The Citizen Entrepreneurial Development Agency (CEDA) Chief Executive Officer, Thapelo Matsheka, this week urged the government to review its policies and programmes relating to procurement, especially the Public Procurement and Asset Disposal (PPAD) Act and the programme on “The use of Locally Manufactured goods and Service” so that there can be meaningful progress in the development of SMMEs.
Speaking at the Botswana Confederation of Commerce, Industry and Manpower (BOCCIM)’s Kanye Annual fund-raising dinner 2007, held under the theme ‘Local Procurement: The Greatest Step Towards SME Growth’, Matsheka said that, relating to SMMEs development, the PPAD Act provides for Government to introduce reserved and preferential schemes from time to time to meet its economic and social objectives, which are consistent with its external obligations as provided for in Article 66.
According to Matsheka, the schemes shall be targeted and time bound, be non discriminatory and based on competition among eligible contractors, and shall apply to specific disadvantaged women’s communities and regions and areas subject to occasional calamities.
Matsheka pointed out that it was disheartening to note that Section 71 of the PPAD Act provides that reservation schemes shall apply to procurement and disposal activities of low complexity; limited scale; repetitive nature; having a financial ceiling. These activities, he said, have low growth potential, less technological innovation and low margins and therefore, although they provide market prospects, they are not ideal for a firm that would innovate and grow, pointing out that these activities may not benefit most small firms and would be restrictive on the SMMEs in terms of the range of products and services to be supplied.
The problem in Botswana, he said, is that each and every time there is problem, an institution is formed, and people hide behind institutions’ mandates. Matsheka pointed out that tenders are being corruptly awarded, adding that some are designed to fail.
He stressed that there is a need for another approach to be adopted. “Local authorities can do a lot to support businesses in their areas,” he said. As CEDA, Matsheka said they remain ready to assist.
“The Consultancy on the Development of the Comprehensive Citizen Empowerment Strategy confirmed that the open category, for instance, where there are no restrictions relating to citizen reservation or preferences schemes, citizen owned companies do not benefit constantly from government procumbent.”
As an example, he cited the example for the period 2004 and 2006 when 124 tenders worth P1 085 billion were awarded by government, although citizen owned companies were awarded 77 tenders representing 62 percent of the total.
“In value terms, citizen owned companies were awarded 17 percent of the total, expatriate companies were awarded 78 percent of tenders by value and joint ventures received only 5 percent which confirms that citizen owned companies are confirmed to low value tenders,” he said.
He lamented the lack of access to government procurement by local companies leading to exporting jobs to other countries.
“South Africa continues to be the top-most source of imports for Botswana with imports from South Africa accounting for about 70 percent of total imports,” he stated, adding that these imports avail an opportunity for at least partial import substitution with the right policies and programme in place.
Matsheka revealed that the Department of Industrial Affairs, following their survey, ‘Identification of Import Substitution Prospects’ in 2004, estimated that there are at least 168 major importers which import goods valued at more than P10 million annually. These organizations include government institutions, parastatals and other companies where government has some form of shareholding
