Public procurement is the lifeblood of South Africa’s public healthcare system – it determines how medicines, equipment, and services reach clinics and hospitals nationwide. An efficient procurement system ensures patients have timely access to life-saving supplies, while a broken system can lead to stockouts and compromised care. Recent years have seen major reforms aimed at overhauling public procurement laws and processes in South Africa’s health sector. 

These changes promise more transparency, inclusivity, and efficiency, but also come with new challenges and responsibilities for all stakeholders. This article explores the evolving public healthcare procurement landscape – from policy reforms and persistent obstacles to opportunities for local manufacturers and a practical guide for businesses looking to supply the public sector.

Policy Reforms Shaping Public Healthcare Procurement

One of the most significant developments is the enactment of the Public Procurement Act, signed into law on 23 July 2024. This Act establishes a unified framework for government purchasing across all levels and sectors. Its key objectives include standardizing procurement practices and embedding transparency through technology, alongside preferential procurement policies to drive economic inclusivity. In practice, the Act created a Public Procurement Office in the National Treasury, mandates the use of centralized e-procurement systems, and sets up a Public Procurement Tribunal for oversight and dispute review.

Importantly for health, the Act’s provisions encourage public health institutions to modernize their buying processes. The mandatory e-procurement requirement is expected to streamline acquisition of medicines and medical supplies, reducing paperwork and bureaucratic delays. 

Electronic tender platforms should make tendering faster and more accessible, while also capturing data for better oversight. The law also entrenches transparency – procurement information must be disclosed, enabling public and watchdog scrutiny of health contracts. 

This aligns with constitutional principles (Section 217 of the Constitution requires public procurement to be fair, equitable, transparent, competitive, and cost-effective) and follows recent court rulings that demand more openness. In 2023, for example, the High Court ordered the government to release previously confidential COVID-19 vaccine contracts, a victory for civil society’s push to end the “shroud of secrecy” in health procurement. Going forward, proactive disclosure is expected to be “built into procurement legislation” and adhered to by government as a non-negotiable principle.

Another pillar of reform is preferential procurement and local content. The new framework emphasizes purchasing from local suppliers and manufacturers, as part of South Africa’s economic transformation agenda. In the healthcare context, this means hospitals and clinics are encouraged (and in some cases required) to source medical products locally when possible. The Public Procurement Act’s preferential policies prioritize South African-made goods and suppliers owned by previously disadvantaged groups, aiming to spur local industry and job creation. 

These policies dovetail with broader government goals to boost local production of health commodities – from personal protective equipment to pharmaceuticals – especially after the supply chain shocks experienced during COVID-19. Indeed, experts have urged the government to ring-fence a portion of health procurement for local manufacturers. One prominent proposal is that 30% of all public healthcare procurement be dedicated to local manufacturers across pharmaceuticals, vaccines, medical devices, and other health products. Such a target is seen as vital to build domestic capacity, improve medicine security, and reduce over-reliance on imports. It could also encourage investment: a clear commitment to buy locally gives investors confidence to fund South African manufacturing facilities, knowing there’s guaranteed demand.

Beyond the procurement act, other policy shifts are on the horizon. The anticipated National Health Insurance (NHI) Bill, currently under consideration, would create a centralized NHI Fund to purchase health services and products for all South Africans. If implemented, NHI could significantly reshape procurement by consolidating purchasing power. However, observers note that the NHI Bill’s procurement mechanisms will need to align with the new Public Procurement Act to avoid confusion. 

The NHI Fund is expected to handle contracting of health services and setting prices for medicines, while actual buying and logistics might remain with existing supply chains. Ensuring “comity” between the NHI system and the general procurement framework will be important so that rules are consistent. In any case, both the Public 

Procurement Act and the NHI plan underscore that transparency, accountability, and value-for-money are guiding principles for health sector procurement going forward.

The Push for Local Manufacturers and Suppliers

The public sector's renewed focus on domestic sourcing presents a critical opportunity for South African manufacturers and suppliers of healthcare goods. The country has long relied on imports for essential medical products, which exposes the system to foreign exchange risks, shipping delays, and price volatility. COVID-19 brought these vulnerabilities into sharp focus, as global supply chains buckled under pressure. Today, government is actively encouraging local production capacity across key areas such as pharmaceuticals, diagnostics, PPE, and medical technologies.

