The Civil Engineering Contractor January 2018 | Page 37

THOUGHT LEADERSHIP
“Umuntu Ngu Muntu Ngabantu: a person is a person through other persons.” Zulu proverb
procurement policy formulation.
The following interventions should
be considered:
The requirement for minimum black
participation on government tenders
should be applied to all sizes of black-
owned companies and not just SMMEs
and EMEs to ensure growth of black-
owned companies in general, regardless
of size.
Where
possible,
framework
agreements or procurement panels
should be developed to ensure targeted
procurement. This will benefit both
SMMEs and BOEs through identifying
opportunities within the procurement
value chain that are suitable for growing
large black-owned businesses but also
for progressively growing SMMEs to
become large companies.
Presently, state organs have a once-
off approach to procurement and
therefore diminish the opportunity to
develop selected SMMEs or BOEs into
large companies.
Procurement strategies within
state organs must consider market
characteristics in a sector(s) instead
of a ‘one-size fits all’ approach. For
example, the market structure in the
engineering industry is different to that
of the property industry. Therefore,
supply chain officials in both in the
public sector must spend sufficient
time to understand the entire value
chain of a sector, including analysing the
concentration of power, the capability,
the capacity and the key players. This
will help to guide state organs on how
best to leverage the state’s buying
power to change the market structure
of a specific sector if necessary by, for
example, introducing new players and
developing local capability and capacity
of significant scale.
Procurement legislation and strategies
within state organs must encourage
competition while driving socio-
economic objectives. While the
emphasis should be on transforming
various sectors to be inclusive, the
issue of quality and creating globally
competitive black-owned and or South
African companies that can export skill,
services or products to the rest of
continent must remain imperative in
a globalised economy. The state must
utilise South African bilateral trade
agreements to promote BOEs and South
African companies in general, with the
aim of ensuring the participation of
local companies in any state sponsored
project beyond our borders. This should
be an inherent part of the country’s
foreign policy, like what China and most
developed countries do.
This could be achieved through
imposing South African content
whenever a South African concessional
loan, grant or any form of financial
aid is used for developing projects in
another country.
Upon achieving ‘large enterprise
status,’ BOEs must assume a leadership
role in transforming our society in
consonance with the Zulu proverb
of Umuntu Ngu Muntu Ngabantu:
‘a person is a person through other
persons.’ BOEs must also be obliged to
create employment opportunities for
previously disadvantaged individuals,
offer educational bursaries, aggressively
invest in skills development and
contribute meaningfully to the
communities in which they operate.
In other words, being black-owned
must not exempt BOEs from social
commitments. nn
companies are not being supported to
become conglomerates.
There is a need to critically examine
the role of the larger black-owned
enterprises in the economy from a
policy support perspective, with a view
to develop BOEs that can eventually
export services and products to other
parts of the globe.
The existing policy framework has no
continuum and simply does not address
the needs of LBOEs. Ultimately, large
black-owned companies find themselves
in the middle of established large, mostly
foreign or white-owned businesses on
the one hand and SMMEs on the other.
Often, most LBOEs have neither the
balance sheet nor the economies of
scale to aggressively compete with their
established business counterparts for
large and/or complex public or private
sector procurement opportunities. On
the other hand, they are not small enough
to benefit from the regulations that seek
to act as a mechanism to empower certain
categories: SMMEs, EMEs or QSEs and
other designated groups. At this point, let
me clarify that I unequivocally support
all policy initiatives that are designed to
develop and grow SMMEs, as they are
core to the economy and create much-
needed jobs.
Notwithstanding this righteous policy
support for SMMEs, on the face of it,
the recent policy interventions appear
to focus exclusively on SMMEs, and not
the growing of black-owned companies,
in general. This policy stance has the
unintended consequence of black-
owned companies preferring to remain
within the benefits thresholds. For
example, growing above R50-million
is deemed punitive because the benefits
flowing from procurement legislation
and black ownership are practically non-
existent above that turnover threshold.
In the main, the procurement policies
and legislation that currently exist
unintentionally restrict the ambitions
of black-owned businesses to remain
small. We should aspire for more – we
should aspire to develop multi-billion-
rand black-owned companies alongside
our efforts to develop SMMEs.
Changing this scenario requires
a proactive and radical approach to
About the author: Muzi Siyaya is
a business executive with more than
20 years’ experience across diverse
industries. Siyaya is responsible for
driving growth, performance levels and
defending market share while building
and developing the GIBB brand.
CEC January 2018 - 35