Stop overpaying and overtaxing, and start delivering – IRR to provincial treasuries

The Institute of Race Relations (IRR) is this week writing to the Finance MECs of Gauteng, North West, Northern Cape, KwaZulu-Natal, and Limpopo, calling on them to make value-for-money procurement the centrepiece of their upcoming provincial budgets.

At the heart of the IRR’s proposal is the Value For Money Bill, a draft law that gives decisive effect to section 217 of the Constitution by making value for money the determining standard in all public procurement. The Bill prohibits points-based award systems that allow government to overpay for goods and services and replaces them with an objective, transparent, cost-effective framework.

BEE premiums, the mark-ups paid by government for the same goods and services, currently amount to more than R100 billion per year. According to research contained in the IRR’s award-winning Blueprint for Growth papers, eliminating these premiums would generate sufficient savings to reduce VAT from 15% to 11.5% – without cutting a single rand from frontline service delivery.

“South Africans are being forced to pay more so that government can pay more,” says Hermann Pretorius, IRR Head of Strategic Communications. “Value for money is not an ideological slogan – it is a constitutional obligation. If provinces stop overpaying for contracts, they can save billions, protect frontline services, and give real tax relief to households without raising a single additional cent.”

By ending procurement overpayments and prioritising life-cycle cost, quality, and integrity, provinces can redirect billions from waste and crony pockets back to taxpayers and essential services.

The IRR urges provincial treasuries to seize this opportunity: spend better, save billions, and deliver real relief to South Africans.

Media contact: Hermann Pretorius IRR Head of Strategic Communications Tel: 079 875 4290 Email: hermann@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za