Institute of Municipal Finance Officers & Related Professions IMPLICATIONS OF IMPLEMENTING CENTRAL DATABASE FOR SUPPLIERS

Institute of Municipal Finance Officers & Related Professions A uniform SCM system for government is essential to optimize the efficiency of service delivery Suppliers currently registered on the database of any organ of state will be automatically transferred to the CSD by March New suppliers can use the self-registration portal from 1 September 2015 There will be an interface with SARS to enable tax clearance verification Also interface with Companies and Intellectual Property Commission (CIPC) for vetting business registrations and ownership NATIONAL TREASURY CENTRAL SUPPLIER DATABASE

Institute of Municipal Finance Officers & Related Professions Single source of supplier information - thus no multiple registrations Reduce and eliminate duplication of supplier registration effort Available to National, Provincial and Local governments Automated distribution of supplier information Standardised vetting of supplier: - tax clearance status - business registration and ownership - bank account and account holder - citizen identity number - BBBEE - government employee verification - blacklisting - register for tender defaulters and database of restricted suppliers NATIONAL TREASURY CSD: INTENDED BENEFITS

Institute of Municipal Finance Officers & Related Professions Accordingly, will result in lower costs – reduced procurement processes, compliance requirements, payment processes, audit processes, and maintenance of registration information Greater efficiency – single, electronic system Greater value-for-money – better prices can be negotiated – economies of scale Benchmarking of prices Specialisation – tenders pooled Category management No need for blacklisting in municipalities NATIONAL TREASURY CSD: INTENDED BENEFITS

Institute of Municipal Finance Officers & Related Professions Who will take accountability for the accreditation of suppliers? What reliance will the Auditor-General place on information on the CSD? On whose audit report will issues relating to the CSD be included? Will it be a municipality finding or National Treasury issue? What will happen to existing municipal databases? The IT cost implications of implementing – hardware and software Compatibility to existing databases. Can the CDS interface with all the disparate GL systems and Accounts Payable systems of municipalities across the country. Whose banking details will be used? NATIONAL TREASURY CSD: ISSUES

Institute of Municipal Finance Officers & Related Professions NATIONAL TREASURY CSD: ISSUES Downtime of databases when updating company details, especially CIDB. Responsiveness of the system and system failure will have consequences on local government and awarding of contracts How will the process be managed? What will the impact of opening new district offices (as per the proposal) be? Incorrect capture of company information may delay tenders Conflict of interest issues – how will the CSD system interface with the disparate HR systems of municipalities across the country SCOA issues – will the CSD be SCOA compliant to be able to interface with municipal GL systems?

Institute of Municipal Finance Officers & Related Professions NATIONAL TREASURY CSD: ISSUES SCM Regulation 14 requires municipalities to maintain a list of accredited prospective service providers. We are bound by this. What is the timeframe to amend the Regulations and rollout of the CSD? The timeframe for the project has already been changed. It was announced that CSD would commence on 1 April 2015, but the date then changed to 1 September There was a lack of consultation with municipalities on the system specifications. For example, municipalities should have been taken through the system to better understand the benefits, challenges, timeframes, and impacts before any announcements were made.

Institute of Municipal Finance Officers & Related Professions NATIONAL TREASURY CSD: ISSUES Several municipalities have their own electronic quote management systems. What impact does the CSD have on this? What are the transitional arrangements? A major concern is the potential negative impact on SMME’s who may only be able or want to work within their local areas. This also has a negative impact on local economic development (LED)

Institute of Municipal Finance Officers & Related Professions Had three different address books: Corporate, Accounts Payable and Water Resulted in duplication of orders, payments, etc Lack of efficiency, effectiveness and value-for-money Consolidated all three into one address book Matching – parent-child approach used When new creditor created no child record created FP Lite and Ellipse used – currently preparing for move to JDE (financial & GL system) Address Book ETHEKWINI : CONSOLIDATION OF ADDRESS BOOKS

Institute of Municipal Finance Officers & Related Professions Helped avoid duplication of orders Helped avoid duplication of payments Easier accessibility of the system for suppliers Work flow not delayed Reduced queries Improved service delivery Allows for rotation of suppliers Payment terms in line with policy Developmental objectives Use of ward based suppliers ETHEKWINI : BENEFITS – CONSOLIDATED ADDRESS BOOK

Institute of Municipal Finance Officers & Related Professions At the outset, it is desirable to have a single, centralized supplier database for the country that adds value in terms of: - benchmarking of prices - blacklisting - better prices – economies of scale However, there are 278 municipalities in South Africa, each with their own disparate systems To have a CSD, you need systems that can interface with regard to: - e-procurement - accounts payable - accreditation of suppliers CONCLUSION

Institute of Municipal Finance Officers & Related Professions CONCLUSION Other key issues include: - accountability for accreditation and audit issues - cost implications - system downtime Accordingly, we need to carefully look at the impact of moving towards a CSD and proceed with caution We must ensure that we do hamper the progress already made by municipalities with regard to centralization of their supplier database In view of the aforegoing, a phased approach is suggested. In the first phase, municipalities should consolidate their own supplier address books.

Thank You! Institute of Municipal Finance Officers & Related Professions