Why and our resolve
To be or not to be, that’s the now pertinent question affecting the Small Business “Set-asides” dichotomy. The governments over R800 Billion infrastructure development projects that are being rolled out, necessitates this conversation. The millions of South Africans on social grants induce us to have serious self-analysis as a nation. We must resolve that the small business set-aside awarding should be an established involuntary practice and traced in the fact that fixed procurements exclusively to small business organisations will accelerate and ignite the economic advances South Africa made.
It is said that the Small Business Set-Aside Program is probably one of the oldest, if not the original, program set up to help small businesses win government contracts. This program helps assure that small businesses are awarded a fair proportion of government contracts by reserving (i.e., “setting aside”) certain government purchases exclusively for participation by small business enterprises.
A set-aside for small business is the reserve of acquisitions exclusively for the participation by small business outfits. A small business set-aside must be open to each and every enterprise regardless of political affiliation; this is the only way politicians can build credibility amongst ordinary citizens. To the extent practicable, unilateral determinations should be allowed and initiated by the accounting officers and be used as the basis for small business set-asides rather than joint determinations by procurement centres. All solicitations involving set-asides must specify the applicable small business size and standards.
The future of South Africa remains in deep uncertain economic times. Levels of inequality are growing at an alarming rate. SA’s economic policies are not making things any easier, while its growth trajectory hangs in the balance. The down grading by rating agencies adds to the already adverse environment. The fact that investors are looking else where at more establish markets, brings excessive pressure upon all emerging markets, including SA. However, reading some of the Finance Minister’s comments of late, Mr Pravin Gordhan remains resolute, South Africans need to be cognisant of the country’s history and the effects the past continues to have on the present, while it remains important for all to craft a new future. Said Pravin “…forget where we come from; start looking at where we need to go…” I agree with the minister that we need to be more aware of the structural matters we inherited and that in my view the economy remains to have structural imperfections.
How we collectively craft this new economic organism will ultimately define our character. Facts are that the tax base was increased by this government and the country’s high debt was attacked with impressive results. The investments in projects remain substantive, but the returns on investments are not equally impressive. We require novel manoeuvres. The small business set asides and good transparent awarding’s should put government and the country on an improved compulsory pathway. I’m baffled to by how South Africa’s local and provincial governments have set targets to buy from small business but nothing happens. The city of Cape Town is suppose to spend 40% and in Gauteng 60%, but these targets were not met. Researches agree that the reason why they fail is that set asides are not backed by any legislation.
National Treasury seems to be the stumbling block. The cabinet approved plan to allocate 85% of the spend on 10 key goods and services to small businesses is being failed by treasuries inflexible approach. National Treasury seems to be intolerant with regards to this developmental and emerging economy. I suspect that they measure the SA economy parallel with developed economies. There could be merits in that approach, but we will simply not move from the starting line with that mindset. The Dti’s plan to leverage more local procurement for its infrastructure programme suffers as a result of treasury’s iron hand. They need to easy up. National Treasury is unquestionably doing a great job, however they need to loosen the grip, particularly to assist small business.
The significance
Significant number of business formations continues to mull over this fiscal penetrating dialogue. It remains a politically electric discourse with fanatical supporters and detractors on either side. Who should be at the epicentre fielding the intricacies of this poignant issue? Shouldn’t the Jacob Zuma administration pursues to infuse capital into this significant market? What are the fundamental issues regarding the constrains of this long over due imperative? In the coming election year, should the small business set asides not feature prominently and should small businesses not secure orders now from federal government as a designated group, collectively so? America’s researchers reported that after 35 years of small-business contracting goals, they started evaluating the worth of the set-asides since it was not delivering the intended results? We must be alert to the inadvertent consequences of this important practice which I advocate.
It was reported around July 2013 that one of the countries risk finance institutions Business Partners Limited allocated a whopping R1-billion plus for SMEs in their 2013/2014 financial year. With this investment they hope to grow the economy and cultivate entrepreneurship in the republic. The key focus of the funding will be to assist and develop the SME segment by providing business infrastructure, information and after-care service. It is public knowledge that SMEs remain the key drivers of prosperity and affluence. “Annually, new funds will be split approximately between real assets (50%), being property investment into purchases, joint ventures and financing of owner occupied properties; traditional family-owned, lifestyle small and growing businesses (40%) and high impact and risk deals (10%)” it was reported Business Partners executive director Christo Botes said. This kind of available funds informs my contention that a fix percentage small business set asides of all government projects should be ordered immediately, meaning instantaneous implementation. The result and significance of small business set asides will be indisputable job creation, fiscal relieve on the country’s coffer, economic growth, regain of dignity and increase in taxes etc.
The benefits
Streamlining into the future, we (government) need to first prioritize Micro Business set asides. South Africa has millions of Micro Businesses that are the real contributors of the economy. These are women and men who get up in the early hours of the morning and venture into just about every street corner, railway stations, bus stops and even side walk selling their goods. The benefit of set asides particularly for Micro Business is to improve access to markets and government contract opportunities for “very small business companies” by reserving certain procurements.There seem to be resistance by government purchasing offices. Secondly, we need to prioritise Small Businesses. Small businesses are the backbone of any economy. The SA government recognizes that. Reality is that all funding agencies that are mandated to assist this sector is under capitalised. Consequently, to insure that small businesses are on equal footing with mega corporations, the national government’s program of small business set-asides need urgent appraisal, evaluation and reform in order to assure that a percentage of annually awarded contracts are “set-aside” or are reserved for them. This practice holds an important key in unlocking the treasure that this nation boasts. Small business set-asides should be of perennial interest to government because of their role in effectuating the countries policies of assisting small businesses.
Anthony Phillip Williams
Editor: SMME XCLUSIVE MAGAZINE
0726272080
smmexclusivemagazine@gmail.com
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