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Measures to support SMMEs

develop SMMEs

SMMEs – Government has set aside 30% of all government contracts to support small businesses and co-operatives in a bid to boost township and rural economies.

Rural Development and Land Reform Minister Gugile Nkwinti said this when he led a briefing of the Economic Sectors, Employment and Infrastructure Development Cluster on Tuesday.

He said small and medium enterprises (SMEs) and co-operatives often fail due to a lack of business opportunities in both the public and private sectors.

“Policy and regulatory constraints which hinder the development, growth and competitiveness of small businesses include lack of finance, under-investment in economic infrastructure in townships and rural areas and a lack of appropriate policies to protect informal business.

“Government will therefore increase procurement from SMMEs, co-ops, rural enterprises, township and smallholder farmers, with a target of 30% set aside for designated categories of state procurement,” he said.

He said to set the wheels in motion, the National Treasury would issue instructions in the form of ‘practice notes’ to all spheres of government and that transversal agreements with the affected sectors would be entered into with key procuring government departments and state agencies.

The Minister said government would also develop a framework to strengthen and regulate the informal business sector, including supporting township enterprises directly with economic infrastructure – like industrial parks and incubators – and basic equipment and machinery.

“In addition, a business rescue strategy aimed at supporting SMMEs and Co-operatives in financial distress will be developed.

“The Small Enterprise Finance Agency will also be migrated to the Department of Small Business Development,” he said.

Strengthening SOCs to transform the economy

The Minister said while government has, under the current economic climate, taken a lead to drive investment in the short to medium term, stronger state-owned companies (SOCs) were needed to lead the transformation of the economy.

“We do recognise that most SOCs play a fundamental role in the economy and their services are used by other sectors.

“Therefore, their operational efficiency has a wider and far reaching impact in the economy.

“The cluster is committed to strengthening the regulatory environment within which SOCs can operate, improving their efficiency and forging the partnership between the SOCs and the private sector.”

He said part of the actions that will be undertaken in the medium term include:

  • Finalising the State-Owned Companies Act that will streamline the governance of the SOCs across the different spheres of government and departments;
  • Introducing a private sector participation framework that will forge sustainable partnerships between SOCs and the private sector;
  • Setting clear remuneration standards that will link remuneration to the size of the company and performance bonuses to the sustainability of the company. This would also ensure that there is greater accountability and consequences for poor performance; and
  • Streamlining government’s shareholding in the ICT sector to accelerate investments in broadband infrastructure. –

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