R115-million South African IT spending pain

South Africa could cut down on R115 million of South African Police Service information and communication technology (ICT) spending over three years if efficiency is prioritised.

However, this is only one of the numerous areas identified by the Government Technical Advisory Centre (GTAC) in its state spending reviews.

This is according to one of the country’s deputy finance ministers, Ashor Sarupen, who told 702 that South Africa could save R12 billion a year by honing on inefficient spending across government.

“A government agency run by the National Treasury called GTAC has been running a series of spending reviews since 2013, and they’ve identified about 12 billion a year in inefficiencies in various parts of the government,” Sarupen said.

“For example, in SAPS, we estimate that over three years, there could be savings of R4 billion in rental costs, R1.6 billion in fleet spending, and R115 million in ICT procurement.”

Sarupen said GTAC has found that the South African government is paying prices that are not market-related for rentals around the country.

He argues this can be attributed to operative inefficiency, poor supply chain management, and policy decisions that are perpetuated and not undone.

However, this is also true for procuring ICT equipment, fleets, and food.

GTAC conducted a spending review of the State Information Technology Agency (Sita) over the five years between the government’s 2016/17 and 2021/22 financial years that raised concerns that it “adds to the cost and reduces the efficiency of IT spending in government.”

It is important to note that the Sita Act states that all government departments at the national and provincial levels source ICT services and equipment through the agency or from it.

The review found that ICT expenditure amounted to R97.5 billion over the period, which comprised 5% of the government’s total procurement spending.

Despite this, GTAC reported that ICT spending in 2021/22 had decreased by 5% compared to 2016/17, with most of the spending focused on core maintenance and very little on developing and digitising government services.

It also noted significant expenditure leakage, as only 25% of the government’s total ICT spending goes through Sita.

This figure can be broken down into 60% mandatory and only 18% non-mandatory government spending going through the agency.

GTAC says that previous reviews have found that the agency’s pricing is often inconsistent and opaque to departments.

“Generally, the costs of utilising SITA are higher than when procuring through non-SITA channels, especially when minimal oversight is applied to SITA procurement processes on behalf of government entities,” the review notes.

According to the “Sita’s customers” page on the agency’s website, it currently services 80 state entities at the national level and 135 at the provincial level.

These include both national and provincial parastatals.

Sita also services another 48 district municipalities, local authorities, and educational institutions throughout the country.

However, the Department of Communications and Digital Technologies recently found that Sita cannot adequately fulfil its mandate.

For this reason, the department intends to amend regulations to allow smaller departments to procure IT services and equipment independently rather than through Sita.

“We’ve received some feedback from several government departments, and there have been extensive complaints regarding delays in service delivery,” the director general of the DCDT, Nonkqubela Jordan-Dyani, recently told Parliament.

“You find that it becomes tedious when you are sourcing an iPad, and you have a new staff compliment, and then experience delays of three months, sometimes even four to six.”

To solve these service delivery issues, communications minister Solly Malatsi proposed that South Africa amend the Sita Act to introduce a threshold that departments must meet to be mandated to procure services and equipment.

Malatsi’s predecessor, Khumbudzo Ntshavheni, also considered this, suggesting a value of R10 million for the threshold.

However, Jordan-Dyani noted that these regulations cannot be adopted as is because they conflict with the Sita Act.

Therefore, the department must review the Act to ensure harmony with the proposed regulations.

In addition to inefficiencies noticed by state departments, Sita is suspected of having various governance and operational issues.

As a result, Malatsi formally requested that the Public Service Commission (PSC) investigate the IT agency for irregular procurement practices and operational inefficiencies.

This followed the Minister joining the Parliamentary Committee on Communications and Digital Technologies for an oversight visit to SITA’s offices in Pretoria on 11 December 2024.

Malatsi also discovered Sita was outsourcing the procurement of internal transactions and supply chain-related issues to a company called Nakede Management Services.

This was despite employing 72 individuals for this very purpose. Sita has over 3,300 employees in total.