By: Tebogo Mokwena
From the middle of January next year, state organs will be mandated to include SMMEs in their tender processes. They will also have to give preference to SMMEs owned by previously disadvantaged groups. The National Treasury said this week the new Preferential Procurement Regulations of the Preferential Procurement Policy Framework Act will take effect on 16 January 2023. It met the Portfolio Committee on Small Business Development to discuss the role it was playing in creating an enabling policy and regulatory environment for SMMEs.
Treasury Chief Procurement Officer Mendoe Ntswahlana explained that Section 2(1)(d) of the Act included groups that were historically disadvantaged. “Specific goals provided for in Section 2(1)(d) include persons historically disadvantaged by unfair discrimination, women, and persons living with disabilities as well as goals of the Reconstruction and Development Programme which includes a provision for SMMEs,” she said.
“It is thus incumbent on organs of state to provide for SMMEs in their tender documents should they wish to advance SMMEs (and this must be) in line with their organisational strategic objectives. “Therefore, Section 2(1) of the Act gives effect to Section 217(2)(a) of the Constitution in terms of which organs of state are required to allocate preferences to promote SMMES and localisation, among others, in the invitation of tenders and in the development of their procurement policies.”
Treasury revealed that it had a total of 1,128,529 suppliers registered on its Central Supplier Database. Of these, 93% were SMMEs, and since the 2019/20 financial period, about 152,718 suppliers were utilised and given procurement opportunities. A total of R638.69 billion had been spent over this period, of which R274.83 billion was spent on SMMEs. This accounted for 45.14% of the total spend.
National Treasury Director Moipone Ramoipone also briefed the committee on the reasons provincial and national government departments had given for failing to pay SMMEs within the required 30-day period. “Some of the reasons departments cite for not paying their suppliers include misplaced, misfiled or unrecorded invoices, inadequate budgets and cashflow management, inadequate internal capacity, IT system issues, unresolved invoice discrepancies and incomplete supporting documents in order to process payments,” she said.
Ramoipone also pointed out that there were regulations that mandated accounting officers to be diligent in paying suppliers their outstanding invoices. “Section 38(1) of the Public Finance Management Act requires accounting officers of departments to settle all contractual obligations and pay all money owing, including intergovernmental claims, within the prescribed or agreed period,” she said.
Committee members expressed disappointment at the reasons departments gave for not paying SMMEs their invoices, describing some of them as “ridiculous”. They reiterated that political heads and CFOs of state organs must be held to account for failing to pay small businesses on time.