Sunday, June 23, 2024

Govt’s procurement system is flawed against SMEs┬á

Botswana Confederation of Commerce Industry and Manpower (BOCCIM)’s drawn out public criticism of government’s overarching role in the economy has gradually gained solid credibility, especially that bureaucratic red tape has been known to smother the private sector.

The Telegraph has previously drawn attention to factors that discredit government as a lucrative business partner for small and medium businesses (SMEs). It highlighted broader factors such as a tight public budget and lack of tools and information. This week’s article will focus on the structure and design of the government procurement processes to interrogate if it is suitable for sustainable growth of SMEs.

In an interview with The Telegraph, BOCCIM outlined a number of constraints in the state procurement system. Government contracts have a wide a ranging scope of work which often leads to wide price variations.

Secondly, said BOCCIM, too much time is taken before contracts are awarded, which forces bidders to factor in costs incurred during the time lapse and further inflate their bids.

“The tendency by authorities to cancel tenders and re-issue, often on more than one occasion, increase costs as well. ┬áSpeedy execution after tender awards would help the private sector including SMEs,” said BOCCIM.

“Tender bidding requirements such as certifying documents also escalates the costs of doing business, which bidders have to factor in. Clearly a competitive bidding approach is required.”

A study conducted in 2009 on government and parastatal procurement processes concluded that SMEs struggled to participate in government and parastatal bids because of lack of knowledge and skills to meet the set conditions.

A lack of interest to buy local goods and services by some public bodies was also identified as a challenge. What is obvious at this point is that government is the biggest buyer of goods and services in the economy.

However, BOCCIM has repeatedly argued that allowing government to expand public spending will stifle private sector growth and create what is known as the crowding effect. BOCCIM acknowledges government’s role in the economy in the form of sharp-witted regulations that will allow the private sector to grow and create jobs and wealth. This is particularly important in Botswana’s economy, in which government has lost steam and must now pave way for the private sector to chart a new growth path with the promise of unlocking economic opportunities.


Read this week's paper