Public sector bodies in South Africa have been urged to ensure their purchasing strategies “explicitly recognise the significant benefits of procuring from local small businesses”.
Lindiwe Zulu, small business development minister in the South African government, told a procurement conference in Durban the growth of big business depended on a “strong small business sector, both as consumers and suppliers”.
She said small firms had been “historically shut out as a result of bureaucratic and costly procurement practices which favoured big suppliers”.
“Big companies have for a long time managed to crowd out small businesses through their financial muscle, cash reserves and economies of scale,” said Zulu.
Zulu said corruption was “killing small businesses” because “their bids or quotations get overlooked by procurement officials because they cannot afford the bribe price”.
“Some of the small suppliers who get opportunities, it is largely on condition that they have to pay a bribe,” she said. “This is unsustainable for small businesses because in essence they are made to pay tax twice: an official tax to SARS [South African Revenue Service] and plastic bag tax.”
Zulu said with at least 42 per cent of South Africa’s national budget spent on goods and services, the country “cannot afford to squander the opportunity this investment affords to support economic recovery and to ensure all SMMEs [small, medium and micro enterprises] benefit in the growing of the country’s economy”.
“Together, we must address lack of business opportunities in both the public and private sectors,” she said. “We must proceed from the premise that supporting small businesses and co-operatives is not a philanthropic gesture on the part of either government or big business. In fact, it is in our collective interest to help grow and sustain small businesses.”
Meanwhile, the Standing Committee on Public Accounts (Scopa) has said it is “shocked by the grim picture” painted by a report from the Office of the Chief Procurement Officer covering supply chain management practices in government departments.
“The committee is shocked to learn that almost R500 billion was spent on goods and services and in the public sector when there is not much evidence of that in service delivery,” said the committee in a statement.
Scopa noted the “twin challenges of inefficiency and corruption” and a lack of compliance with a policy to pay suppliers in 30 days, which “creates a lot of challenges that fall within the supply chain management environment”.