Big plans for procurement

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

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.