The effect of preferential procurement on small, medium and micro enterprises within the Molopo region of North West Province

Abstract

In his study, the impact of preferential procurement on Small, Medium and Micro Enterprises (SMMEs') was evaluated. Most developing countries, including South Africa are characterised by a rapidly growing population, high unemployment rate and poverty. To redress the situation, the South African government, both at National and Provincial level has shown an interest in the development and sustainability of SMMEs' There is a dire need for the redistribution of income and opportunities to the historically disadvantaged individuals. The South African economy is not labour absorbing because of the inherited capital-intensive structure of the economy. The South African SMME sector is far from homogenous and would require a fine tuned set of interventions rather than the generic assistance currently provided. Only a few dynamic SMMEs' show a potential to contribute to rapid employment creation whilst survivalist activities constitute the vast majority of South African SMMEs' (Kesper, 2000). It is also important for government to know the value of SMMEs', especially in the creation of employment and the impact that preferential procurement has on the SMME sector within the Molopo Region of the North West Province. This study should serve as an informative reference to the North West Province and other relevant stakeholders, seeking greater insight into the effect that preferential procurement has on SMMEs' within the Molopo Region. In order to obtain a meaningful insight on the data collected, two sets of questionnaires were developed. The questionnaires were structured so as to get the views of : The management of the Department of Finance. Small, Medium and Micro Enterprises. The tabular and graphical representations indicate the responses from the management of the Department of Finance and the owners of SMMEs' within the Molopo Region. Personal interviews were also carried out in order to obtain a meaningful insight into the research. However, there were some research limitations to the study as indicated hereunder: On going changes of government rules and regulations. The continuous revision of government programmes. Restructuring within government departments. The results of the study reflect that SMMEs' do generate employment and the management of the Department of Finance are fully aware of the impact that preferential procurement has on the SMME sector within the Molopo Region, with respect to job creation, empowerment and sustainability of the SMMEs'. The need for a fully integrated and up to date database cannot be over emphasised. By contributing to the development of the country's economy, SMMEs' will facilitate a greater and more equitable distribution of wealth. It will also assist in reducing the gap between small and big businesses, allowing businesses to meet the challenge of a global competitive economy.