFederal Securities Law New York: Walter de Gruyter, 1988; and Danielsen, Dan.Corporate power and global order’ International Law and Its Others. Edited by Anne Orford. Cambridge: Cambridge University Press, 2007, 85–99. 15Trubeck, D., and Louise Trubeck. “New Governance and Legal Regulation: Complementarity, Rivalry and Transformation.” Columbia. Journal of European Law, Vol. 13, (2006–2007): 539–564; Tamara Hervey and Louise Trubeck. “Freedom to Provide Health Care Services within the EU: An Opportunity for a Transformative Directive.” Columbia. Journal of European Law, Vol. 13, (2006–2007):623–647. 16See TED video (www.ted.com) by Auret van Heerden “Making Global Labor Fair.”
- 13.
Bosch G., Mayhem K. & Gautie J. “Industrial relations, legal regulations and wage setting.” In Low Wage Work in the Wealthy World. Edited by Gautie. New York: Russell Sage Foundation, 2010.
- 14.
Supply chains and production networks represent two different analytical perspectives. Value chain analysis follows a product from inception until it is sold. It analyzes the linkages between firms with the objective of ascertaining who supplies what to whom and the value that is added at each stage of the process. It analyzes the power relations between firms in the value chain. Production network analysis looks at the relationship of firms with wider institutional actors including other firms in the network, the social and institutional context within which the chains operate. See Barrientos S. “Global production systems and decent work.” ILO Working Paper (2007) and Navdi K. “Globalisation and poverty.” Institute of Development Studies Bulletin (2004).
- 15.
For example, in India, different castes have different rules pertaining to the economic participation of women. The author spent two days with a fruit vendor in Ahmadabad in January 2013 and found that the vendor’s caste rules forbid her to buy goods directly from wholesalers or else “bring shame” on the men of her caste. She may only buy through a broker who adds a 2% brokerage fee.
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von Broembsen, M. (2016). Procurement Policy Subversion in Contracts Between South African Retailers and Suppliers. In: Nyeck, S. (eds) Public Procurement Reform and Governance in Africa. Contemporary African Political Economy. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-52137-8_4
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