Report exposes government's hefty telecoms bill

Treasury says government could save R400 million a year on telecommunications.
Treasury says government could save R400 million a year on telecommunications.

National and provincial government together spend approximately R3.2 billion annually on telecommunications. This is according to a progress report released by National Treasury's Office of the Chief Procurement Officer (OCPO).

Government spending on mobile accounts for R800 million per year, while fixed-line costs R2.2 billion annually.

The report is a 2016 update on the progress of the 2014 Public Sector Supply Chain Management (SCM) Review, which aimed to provide a frank assessment of the SCM system and deliver a roadmap for reform.

"Government is implementing procurement strategies that would result in savings of approximately R25 billion a year," the update reads. This includes savings on government telecommunications costs.

"Based on research and engagement of the South African supply market, savings of R400 million a year can be achieved [on telecommunications]."

The full R3.2 billion telecoms bill is almost the same as the entire 2016/2017 budget for the Gauteng Education Department, of R3 billion, announced by finance MEC Barbara Creecy this week.

However, ICT industry veteran Adrian Schofield says it is not the quantum that is important, but how effectively it is spent.

"There is a desperate need for government to have all its operations connected to an integrated broadband network so that all officials can access information and communicate efficiently with each other and all stakeholders," he notes.

The Treasury report says the procurement of telecoms service is "fragmented across all government entities".

"Government owns significant portions of the network and some of the operators, as well as having the State Information Technology Agency, which has the mandate to manage central government services, but there needs to be greater progress towards adopting and implementing the National Broadband Policy, the National ICT Policy and the relevant sections of the National Development Plan.

"The delays in rolling out the initial stages of SA Connect do not bode well for the achievement of these essential goals," adds Schofield.

Digital saviour

The SCM Review is looking to reduce government spending across the board, with government introducing a number of online methods for bringing down costs. These include the Central Supplier Database (CSD) for government and the eTender portal.

The OCPO still believes public procurement should be used to stimulate the South African economy and continue to create opportunities for growth, but says specific measures can be taken "to eliminate unnecessary spending, eradicate waste and implement measures to contain costs to improve efficiency in spending programmes".

The CSD was introduced on 1 September 2015 as a way to register government's suppliers on one central database. The CSD automates the verification of tax clearance certificates, company registration information, black empowerment status and personal identification information, and enhancements are being made to interface with government payroll systems.

"The introduction of the CSD has reduced the cost of doing business significantly, as suppliers no longer have to incur costs of acquiring these administrative documents and register on the databases of each department, municipality and public entity," according to the OCPO.

So far, 95 000 suppliers have registered on the CSD and the estimated cost saving for government is R350 million by eliminating duplication of registration of suppliers at different departments and entities.

The OCPO says over 71 000 users accessed the site in February 2016 alone, with an average session of 6 250 per day. It takes on average 15 minutes and 36 seconds to register on the CSD.

From 1 April, registration on the CSD will be compulsory for suppliers doing business with national and provincial government and their respective entities. The CSD will be compulsory for local government from 1 July.

Portal power

From 1 April, processing of bids through the eTender portal is also compulsory for both national and provincial government while local government has until July to switch to the online system.

The OCPO says the initiative will save government over R700 million a year on advertisement and printing costs. It says Transnet alone is already saving R1 million a month by using the eTender portal.

The portal was originally introduced on 1 April 2015, and government says it also enhances transparency and over time will reduce corruption and the number of tender disputes.

"To date, more than 2 800 tenders representing approximately R40 billion in government business have been advertised on the portal. The portal is approximately visited 2 600 times per day. Over 30 000 users have accessed the eTender portal in February alone," according to the OCPO report.

Read time 4min 00sec
Paula Gilbert
ITWeb telecoms editor.

Paula Gilbert is the Telecoms Editor at ITWeb. She is an award winning journalist covering telecoms, business, start-ups and new innovations in finance and mobile. She previously worked as a producer and reporter for business television channels Bloomberg TV Africa and CNBC Africa and started her career in radio. She has an Honours degree in Journalism from Rhodes University. Travel is always on Paula's mind, she has visited 30 countries so far and is currently researching her next adventure.

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