16 May 2007 | Paul Snell
South Africa must develop a more competitive supply base if it is to develop economically, according to a government minister.
Alec Erwin, minister for public enterprises, told delegates at the Institute of Purchasing and Supply South Africa conference in Johannesburg yesterday that an uncompetitive supply base was responsible for higher prices for buyers. He added that short-term buying decisions had led to short-term planning by suppliers.
"We have to be not just competitive, but at the leading edge of competition," he said. "That is critical and I cannot stress this enough. We need to be looking for incentives and mechanisms that allow suppliers to be inventive and competitive."
He described good procurement as purchasing that was "good for everybody", both buyers and suppliers.
Erwin said major infrastructure projects being carried out in the country, at a cost of around R200 billion (£14.6 billion) over the next five years, offered both threats and opportunities for purchasers.
Buyers could use the investment to develop the local supplier base, he said, but he didn't want them being seen as a "nuisance", filling up global order books.
To encourage competition the government has started a Competitive Supplier Development Programme, where state-owned enterprises (SOEs) Transnet and Eskom provide analysis on the state of supply markets, and how much investment is necessary to provide a competitive market in the sector. Erwin said other SOEs would be joining the programme soon.