The contribution of procurement policies to the development of small, medium and micro enterprises in Department of Public Works, KwaZulu-Natal.

Abstract

Although the unemployment rate in South Africa had approached 30% by June 2020, it was impossible for anyone to predict the full effect on employment of the prolonged lockdown of the country in response to the Covid-19 virus pandemic. The stark reality is however that there will certainly be major socio-economic challenges of inequality and growing unemployment which will contribute to the pervasive levels of abject poverty. With unemployed person already at almost 7, 2 million, government has identified small enterprises development as a viable strategy in addressing key developmental goals of poverty alleviation, job creation and equality. The objective of this study was to assess the contribution of procurement policies in the development of Small, Medium and Micro Enterprises (SMMEs) at the KwaZulu-Natal Department of Public Works (KZNDPW). A mixed method research approach was used, wherein secondary data from filed documents, expenditure reports and a relevant database was considered. The aim was to establish the budget spending patterns of KZNDPW in relation to government’s policies relating to small enterprise development. Structured interviews were also conducted with five KZNDPW senior officials, who were members of bid adjudication committees. The researcher wanted to acquire Departmental official’s perspectives on the role and effectiveness of procurement policies in accelerating economic opportunities and growth of SMMEs within the KZNDPW. The study was based on a population of 3186 emerging contractors that were duly registered in the Eyesizwe Contractor Development Programme (ECDP) database of the KZNDPW. Growth and development of these contactors was assessed based on the number of contractors who moved upwards on the Construction Industry Development Board (CIDB) grading level over the four-year study period. Findings revealed that legislative framework and policies to stimulate SMMEs financial growth and development do exist in SA, and the KZNDPW have implemented legislated procurement policies, and utilised a targeted sourcing strategy during the tender process. However the statistics reveal a small level of growth in SMMEs. The study reveals that lack of financial management skills is one of major causes of failing SMMEs businesses to grow. One of the recommendation is that government institutions need to provide properly structured financial management workshops to SMMEs.