The role of public procurement in development of SMME’s in KwaZulu-Natal.

Abstract

Small, medium and micro enterprises (SMME’s) play a pivotal role in the development of the economy of any country. South Africa is a developing country with high unemployment, high poverty levels, low economic growth and disparities in wealth distribution. Further, it has the unenviable task of righting the wrongs of apartheid through uplifting of the previously disadvantaged people who happen to be the majority of the population. SMME’s have been identified as the forerunners in contributing to assist in meeting these objectives. The government has to assist in providing opportunities for these small businesses through its procurement policies. This study investigated, within the province of KwaZulu-Natal, the link between public procurement and the promotion of SMME’s and further, the factors for and against the promotion of SMME’s by the public sector procurement policies and procedures. Furthermore, the initiatives which have been put into place by government were analysed and critiqued on their implementation. Mixed method research study was conducted through the completion of questionnaires by SCM practitioners and interviews with the SCM management of each organisation. Closed ended questions were utilised for quantitative research. Open-ended questions and interviews were conducted for qualitative research. The population was made up of 105 SCM practitioners from different organs of state, who were based within KwaZulu-Natal, selected utilising random probability sampling. Data collected was descriptively and inferentially analysed and it was found that government procurement policies both assisted and hindered the development of SMMEs. The objectives of the policies included the development of local economies and uplifting of previously disadvantaged individuals. The three spheres of government were not equally as effective. The local sphere was found to be most effective. Centralisation of procurement also assisted in the quest for SMME development. While the SMME’s themselves were found to lack business and management skills, they were also competing with bigger firms for the same government contracts. The biggest hindering factors were lack of access to finance, collateral and availability of funding. Aid provided by government in the way of workshops and training was insufficient and there were no collaborations between procurement units and business support structures. The study recommended more training for SMME’s as well as access to finance and other resources. Government entities should work collectively and ensure proper reporting and tracking of progress.