Why ethical procurement in Africa matters

/ MEDIA STATEMENT / This content is not written by Creamer Media, but is a supplied media statement.

Adhering to globally recognised procurement and supply standards can help the continent's public and private organisations attract investment.    

This year’s Global Ethics Day is a timely reminder to Africa of the need for ethics to build a prosperous, equitable and just society.  Ethical procurement can help attract investment, foster sustainable growth, and establish credibility for African organisations seeking to enhance local and international partnerships.

The annual event, commemorated on October 16, seeks to magnify, encourage, and empower ethics through the actions of individuals and organisations. It also provides an opportunity to address society's most critical issues.

Africa knows many of these issues well.

Addressing historical inequities, supporting economic transformation, and tackling poverty and rampant corruption are ongoing issues in many parts of the world. These are especially relevant for African economies working to attract sustainable investments.

Unfortunately, this volatile blend of circumstances has led to a significant decline in investment. Where middle-income countries boast an annual average investment rate of 30% as a proportion of GDP, a country like South Africa’s is less than half that.

It is no secret that fraud and corruption have gutted the economy, and according to a new report by the Centre for Risk Analysis, a local think tank, total investment in South Africa declined to R685.6 billion in 2023 from R796 billion in 2013. Load-shedding has further dented economic growth and investor confidence, with the country’s GDP growth rate averaging just 1% in the past decade.  

Yet, as troubling as these statistics are, the country still offers excellent potential as an investment destination, especially with load-shedding on pause and the government open to working with the private sector.

A slight decline in the unemployment rate to 32.1% in Q3 from 33.5% in Q2 2024 and inflation falling to its lowest level in three years are deemed signs of cautiously rebounding business confidence under the Government of National Unity. 

However, attracting new investment will require reassurances that local organisations adhere to ethical processes. Investors increasingly seek organisations that demonstrate ethical practices and transparency.

Earlier this year, Rand Water achieved a Chartered Institute for Procurement and Supply (CIPS) Corporate Ethics Mark for the third consecutive year – the first South African parastatal to do so. 

This mark demonstrates an organisation’s integrity and commitment to ethics, helping to safeguard the procurement and supply chain and the organisation’s reputation.

CIPS is the world’s largest professional body for the procurement and supply profession. It helps organisations across Africa achieve transparency and accountability in their practices.

According to Lesego Sineke, the utility’s Chief Procurement Officer, consumers are increasingly conscious of a company’s ethics. Brand loyalty and an enhanced reputation follow if a firm meets its expectations.

she adds that organisations can reduce the risk of legal issues, supply chain disruptions, and reputational damage by sourcing ethically.

“A focus on ethics also fosters collaborative relationships with suppliers, contributing to more reliable partnerships and long-term value,” Sineke says.

Ethical procurement requires transparency and accountability, ensuring a clear audit trail of transactions, contracts, and decisions.

Suppliers should always be vetted for ethics, human rights, environmental impact, and law compliance. Regular audits should also ensure ongoing compliance.

“Importantly, ethical procurement mandates that suppliers comply with labour laws. Suppliers are expected to pay fair wages, provide safe working conditions and ensure employees have reasonable working hours and freedom of association.

“Also, ethical procurement prioritises suppliers who use sustainable materials, limit waste, reduce emissions and promote eco-friendly practices throughout their processes.”

Another critical pillar is eradicating bribery, corruption and favouritism in supplier selection to ensure contracts are awarded based on merit and fairness.

Sineke says ethical procurement often involves sourcing from diverse suppliers, such as women-owned and minority-owned businesses or socially disadvantaged groups. “Procurement decisions should consider the impact on local communities, aiming to source locally, when possible, to reduce environmental costs associated with transport and contribute to local economic development.”

Rand Water is among many African organisations that have recently achieved the CIPS Corporate Ethics Mark. Others include Mopani Copper Mines PLC in Zambia, ABSA Bank Group Ltd, the Financial Sector Deepening Africa, the Eswatini Public Procurement Regulatory Agency, and the Auditor-General of South Africa.

The CIPS Corporate Ethics Mark is a “stamp of approval” that signals credibility, instilling confidence among partners and investors. CIPS is governed by a code of ethics that every member signs and agrees to abide by. Suppose member organisations want to achieve a CIPS Corporate Ethics Mark. In that case, all procurement professionals must complete a course on ethical procurement and supply to demonstrate their commitment to ethical and responsible procurement.

The CIPS Membership package includes the course and tests participants on ethical procurement practices.

The CIPS Corporate Ethics Mark is awarded once all procurement professionals pass online tests.

Mopani Copper Mines PLC Supply Chain Manager Gershom Tanga explains that the certification has materially enhanced its credibility with vendors and other stakeholders.

“We have become an employer of choice, with many supply chain professionals approaching us for possible recruitment,” Tanga adds.

“This has strengthened the reputation of our supply chain. We have also received positive comments about our ethical, efficient and economical supply chain practices.”

The CIPS Corporate Ethics Mark results in greater business confidence, boosting investment across the continent.