Tuesday, December 7, 2021

Beware the ‘tender boy’ affliction

Global market figures show that world output has been declining, and Botswana has been no exception as it has employed austerity measures and significantly reduced spending. Since the 2008 global recession, Minister of Finance Ken Matambo has repeatedly talked about “achieving more with less” which implies that government will reduce the number of contracts/bids that it doles out to businesses. As it is, the government budget is already constrained, which has resulted in fewer projects being implemented, thus fewer opportunities for businesses.

However analysts maintain that government remains the biggest money-spinner because it is the largest consumer of goods and services in the economy. This therefore makes it rather obvious why businesses tend to concentrate on selling their products and services to government. However, this is a dangerous trend because the state budget is susceptible to external shocks, such that most businesses will fail if government doesn’t have money to implement projects.

The e-Gov mirage

ICT is an important platform for efficiency in government, but its potential is yet to be realized. In its response to the 2015 budget speech, BOCCIM cited a few areas that were not “plugged-in” within government, which poses a threat to doing business in Botswana. The major issue was e-Government, the automation of government processes. BOCCIM expressed disappointment that while the e-Gov project was first mooted 10 years ago, it had still not come to fruition.
“BOCCIM is deeply concerned that after almost ten years there has been limited progress in implementing electronic government as a transformational tool for doing business in Botswana. The opportunities that such a game changing tool could bring to the economy continue to be missed,” said BOCCIM.

It was a valid concern, given that ICT would avail to businesses tools and information that would enable it to become fully acquainted with all public bodies that could purchase their products and services. Equipped with information, businesses and government will be able to deliver effectively. The lack of such a swift approach to providing public services is a drawback to businesses that seek to position themselves as credible suppliers to government.

Without e-Gov, businesses also miss opportunities to understand how government procurement works, which could assist them to build better business models. The lack of information skews the playing field in that large businesses are able to exploit loopholes because they already have systems in place, leaving small businesses behind.

Delayed processes and payments

The experiences of many businesses in their dealings with government reveal an obvious fact; that government does not do business like the commercial sector. In its attempt to level the playing field, government spends a considerable amount of time preparing bids. In the end, the process of ticking the boxes for businesses competing bids becomes very time consuming as it has to be done with the smallest margin of error. Before they can win a tender and finally get paid, businesses have to go through a series of processes which inhibit their performance capacity and starve them of a positive flow of money. Government also takes too long to pay businesses, which leaves them stuck with a huge opportunity cost.

Because of the unreasonable amount of time that government takes to pay, some businesses are left on the brink of collapse as they are unable to cover operation costs. A shortage of money going in and out of the business weakens its financial strength. To make matters worse, there is very little evidence that government is making any effort to speed up payments to businesses, especially SMEs. However, it was revealed at the recent SMME Pitso that government is working on a project to track delayed payments to SMEs.


Read this week's paper