As much as 85 percent of government spending on goods and services will be directed to small, medium and micro-sized enterprises (SMMEs).

These funds will be paid within 30 days to the businesses, for the goods or services they supply, government spokesperson Themba Maseko said Thursday.

Briefing reporters on the outcome of the latest ordinary Cabinet meeting, held on Wednesday, Mr Maseko said the spending would be directed at 10 products and services supplied by SMMEs.

He added that the 30-day payment rule for paying small enterprises for goods and services rendered to all government departments would be implemented with immediate effect.

In a bid to ensure the 30-day payment rule is firmly applied, Mr Maseko added that the measure would be monitored and enforced by ensuring that the performance contracts of accounting officers in government departments include its implementation.

In another measure to ensure wide compliance with the 30-day payment rule, the Small Enterprise Development Agency (SEDA) is to set up a call centre to handle complaints from small business owners about late payment for goods supplied and services rendered.

Mr Maseko added that timely payment is the lifeblood of SMMEs, which don't have the large cash reserves to survive long periods without payment.

Meanwhile, the 10 products and services targeted for 85 percent of state spending are: Advertising, media and communication products and services; interior and exterior cleaning services and cleaning product supplies; clothing and textiles; computer equipment and consumable supplies; interior and exterior furniture and décor; events coordination and management; maintenance, repairs, construction and office space; travel coordination and shuttle services; perishable food supplies and stationery supplies and printing.

And government-funded small enterprise support agencies will provide dedicated financial and non-financial procurement-based support for these products, Mr Maseko said.

"The only way we will grow small enterprises is by giving them work," said Mr Maseko, who pointed out that SMMEs stand to benefit from hundreds of millions of rands of expenditure.

Already, many products and services required and used by government are sourced from SMMEs, with millions of rands already spent on boosting SMMEs through sourcing products and services from them, but now a specific target of 85 percent has been set, and approved by Cabinet.

The identification of the 10 economic sectors where SMMEs stand to benefit from state procurement is the culmination of extensive research as part of an initiative led by the Minister of Trade and Industry, Mandisi Mpahlwa, said Mr Maseko.

"SMMEs have a very strong role to play in creating economic opportunities," Mr Maseko added.

National Treasury is to issue guidelines to all national and provincial departments to ensure the implementation, monitoring and reporting on the expenditure targets.

Expanding on the 85 percent target, Mr Maseko said this expenditure would be directed especially black-owned companies, in line with government guidelines regarding broad-based black economic empowerment.

However, government would not be limited by these guidelines, he said, adding that the initiative was a broader one that focused on all small enterprises in South Africa, he said.

The cabinet meeting also noted progress towards boosting SMMEs through the establishment of 103 Enterprise Information Centres of the SEDA and the establishment of 47 offices of SEDA countrywide,13 Khula mentorship offices, eight South African Micro-Finance Apex Fund (SAMAF) provincial offices, 38 SAMAF partner organisations acting as financial lending intermediaries and 18 incubation centers around the country.

Also, the establishment of the Cooperative Incentive Scheme, and in the 2006/7 financial year the Industrial Development Corporation allocated R597 million to businesses operating in or near townships and the IDC Risk Capital Facility has allocated R190m to 90 companies creating 5310 jobs.

Cabinet noted a R496 million portfolio investment by the National Empowerment Fund, the implementation of the Black Business Supplier Development Programme and the SME Enterprise Development Programme supporting 11 309 projects to the value of R12.7 billion since 2000.

Bu BuaNews (Tshwane)

Shaun Benton
Cape Town