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30 November 2011 | Adam Leach
Small- and medium-sized
enterprises (SMEs) in South Africa are making a “conscious decision” not to compete
for government contracts, according to a report.
Priming The Soil: Small Business In SouthAfrica, published yesterday by the SBP, which represents SMEs in the country, said
the complexity of the public sector procurement procedures had led many
businesses to dismiss government contracts as a growth opportunity.
The report, which consulted
representatives from 500 SMEs, revealed that many were put off by the complex
nature of the tender process, an unwillingness from government to pay deposits
and late payment.
It also found that while
companies believe the policy commitment to direct 75 per cent of state
procurement to local firms provides a big opportunity, the benefits risk being
squashed by burdensome regulation. It said: “This [opportunity] will not
materialize if they [SMEs] are stymied by regulatory constraints.”
It added: “South Africa has a
limited pool of productive SMEs capable of producing quality products and
services in sufficient quality and within timeframes, and this is unlikely to
expand if they are hemmed in by demands of scant relevance to themselves.”
Under new regulations, which come
into force on 7 December, the Department of Trade and Industry (DTI) will be awarded powers to mandate that certainproducts, such as buses and power pylons must be sourced locally.
Outlining the spirit of the
policy, DTI minister Rob Davies previously told SM: “We say to foreign companies: ‘You
come here and manufacture, and you will be eligible for public sector
contracts. You come here and bring your goods by boat, you won’t’.”