Abstract
Background: The function of public procurement is indispensable for the South African government its municipalities. It contributes to the overall welfare of society. However, public procurement often faces the challenge of corruption. Problem Statement: This issue is evident in South Africa’s City of Tshwane Metropolitan Municipality (CTMM), where there has been a failure to fulfil the state's governance agenda. Aim: In this study, we seek to explore how blockchain-based systems could potentially mitigate corruption in CTMM's public procurement process. Additionally, we aim to assess the efficacy of the current mitigating measures against corruption, to determine if they require amendments. Research Question: Can the integration of a blockchain-based mechanism into the procurement process in the CTMM help mitigate municipal corruption, and thus improve the procurement process and service delivery? Methodology: To explain the state's governance responsibility towards the citizens, we utilize the Principal Agent theory. Our primary data is collected through interviews with the supply chain management division at CTMM. This approach provides us with a detailed understanding of the e-procurement process, thereby identifying potential areas of improvement. Results: Our interview findings indicate that there could be significant benefits in adopting blockchain technology to mitigate corruption and procurement processes. The study found that the areas which can be improved by blockchain technology include, the E-tendering portal, Accounting Practices, Transparency, record-keeping, and traceability. Our results could be valuable to policymakers who look to adopt disruptive technologies that help circumvent the issues of traceability, and accountability by introducing a tamper-proof oversight mechanism in the procurement process.
Keywords: Blockchain technology, Smart contracts, CTMM, Corruption, Chapter 9 Institutions, Principal agent theory, Corruption mitigating mechanisms.