Big plans for pro­cure­ment

In­creased em­pha­sis by gov­ern­ment and cor­po­rates on buy­ing from small busi­nesses should help grow the sec­tor

Financial Mail - Investors Monthly - - Budget 2017 - Char­lotte Mathews math­ewsc@fm.co.za

The pri­or­ity in en­cour­ag­ing small busi­nesses must be to cre­ate an en­abling en­vi­ron­ment that en­sures they are tar­geted by the pro­cure­ment poli­cies of gov­ern­ment and the pri­vate sec­tor alike, said fi­nance min­is­ter Pravin Gord­han.

New pref­er­en­tial pro­cure­ment reg­u­la­tions, gazetted in Jan­uary 2017, re­quire large firms awarded ten­ders of R30m or more to set aside one-third of the value for small or black-owned en­ter­prises, where fea­si­ble.

The bud­get al­lo­cates R3.9bn over the medium term to sup­port small, medium and mi­cro en­ter­prises and co-op­er­a­tives.

Du­misani Bengu, head of fran­chis­ing at Absa, says these funds will help to pro­mote growth, to erad­i­cate poverty and to pro­mote em­ploy­ment.

The de­part­ment of small busi­ness de­velop- ment’s bud­get will grow an­nu­ally by 7.1% to R1.6bn by 2019/2020. Its plans in the next three years in­clude draw­ing up the Na­tional Small Busi­ness Amend­ment Bill, to re­fine the def­i­ni­tion of a small busi­ness so that more ap­pro­pri­ate poli­cies and in­ter­ven­tions can be de­vel­oped. It will also stream­line gov­ern­ment en­ti­ties serv­ing the sec­tor.

The Small En­ter­prise De­vel­op­ment Agency, which pro­vides in­cu­ba­tor sup­port through the Na­tional Gazelles pro­gramme, ex­pects to sup­port about 600 small en­ter­prises in the next three years.

The num­ber of small, black-owned en­ter­prises re­ceiv­ing grants to help buy ma­chin­ery and pay for train­ing is ex­pected to top 2,000 in the next few years. There is also an in­for­mal busi­ness up­lift­ment scheme which aims to grow 5,445 in­for­mal busi­nesses through fi­nan­cial and non­fi­nan­cial sup­port.

Sup­port for co-op­er­a­tives, through the co-op­er­a­tive incentive scheme, will in­crease by about 5.6% an­nu­ally but the num­ber of co-op­er­a­tives sup­ported will fall, to about 302 from 370.

This year the de­part­ment of eco­nomic de­vel­op­ment will fi­nalise the Tirisano Fund, fi­nanced from the set­tle­ment reached be­tween com­pe­ti­tion au­thor­i­ties and con­struc­tion com­pa­nies. Tirisano’s man­date will be to boost black skills and sup­port emerg­ing en­ter­prises. Its ini­tial al­lo­ca­tion is R117m.

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