Township businesses are unable to benefit from the Gauteng government’s procurement policy due to a mismatch between the services they provide and those needed by the state.
This was revealed by Nombulelo Mbeki, deputy director-general of provincial supply chain management in the Gauteng treasury, during a meeting in Soweto with such business owners..
Mbeki conceded the provincial government was not meeting its initial target of providing 30% procurement to township businesses. This is not even half of the provincial government’s new target of 60%.
“We did research and found that the goods and services offered in townships are not what government wants to procure. There are a lot of hair salons and spaza shops which the government cannot use. We are here in the township to say to entrepreneurs: diversify your business in line with future government needs.”
Mbeki said the provincial government needed lots of medical supplies, stationery and school uniforms.
This has now forced the provincial treasury to initiate a process to enable township businesses to assess what goods and services are needed by the government.
Mbeki said all departments had been asked to provide their procurement plans, which will be consolidated and shared with the public.
This process is expected to be completed in April.
Mbeki accompanied by Gauteng finance MEC Jacob Mamabolo who outlined the provincial government’s commitment to grow the township economy.
Government comes so often to us to tell us about opportunities, but when we apply for those opportunities we cannot get them if we do not know anyone inside.
— Vuyo Gumede, founder, Sphile Holdings
Presenting his budget this month, Mamabolo said Gauteng now wants to spend 60% of its R35bn procurement allowance on township businesses.
But township-based entrepreneurs said the way government implemented procurement excluded those without political connections.
Vuyo Gumede, founder of Sphile Holdings, said corruption in procurement was still rife.
“Government comes so often to us to tell us about opportunities, but when we apply for those opportunities we cannot get them if we do not know anyone inside.”
Gumede added that even when a township business gets projects, the provincial government does not pay timeously.
“I got a construction project at Steve Biko which I did in October. I have not been paid. By the time I get the money I will be in debt because I had to pay workers and hire equipment to do the work. You cannot grow township businesses if we are not paid on time.”
Susan Mthembu, CEO of Township Events Business Council, said there was little support for township businesses wanting to get into manufacturing as it required capital.
“When you go to government financing agencies they want guarantees and sureties which people in the township do not have. The financial support that government is providing does not speak to us as township businesses.
“Most of the entrepreneurs in the township do not have properties which they can put up as guarantees to secure funding. The support then does not address the specific needs of township businesses that want to manufacture goods within their areas. Even shopping malls that are in the township do not sell goods from the townships because there is no manufacturing capacity in the township,” Mthembu said.
The Gauteng government has prioritised reviving township businesses to fight unemployment and transform an economy largely driven by big corporates.
Last year the Gauteng Township Economic Development Act became law, ushering in an era in which more resources can be channelled into reviving neglected townships.
The act also allows non-township areas that have economically declined to benefit.
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