Afribusiness NPC v The Minister of Finance

The Minister of Finance promulgated the Preferential Procurement Regulations, 2017 under s 5 of the Preferential Procurement Policy Framework Act 5 of 2000 (PPPFA). The regulations introduced, among other things, mandatory pre-qualification criteria and subcontracting requirements favouring designated groups. Afribusiness NPC, a business advocacy non-profit organisation, challenged the validity of the regulations in the Gauteng Division of the High Court on the basis that the Minister acted ultra vires, failed to comply with constitutional and statutory procurement requirements, and undermined the preference point system mandated by the PPPFA and s 217 of the Constitution. The High Court dismissed the application. Afribusiness appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the High Court was set aside. The Preferential Procurement Regulations, 2017 were declared inconsistent with the PPPFA and invalid. The declaration of invalidity was suspended for 12 months to allow the Minister to remedy the defect.

This judgment is a leading authority on the limits of executive power in public procurement regulation. It reaffirmed that transformation objectives in procurement must be pursued strictly within the statutory framework enacted by Parliament and that the preference point system in the PPPFA is mandatory. The case has had significant implications for procurement policy and led to subsequent constitutional litigation and legislative reform.