South Africa’s micro, small and medium enterprises (MSMEs) contribute around 40% of GDP and employ more than half the country’s workforce (Department of Small Business Development). Yet, questions remain about whether billions of rand invested in preferential procurement and supplier development are delivering sustainable business growth, job creation and meaningful economic inclusion.
The debate is particularly significant given the scale of procurement’s influence. Public procurement accounts for an estimated 15% of global GDP (World Bank), making it one of the most powerful levers for economic inclusion, supplier development and social value creation.
Yet, despite years of preferential procurement and supplier development initiatives, a key question remains: is procurement spend driving lasting economic impact or merely meeting compliance requirements?
Contracting designated suppliers is an important first step, but spend alone does not create sustainable businesses, jobs or lasting economic participation. Success should be measured by outcomes, not just rand value.
“The challenge is that too many organisations still confuse spend with impact,” says Paul Vos, Regional Managing Director of CIPS Southern Africa. “A contract alone does not create a sustainable business. Without skills, mentorship, finance and market access, procurement simply shifts spend rather than creating lasting economic participation.”
This gap between policy intent and real-world outcomes remains one of the biggest obstacles to achieving meaningful equity, diversity and inclusion (ED&I) outcomes through procurement.
While procurement is increasingly recognised as a strategic lever for economic development, supplier competitiveness and broader socio-economic growth, many organisations still approach preferential procurement primarily as a compliance exercise, focusing on scorecards and reporting rather than building supplier capability.
As Vos argues, compliance should be the starting point, not the end goal.
“When supplier inclusion is treated as compliance, organisations achieve short-term wins rather than lasting outcomes. Suppliers receive contracts, but not the support needed to grow and compete,” he says.
The consequences are significant. Many small businesses remain dependent, unable to scale or withstand market shocks, limiting transformation despite significant procurement spend.
Globally and locally, leading initiatives increasingly focus on mentorship, skills, finance, technology and market access, recognising that sustainable inclusion requires long-term commercial partnerships, not short-term interventions.
Leading organisations view supplier development as a strategic partnership, recognising that resilient suppliers strengthen supply chains, drive innovation and improve long-term performance.
“Successful programmes recognise that inclusion is a journey, not an event,” says Vos.
“At CIPS, we see sustainable supplier development built on three pillars: capability, opportunity and continuity. Together, they drive meaningful economic inclusion.”
At the same time, organisations must continue to address risks that undermine confidence in ED&I initiatives.
Fronting, inflated pricing, short-term contracting and poorly aligned incentives continue to damage trust in the system. These practices create the appearance of transformation while often failing to deliver genuine empowerment or sustainable economic benefit.
Addressing these risks requires stronger supplier verification, more robust governance, outcome-based measurement and greater transparency around who ultimately benefits from procurement spend.
“Effective ED&I should never compromise good procurement practice,” says Vos. “Good governance and genuine inclusion reinforce each other.”
One of the most significant shifts taking place is how organisations measure success.
Historically focused on spend, procurement is shifting towards outcomes and measuring supplier revenue growth, job creation, skills development, sustainability and economic participation.
Questions such as how many jobs were created, how many suppliers became commercially sustainable, and how many businesses graduated into larger opportunities are increasingly replacing traditional compliance metrics.
The shift is being reinforced by South Africa’s evolving regulatory environment, including the Public Procurement Act, which places greater emphasis on broader socio-economic outcomes alongside value for money and good governance.
While legislation creates an important framework, meaningful inclusion ultimately depends on organisational intent and execution. Success is most often achieved when inclusion is embedded into business strategy and leadership priorities rather than treated as a compliance requirement.
For Vos, the challenge is clear.
“Organisations must shift from transactional to developmental procurement. The question is not ‘How much did we spend?’ but ‘What changed because of that spend?’,” he says.
“The opportunity for 2026 and beyond is to move beyond compliance and towards genuine shared value, where suppliers, communities, organisations and economies all benefit from more inclusive, resilient and sustainable supply chains.”
