An interdepartmental working group has been established to develop a roadmap for South Africa’s digital public infrastructure focusing on digital payments, digital IDs, and data exchange.
It is imperative that public finance management systems are interoperable with digital public infrastructure, National Treasury’s director-general, Dr Duncan Pieterse (pictured), told the Collaborative Africa Budget Reform Initiative’s International Conference on Public Finance in the Digital Era earlier this week.
“Ultimately, we would like to improve the application and disbursement of social grants, improve the accessibility of government services, and facilitate more data-driven policy and decision-making. We must harness the potential of digital public infrastructure to stimulate economic growth and advance inclusion,” he said.
Pieterse explained that National Treasury has been collaborating closely with the Presidency on digital transformation through the Operation Vulindlela initiative. This joint effort between the Presidency and Treasury aims to expedite structural reforms and support the country’s economic recovery. Led by Deputy Minister David Masondo, Operation Vulindlela reports directly to President Cyril Ramaphosa.
The initiative seeks to modernise and transform essential sectors, including electricity, water, transport, and digital communications. It also prioritises reforms to the visa system, designed to attract skilled workers and boost tourism. In total, 19 key reforms have been identified in these areas to drive forward the country’s development and growth strategy.
Pieterse said the convergence of digital technology and public finance presents a unique opportunity to elevate public finance management “from a narrow focus on transactions, compliance, and transparency to a more strategic role that supports evidence-based policymaking, efficient service delivery, and accountability”.
“Through innovations such as the automation and optimisation of budget allocation and expenditure tracking, modern digital systems can significantly reduce inefficiencies and ensure that resources are allocated to areas where they will have the most impact.”
He noted that real-time data collection and analysis enable evidence-based decisions, allowing governments to allocate resources more efficiently and respond quickly to changing conditions. He added that automating manual processes would enhance the efficiency of service delivery, reducing errors and delays.
“Importantly, an integrated approach to financial management can break down silos between departments, enabling better co-ordination and a more holistic understanding of government operations.”
Navigating the challenges
Despite the potential benefits, Pieterse highlighted several challenges that need to be addressed. One major issue is that many public finance management systems rely on outdated technology, which “limits their ability to integrate data impeding making real-time, data-driven decisions”. He added that although these legacy systems are robust, they often contain “fragmented or incomplete information, making it difficult for us to gain a comprehensive understanding of financial performance”.
Pieterse’s remarks seemed to critique the government procurement processes, which have faced growing criticism for their rigidity, inefficiency, and over-regulation. Many argue that these issues stifle innovation and hinder effective service delivery.
A key concern is the Public Procurement Bill, which has been criticised for potentially creating bureaucratic bottlenecks. According to The Mail & Guardian, although the Bill aims to standardise procurement and reduce corruption, critics warn that centralisation could slow down processes and reduce the flexibility of local agencies to address specific needs.
There are also concerns that the legislation may impose excessive costs and administrative burdens. Some critics argue it could inflate procurement costs and lower quality outcomes by focusing on criteria such as race or local content instead of prioritising value for money.
Following the signing of the Bill into law on 23 July, BusinessTech reported that Western Cape Premier Alan Winde raised “serious concerns over the constitutionality” of the Act, calling it a “handbrake for service delivery”. Business groups such as Sakeliga have also warned that the Bill’s rigid requirements could reduce the pool of suppliers, harming competition and increasing costs. They argue that procurement should focus on efficiency and value, not political objectives.
In contrast, some support the Bill for its emphasis on inclusive economic participation and its potential to empower historically disadvantaged communities. The debate continues, with many calling for adjustments to ensure that the new framework does not undermine service delivery and economic growth.
During his address at the conference, Pieterse said that rigid and risk-averse government procurement processes further complicate efforts to modernise.
“Procurement processes are often misaligned with the needs of rapidly evolving IT projects, leading to delays and decision paralysis due to fears of irregular expenditure or legal risks,” he said.
He also pointed out that poorly structured vendor contracts exacerbate these challenges, locking governments into inflexible agreements that fail to adapt to changing needs. “Moreover, there is often a lack of investment in developing the skills needed for digital transformation,” Pieterse added.
Strategies for building missing skills
While policies may advocate for cloud adoption and digitisation, Pieterse said clear strategies for building these skills are often missing.
“Establishing a pipeline of in-house digital expertise – from new graduates to experienced professionals – is essential to reduce reliance on external vendors and will enable the public sector to manage and innovate with new technologies.”
He said, given the current fiscal constraints, it was important to draw out which components of digital public infrastructure should be funded by the public sector and which can be supported by donors and other partners.
“Collaboration with development partners and the private sector can also provide valuable expertise and resources. By leveraging these partnerships, governments can access best practices, share knowledge, and secure co-financing or technical support.”
Prioritising cybersecurity
However, as systems become increasingly digital, Pieterse noted prioritising cybersecurity and robust data protection measures become essential to safeguard sensitive information and maintain public trust.
In South Africa, public infrastructure has increasingly become a target for cyberattacks, with significant consequences for government operations.
In May, the Government Employees Pension Fund (GEPF) announced it was investigating an alleged data breach at its administrator, the Government Pensions Administration Agency (GPAA).
The GPAA manages the money within the GEPF, the largest pension fund in Africa, administering the pensions of about 1.7 million government employees and pensioners, as well as their spouses and dependants.
The GEPF was notified by the GPAA of an attempt to access the administrator’s systems on 16 February. At first, it was informed that no data breach had occurred. The GPAA subsequently established this was an attempt by the ransomware group LockBit.
On 12 March, following the release of “certain GPAA data” by LockBit, the GEPF was informed by the GPAA that preliminary investigations found that “certain GPAA systems were compromised”.
Read: Ransomware gang claims to have leaked government pension data
Another recent example is the cyberattack on the Department of Public Works and Infrastructure, which saw R24 million stolen in May. TimesLive reported that over the past decade, the department had lost an estimated R300m to cybercrime. Investigations have revealed systemic vulnerabilities in its financial controls and IT systems, leading to the suspension of key officials and an ongoing forensic investigation.
In June, the National Health Laboratory Service (NHLS) experienced a significant security breach resulting from a ransomware attack that compromised its IT systems and infrastructure. The incident rendered many of the NHLS’s internal and external systems inaccessible.
Read: Ransomware attack at National Health Laboratory Service
