Photo: EJ Yao (Unsplash)
  • Only a quarter of South African small and medium-sized companies do business with government.
  • Fears of red tape and delayed payments are discouraging entrepreneurs from engaging with government, according to a report.
  • Here are tips to make the process a bit easier.

Almost three-quarters of South African small and medium enterprises (SMMEs) do not do business with the government at any level.

This is according to the South African Institute of Chartered Accountants (SAICA)'s 2016 SMME Insight Report. The report found that 90% of the SMEs surveyed conducted less than 10% of their business with government at any level. Some 72% do not deal with government at all.

The Preferential Procurement Regulations, which took effect last year, offers new opportunities for SMMEs to participate in the government procurement process.

Here's how to benefit from doing business with government:

Register with the Central Supplier Database.

This is a good starting point. It is database of all organisations, institutions and individuals who can provide goods and services to government.

The CSD provides up-to-date supplier information to procuring organs of state. Key information needed includes banking details, tax information, company registration details, contact details and B-BBEE confirmation.

Sign up on the E-Tender Portal.

The portal provides a single point of access for any tender issued by public sector organisations in all spheres of government.

The portal also has tenders advertised in all national, provincial, metro, district and municipal departments. This includes those from state owned enterprises (SOE) and constitutional bodies.

Information includes advertised, awarded, closed and cancelled bids as well as templates of bid documents.

B-BBEE confirmations.

SMMEs that qualify as exempt micro enterprises (EME) and black-controlled and owned qualifying small enterprises (QSE) are no longer required to obtain B-BBEE certificates to confirm their status level.

They do, however, need to get a sworn affidavit annually confirming their annual total revenue and level of black ownership. The affidavit is only valid for 12 months by a date signed by a commissioner of oaths.

An EME is an entity with an annual turnover or R10 million or less. A QSE, on the other hand, is an an entity that has an annual turnover of R10 million or more, but less than R50 million

The purpose of this intervention, according to the B-BBEE Commission, is to reduce the cost of compliance and the cost of doing business for SMMEs in the country.

Getting paid.

According to section 65(2)(e) of the Public Finance Management Act, claims need to be settled within 30 days after receiving the relevant invoice.

To ensure that you are not paid late first make sure that you are responding to a valid bid. This is due to a prevalence of fake tenders in South Africa.

Then take care that the government department followed the correct bidding process when awarding the contract. Lastly, keep your tax affairs in order. 

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