Several strategic interventions are taking place. 

These include investment incentives for local production, support for small and medium-sized manufacturers, and inclusion of local content thresholds in tenders. The Department of Trade, Industry and Competition (DTIC), for instance, has classified certain health goods as designated for local procurement under the Preferential Procurement Policy Framework. 

This includes surgical masks, gloves, thermometers, and more. Public health institutions are required to procure these items locally, provided suppliers meet technical and price criteria. However, access remains a challenge: many local producers find it hard to navigate complex tendering systems, get visibility on opportunities, or secure financing for scaling up.

Persistent Challenges in Health Procurement

Despite progress, South Africa's healthcare procurement landscape remains riddled with obstacles. Bureaucratic inefficiency, skills shortages, and poor contract management continue to plague many institutions. Corruption is a serious concern – irregular contracts and inflated pricing undermine value-for-money and erode trust. Weak demand forecasting and poor communication between central depots and provincial facilities lead to stockouts of essential medicines. Even where tenders are awarded to credible suppliers, payment delays and supply chain fragmentation can derail performance. At a higher level, policy inconsistency and overlapping mandates between entities like the National Treasury, provincial health departments, and the NHI Fund (once implemented) risk undermining coordination.

Many local businesses struggle to access the procurement system. Small manufacturers often lack the resources to meet complex compliance requirements, or the technical capacity to scale up. Tenders are frequently won by large, established suppliers or multinational firms. As a result, smaller players are left out, and government loses out on potentially innovative, cost-effective local options. Addressing this requires not just policy reform, but practical steps to simplify entry, share information, and support capacity-building.

Solutions and Initiatives for Stronger Procurement

To improve public healthcare procurement, South Africa needs a combination of structural and operational reforms. This includes:

Strengthening training for procurement officials.

Establishing real-time inventory tracking systems.

Ensuring regular audits and contract transparency.

Developing supplier databases with vendor performance records.

Introducing feedback channels between end users (clinics, hospitals) and purchasing units.

Creating financing schemes and technical support for small and medium local manufacturers.

Public-private partnerships can also help. Collaboration between government, industry bodies, and civil society can support better procurement outcomes, especially in innovation areas. Creating forums where suppliers, buyers, and regulators share knowledge and resolve barriers can speed up reform.

How to Supply Healthcare Products to the Public Sector: A Step-by-Step Guide

Register on the Central Supplier Database (CSD): Visit the National Treasury's CSD platform to create a supplier profile. You will need your company documents, tax clearance, B-BBEE certificate, and bank confirmation.

Monitor E-Procurement Portals: Check for tenders on eTender Portal, provincial tender bulletins, and institutional websites. E-procurement platforms are now mandatory under the new Public Procurement Act.

Understand Technical and Compliance Requirements: Carefully study bid specifications, local content thresholds, and compliance rules. For medical products, SAHPRA approval may be required.

Build Capacity and Track Record: Demonstrate your ability to deliver at scale, on time, and within budget. Include references, testimonials, or previous contracts in your bid.

Participate in Supplier Development and Industry Networks: Engage with industry groups, attend procurement training, and collaborate with others to improve your competitiveness.

Focus on Quality and Price Competitiveness: Government buyers look for value-for-money. Offer durable, cost-efficient solutions with strong after-sales support.

Ensure Transparency and Accountability: Declare conflicts of interest and maintain clear records. Responsible conduct helps build long-term relationships with government clients.

Conclusion

South Africa’s public healthcare procurement system is at a turning point. Legislative reforms such as the Public Procurement Act and the anticipated NHI Bill promise greater transparency, inclusivity, and strategic sourcing. However, challenges of bureaucracy, access, and accountability persist. Local manufacturers and suppliers have a vital role to play in rebuilding health supply chains and supporting public sector resilience. With clear policies, targeted support, and stronger collaboration, the country can build a procurement ecosystem that delivers value for money and health for all.