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To proactively redress black business participation in the economy, focus on demand and not supply

10 September 2019

 The public sector needs to afford South African black businesses opportunities that will ensure the sustainability and self-reliance of the country, says Jasco’s Managing Director in the Business Development Cluster, Thapelo Petje.

 

Jasco is a South African JSE-listed company that delivers smart technologies across multiple disciplines.

 Petje says government knows before a budget is tabled in parliament what the country needs, which means they can manage demand.

 

“Yet the manner in which procurement is set out in this country ensures that a majority of the spend goes to big companies who have a national footprint, which means the smaller businesses struggle to penetrate this arena, yet everyone is fighting for a slice of the procurement pie,” he says.

 

As a developmental state, Petje says there are several issues that need to be addressed within the supply chain.

 

“Let’s look at the fourth industrial revolution for example. This will require technological infrastructure, yet what we are seeing now is there is no supply chain that benefits locals, the public and private sector are importing skills from abroad in the form of turnkey solutions that completely ignore local business more especially black business in the supply value chain. The issue of transfer of skills is now relative after 25 years and thus has become a way of spending huge amounts of money directly with Original Equipment Manufacturers (OEMs) at the expense of local companies, more especially SMMEs and black-owned companies.

 

"This creates a dependency that the government and State-Owned Entities (SOEs) will solely depend on OEMs when the infrastructure needs support and maintenance, as there will be no local skills to fix the infrastructure, therefore, perpetuating the skills shortage. This is economic self-sabotage, it creates dependency on foreign skills, it is not sustainable,” he says.

 

Petje says demand management is the art of knowing what is needed and then when identifying the supply of products, technology and services for the government/SOEs to be in the position to proactively know the capabilities of potential suppliers that will be able to meet the demand.

 

He says countries such as Singapore, China and Japan had developed their economies by using reliance on their own consumption patterns to develop their own industries.

 

In South Africa today, it seems we are the net importers of goods and services and this is destroying value creation by relying on OEMs who are turnkey solutions and maintenance providers which in turn fuels their own economies.

 

“The procurement of South Africa is in actual fact benefiting job creation in other countries rather than creating job opportunities and growing their own markets.”

 

“Talk of the fourth industrial revolution (4IR) seems to focus more on gadgets and their functions, but who is going to build the infrastructure and applications to use those imported gadgets we plan to use? Infrastructure must be built by locals with a view of local applications so they know how to use, adapt, enhance and maintain it.

 

“Local business with local skills and the ability to employ and develop our youth are overlooked. It is no longer a question of skills transfer, but one of preference. Our people are sitting on the peripheries of this country’s software applications and infrastructural development,” Petje laments.

 

“Will the 4IR be like the Y2K hype where the money goes to consultants by the mere fact of reliance and expertise?”

 

He says the government needs to disaggregate the procurement process and give small players a chance to participate in the growth trajectory of the country. When SMMEs are used in the environment of economic development, demand planning and management will increase their participation and therefore create more job opportunities as they are the biggest job creators.

 

“The more you focus on supply management, the more you miss the developmental trajectory of the country. This is more than just about tenders or bidding, but about how a country wants to develop its industries inside out, from a net importer of goods and services to a net exporter.

 

"Therefore, it is wiser to provide smaller companies with a platform to compete and involve communities where services are being rendered than to simply disregard them altogether,” he says.

 

This, Petje says, is a more proactive redressing of barriers of entry created for SMMEs, especially black business, to participation in the economy.

 

//ends