More tenders for SMMEs, urges Zulu

Cape Town – State-owned enterprises (SOEs) have in the past been at the forefront of anti-competitive behaviour, said Small Business Development Minister Lindiwe Zulu.


Addressing MPs in a debate on President Jacob Zuma’s State of the Nation Address (SONA), Zulu alleged that SOEs have locked out small players when awarding tenders.

“We’ve now signed a memorandum of understanding to increase oversight of SOEs and we’d like to see tenders go to small and medium-sized enterprises (SMMEs). I invite others to collaborate with us to ensure we provide sustainable opportunities for small business.”

Zulu also said In order to deal with this asymmetry, the President and this government have proposed the use of “strategic levers” available to the state.

“The President has cited the R500bn a year for the government bill of goods and services as well as the R900bn infrastructure budget over the medium term framework, which must be used to advance economic transformation. That is a total of close to R1.5tr of opportunity,” Zulu said.

In addition, the new Preferential Procurement Framework Regulations that were signed into law in January 2017, means 30% of state procurement must go towards SMMEs and township and rural enterprises.

“This will take effect from April 2017, replacing the Preferential Procurement regulations of 2011,” Zulu said.

“What the legislation means is that state departments and agencies may restrict certain designated tenders by stipulating minimum B-BBEE requirements or stipulating that tenderers agree to subcontract a minimum of 30% to categories of exempted micro enterprises and qualifying small businesses.”

According to Zulu, the new regulations will also increase the threshold of affected contracts from R1m to a threshold of R50m.  

“Tenders below R50m will now be evaluated in terms of 80/20 preference system and tenders above R50m will be evaluated in terms of the 90/10 preference system. This will allow smaller, less established companies better opportunities for real growth,” she said.

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