Corporates must open their procurement to SMMEs
THE CONCENTRATION of economic power in a few giant companies has made it difficult for small businesses, in particular black SMMEs, in South Africa to grow and this explains why the economy is struggling, says Nyeleti Magadze Executive for Strategy at Business Leadership South Africa (BLSA).
Small Medium and Micro Enterprises are key to job creation and globally known to be the mechanism to generate new job in society where over 90% of enterprises are SMMEs and employs almost 70% of active working population.
Says Magadze: “Despite a growing recognition of SMMEs as a viable option to generate jobs, the private and public sectors to a certain extent remain the largest employers in this country. The overreliance on private sector employment is a major problem for South Africa.”
“Unfortunately, this state of affairs continues to prioritise larger companies, and that is why SMMEs face stiff challenges which include regulatory constraints, limited access to finance and limited access to markets.”
In the past two decades and more, big business in South Africa has invested billions of rand in what is known as Enterprise and Supply Development (ESD). But how does it measure impact of these ESD programmes implemented by large corporates? How many of the SMMEs have really grown as a result of the ESD programmes?
Government has done a lot with the new regulations that now require business to fund SMMEs that can also benefit from procurement. SMMEs themselves must begin to ask about real business opportunities for growth, beyond training and development.
It is for this reason that BLSA is insisting on demand-driven approach with our members, where corporates open up their procurement opportunities to SMMEs. Business cannot continue to train and develop SMMEs and fail to give them access to market so that they can grow.
“This is not to mean that training and development are not important. We know they are. Many SMMEs lack requisite skills and tools to do business. And when the SMMEs are not fit for purpose, then we have to look at ESD for that so that we get them to the right levels to supply services and products to corporates,” says Magadze.
BLSA’s first strategic pillar speaks of inclusive socio-economic growth and transformation through which it seeks to recommit business to and reset the platforms for shared economic leadership and public-private collaboration and partnership.
“But government must also play its part. Fact of the matter is that in spite of the investment of corporates in ESD, there is a still a lot that needs to be done. Government must available funding (grants and loans) which should support infrastructure and equipment as well as cashflow,” she adds.