16 February 2017

South Africa: SMMEs to Get More Business From State-Owned Entreprises

Cape Town — Small Business Development Minister Lindiwe Zulu says Small, Medium and Micro-Sized Enterprises (SMMEs) will soon enjoy a lot more support from State-Owned Enterprises.

The Department of Small Business Development has signed a Memorandum of Agreement with the Department of Public Enterprises that will see State-Owned entities (SOEs) channelling most of their work to support small businesses.

The Minister said this when she participated in the second day of the debate on the State of the Nation Address at the National Assembly on Wednesday.

"The Department of Small Business Development and the Department of Public Enterprises have signed a Memorandum of Agreement to cooperate on providing opportunities for SMMEs and increasing oversight over State-Owned Enterprises' adherence to fair business practices towards small business," she said.

The Minister said she was aware that in the past, some of the large SOEs have been at the forefront of anti-competitive behaviour that has limited opportunities for small business in favour of more established corporations.

She said this ranged from the non-payment of invoices to emerging suppliers and collusion to fix prices and lock out smaller players.

Over the last 15 years, a large number of cases brought before competition authorities have involved some of government's biggest SOEs such as SAA, Transnet, Eskom, Telkom, SAFCOL and PRASA, the Minister said.

"Next month, senior officials from my Department and the Department of Public Enterprises, together with Transnet will develop a cooperation strategy, which we will pilot in Saldanah in the Western Cape with a view to spreading this new strategy countrywide," she said.

The Minister urged other SOEs to collaborate with all relevant departments for sustainable opportunities for SMMEs.

"We will hold State agencies that continue to underperform on providing opportunities to SMMEs to account.

"We will seek proof that SMMEs are being enabled to access opportunities within these supply chains. In this context, we will ensure that we give practical meaning to localization through various capacitation efforts," she said.

Preferential Procurement Regulations

Meanwhile, the Minister said the new Preferential Procurement Regulations have been signed into law and will take effect from April 2017.

The legislation empowers state departments and agencies to 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.

"The new legislation increases the threshold of affected contracts from R1 million to a threshold of R50 million. Tenders below R50 million will now be evaluated in terms of 80/20 preference system and tenders above R50 million will be evaluated in terms of the 90/10 preference system. This will allow smaller, less established companies better opportunities for real growth."

SA, UK to hold trade talks post Brexit

Kicking-off the debate earlier, Trade and Industry Minister Rob Davies said as the United Kingdom prepares to trigger exit negotiations from the European Union, South Africa should prepare for a new trade arrangement with the UK.

He said his department has engaged with the UK government and reached an in-principle understanding that there will be no damage to existing trade and investment relations that must be preserved.

"We also agree that the legal commitments under the Economic Partnership Agreement (EPA) with the EU, including the UK, will continue to be the basis for our bilateral trade in the immediate future and that those commitments would be carried over into any new arrangement in future.

"We will have to pay particular attention to questions of how quotas, notably on agricultural products will be dealt with to avoid any damage to current trade," he said.

He said, meanwhile, that localization remained a top priority for government.

The Minister said in light of this, South Africa must, therefore, remain steadfast in not signing the World Trade Organisation's (WTO) "Optional Protocol on Transparency in Government Procurement".

"If we did, we would have to open up government procurement to all other state signatories on a non-discriminatory basis and disable procurement as the tool of local development and radical economic transformation which the President referred to in SONA.

"Likewise we must politely but firmly say no, as we have done, when proposals are put forward for further WTO disciplines on procurement.

"For similar reasons we must resist the entreaties of our friends to sign the Environmental Goods Agreement. If we did we would hobble the local industrial development potential of the roll out of renewable energy," he said.

Reducing cost to communicate

Meanwhile, Telecommunication and Postal Services Minister Siyabonga Cwele that reducing the cost to communicate by ensuring that data prices fall is a top priority for government.

"Our youth have realized the power of using internet for their development. We have heard their plight to make data affordable as it is still relatively high compared to our peers. We agree with them that data prices must come down."

He said this can only be achieved when more players and SMMEs compete in giving services to the people as advocated by the new policy.

He said in 2016, he issued a policy directive mandating ICASA to conduct an inquiry to see if there is effective competition in the broadband market segments and recommend corrective remedies or regulation to bring price down.

"The regulator has put a deadline of April 2017 to do this work. We hope the public will give their valuable inputs in this process," he said.

The Minister also said the rollout of municipal Wi-Fi contributes significantly to providing basic access to many citizens.

Interventions to improve education

In his debate speech on Tuesday, DA caucus leader Mmusi Maimane said the DA would, if they were in government, "Invest in training existing teachers and recruiting more teachers with excellent skills, particularly in Mathematics and Science".

Coming on as a sweeper in the debate on Thursday, Deputy Minister in the Presidency responsible for Planning, Monitoring and Evaluation, Buti Manamela, said there was already a Mathematics, Science and Technology (MST) programme that is initiated by the Department of Basic Education which focuses on training and supporting teachers who are already in the system.

He said Fundza Lushaka programme already recruits teachers into university training to teach scarce skills in schools, and since 2013, more than 15 000 teachers who have graduated from this programme have been deployed into schools.

"Secondly, you suggested that the DA will 'explore the feasibility of bringing back teacher training colleges'.

"This government of the people... has already explored this possibility and has reopened three former Colleges of Education, and will be opening more of these in a not too distant future. We are committed to ensure that we have quality teaching in our schools."

He said Maimane's suggestions to help poor students, especially the "missing middle", was already being done by government.

"The Minister of Higher Education announced a stop-gap plan for the missing middle whose parents earn a combined income of less than 600 000 a year, and this government of the people has paid off all historical debt owed since 2013 by students,"

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