The impact of public procurement on business success of small micro medium enterprises: case of Greater Kokstad Municipality.

Abstract

Small, medium and micro enterprises (SMMEs) in South Africa are struggling to survive. However, improving their success rate in public procurement will significantly enhance their business growth and success. The purpose of this study was to investigate the impact of public procurement on the success of SMMEs within the Greater Kokstad Municipality (GKM). The aim was to gain a deeper understanding of how effective public procurement can be in assisting SMMEs in becoming successful businesses that can contribute to the local economy. The study employed a qualitative research method, utilizing a case study design. Twelve (12) participants were selected for the study, which consisted of municipal officials and local SMMEs. In-depth semi-structured interviews served as the primary data collection method to gain a comprehensive understanding of the impact of public procurement on the business success of local SMMEs. Qualitative data was analysed using thematic analysis. The thematic analysis was conducted on the information received from interview transcription. The study findings revealed that public procurement in the GKM can enhance the profitability of local SMMEs and contribute to building their reputation and experience. However, several barriers such as limited access to finance, competition from larger firms, delayed payments, lack of transparency and corruption continue to hinder the growth and success of SMMEs within the GKM procurement system. Although government policies do exist to support and develop SMMEs in public procurement, their effective implementation remains a challenge in supporting local SMMEs in the GKM, as these policies lack practical support to address the needs of these enterprises. The study highlights the need for a more pragmatic approach to supporting local SMMEs, including strengthening training programs, improving access to finance, having more inclusive procurement measures and greater transparency within the procurement process. The outcome of the study contributes to a broader understanding of the dynamics of local SMMEs operating within the public procurement market. The findings collectively enhance knowledge on SMME development and public sector reform, while also enriching the existing literature on public procurement, small business growth, and local economic development. It bridges theory and practice in promoting inclusive growth, opening opportunities for future research aimed at improving procurement systems to better support local enterprises.