Blockchain technology offers a paradigm shift in how local governments manage public procurement, particularly in enhancing transparency, accountability, and efficiency. Traditional procurement systems in developing economies are prone to corruption, data manipulation, and bureaucratic delays, resulting in public mistrust and financial inefficiencies. This study explores the integration of blockchain-based smart contracts into local government financial management systems to automate procurement workflows and ensure immutable, auditable records of every transaction. Using a hybrid analytical model combining policy analysis and blockchain simulation, the research evaluates three local government entities with varying levels of digital maturity. Smart contracts, coded using Solidity and deployed on a test Ethereum framework, demonstrate the capacity to automate bid evaluation, vendor verification, and fund release based on predefined conditions. Quantitative analysis indicates a substantial reduction in transaction processing time and enhanced traceability, with a marked improvement in the procurement transparency index. The findings highlight blockchain’s potential as a structural enabler of digital governance, reducing human interference and promoting trust among stakeholders. This paper recommends the adoption of blockchain-enabled procurement systems as a foundational step toward integrity-driven public financial management and sustainable governance reform in developing economies.