Recent studies by Stats SA indicate that the face of poverty in South Africa remains black, female and that of children below the age of 17. Furthermore, more than one in every two SA citizens can be officially classified as poor, said Gauteng Finance MEC Barbara Creecy at the Smart Procurement World conference in Johannesburg.
“[Stats SA’s] Poverty Trends Report shows that by 2015, approximately 33% of Gauteng’s citizens were living in poverty. Although this is lower than most of the country, it is not a cause for celebration. One in three Gautengers go to bed without a meal. The situation was further worsened by the province losing 146 000 jobs during the last financial quarter,” said MEC Creecy.
The most direct and effective route to address these socio-economic challenges is a programme of transformation, modernisation and re-industrialisation. Gauteng’s provincial government is currently implementing such a programme in partnership with the private sector, organised labour and civil society, said MEC Creecy.
“The programme is our road map to achieve a transformed, modernised and re-industrialised city region, that is socially and economically inclusive, a leading economy on the African continent, and at the cutting edge of the Fourth Industrial Revolution,” said MEC Creecy.
The programme will help the province deal decisively with the monopoly structure of its economy, and create space for a vibrant and thriving small, medium and micro enterprise (SMME) sector – including co-ops and township enterprises.
Gauteng home to 46% of SA’s SMMEs
“At the centre of our efforts to fundamentally change the structure of our economy is a vigorous promotion of SMMEs. SMMEs dominate the world business stage, and are currently the main type of business.”
A 2016 research note commissioned by the Small Enterprise Development Agency confirms that 46% of SA’s small enterprises operate in Gauteng and the province has the largest number of informal enterprises.
A recent world bank study found that the township economy is worth more than R10-billion a year. “Given the important role that this sector plays in our overall agenda to transform, modernise and re-industrialise, government continues to use our massive procurement muscle – as well as our vast infrastructure spend at a strategic level – to drive meaningful transformation, empowerment, job creation and economic inclusion.”
Putting its R46-billion where its mouth is
“Not only are we encouraging the private sector to prioritise small enterprises in their procurement practices, we are also deliberately targeting businesses owned by historically disadvantaged individuals.”
Gauteng provincial government is already spending 91% of its procurement budget – worth R46-billion – with businesses owned by HDIs. This spend is spread amongst 10 000 black enterprises. In addition, from 2013 to 2016, the Gauteng provincial government spent R30-billion on infrastructure development and maintenance, with over 90% benefitting B-BBEE enterprises – especially in construction and professional services.
To formalise township enterprises and facilitate market access, the Gauteng provincial government has registered more than 7 000 of these enterprises on the Central Supplier Database, and spent R7.5-billion procuring goods and services from them.
“Our target for 2019 is to spend 40% of our annual R12-billion goods-and-services budget on township procurement. At the end of 2016, we had supported more than 50 co-ops – mainly owned by women – benefitting 2 800 individuals. To ensure their sustainability, these co-ops are currently being linked to operations in the mainstream economy,” said MEC Creecy.
SMMEs are the future
The Finance MEC expressed the hope that following the Smart Procurement’s Gauteng conference, there will be an initiative to bring together a working group of all major enterprises that are interested in developing small enterprises in their supply chains.”
“Gauteng Province would be very keen to work with such an initiative in a concrete, and hands-on way. SMEs are the future, and we must do everything necessary to support them.”