Localisation Fails to Save Ithuba's National Lottery Bid Against International Scale

What Happened

Ithuba has lost its status as South Africa's national lottery operator to the Sizekhaya consortium, despite achieving the highest localisation credentials among eight competing firms. The Department of Trade, Industry and Competition, led by Minister Parks Tau, awarded the eight-year contract to Sizekhaya following a recommendation from an advisory panel. This decision is currently being challenged in the Pretoria High Court by both Ithuba and the Ringeta consortium, which was originally the preferred bidder before being disqualified for political exposure.

Background

The procurement process involved a panel of five advisors—Mpho Lepele, David Mbuyisa, Anton Roskam, Jeffrey Sehume, and Tebogo Tsotetsi—who evaluated technical capacity and financial projections. While Ithuba utilized a local technology partner, Paytronix, the panel expressed concerns that this partner lacked the scale and experience of international counterparts. In contrast, Sizekhaya partnered with Genlot, a Chinese firm capable of managing 700,000 lottery draws annually.

Ringeta, the initial top choice of the bid evaluation committee, was sidelined after the panel identified a potential conflict of interest involving ANC MP Dr. Sibongiseni Dhlomo. Dhlomo serves as a trustee for the Batho Batho Trust, which owns a significant stake in Ringeta’s parent company and has donated R60 million to the ANC since 2021. The EFF has also raised concerns regarding Sizekhaya, alleging a conflict of interest involving the sister-in-law of Deputy President Paul Mashatile, a claim rejected by the National Lotteries Commission.

Why It Matters

The selection of Sizekhaya indicates a regulatory preference for aggressive revenue growth over local industrial development. Although Genesis, the consultancy firm assessing the bids, ranked Ithuba first for its B-BBEE rating and local software development, the panel prioritized Sizekhaya's ambitious financial projections. These projections are expected to generate higher proceeds for the National Lottery Distribution Trust Fund.

Key Facts

• Ithuba was named the reserve bidder despite its localisation score of 10 out of 10.
• The new license granted to Sizekhaya spans a period of eight years.
• Sizekhaya’s technology partner, Genlot, supports more than 30 games globally.
• The Batho Batho Trust holds 70% of Thebe Investment Consortium, which owns 49% of Ringeta.
• A judgment from the Pretoria High Court regarding the legal challenges is expected before the end of the year.