Public procurement of innovation in the valve manufacturing sector in South Africa

Abstract

Public procurement, in addition to its primary role of obtaining goods and services to fulfil public service functions, has been used by many economies to accomplish various socio-economic and developmental objectives. Moreover, public procurement is suggested to have played a big role in stimulating the establishment of manufacturing sectors in existence today. For many developing economies, manufacturing remains critical to creating large scale employment opportunities to reduce the high-rate unemployment and poverty. Against the budgetary constraints and tough economic climate, the past decades witnessed a renewed interest in the utilisation of public procurement of innovation (PPI) as either a stand-alone policy or as part of general innovation or procurement policy tool to stimulate innovation amongst the existing sectors or creation of new sectors. In South Africa, public procurement accounts for a significant share of economic activity with many domestic industries reliant on government contracts for their commercial activities. However, in comparison to other developed economies where PPI has become popular, it has been suggested that developing economies are not taking full advantage of the immense potential of PPI as tool to advance innovation capabilities and to strengthen the competitiveness of domestic firms. The purpose of the study is to explore the potential of PPI as tool to facilitate innovation in South Africa, utilising the valve manufacturing sector as case study. The study employed qualitative methods to gather and analyse data. The study used primary data as well as policy document analysis. Primary data was gathered through semi-structured one on one interviews with government officials, Eskom official as well as local valve manufacturers to determine the suitability of PPI to the South African environment. Policy documents and government report were used as secondary data. The key finding of the study PPI is a complex tool and there are many factors involved its implementation. Its successful implementation is reliant on certain conditions being in place. The complexities and weaknesses inherent within the South African regulatory, organisational, and institutional landscape may present iii major difficulties in the successful implementation of PPI as an explicit tool for government.