HOW ACCOMMODATIVE APPROACH TO PROCUREMENT COULD LEVERAGE LONG TERM GROWTH

The raft of community-based COVID-19 responses currently underway represent a real opportunity to broaden inclusion and achieve permanent, positive economic gain out of current economic disruption.

South Africa’s response to COVID-19 and the broader economic situation in which this crisis is playing out, “represents a once-in-a-lifetime opportunity to use procurement to leverage South Africa’s full human and resource capability,” says Zakhele Mkhize, Founder and Director of the Entsika Group.   

Entsika is a black-owned and managed consulting and advisory business, providing clients with Proactive Assurance to sustain long-term operational and financial success. Advising across Consulting, Internal Audit, Engineering and Construction, Plant Asset Management, and Training and Skills Development, Entsika unlocks the value of South Africa’s hidden human capital, “realising new growth by broadening inclusion and reducing social and economic inequality,” says Mkhize.

Now more than ever, government and corporates need to look closely at how their procurement processes are including black-owned small and medium enterprises (SMEs), local communities and marginalised individuals in their response to COVID-19.  

To get this right, however, “government and corporations need to think out of the box,” says Mkhize.

For example, right now it’s not important whether an individual or business is registered. It only matters that they are in the right place, are producing the goods needed, have the resources required, or can do the job.

Government has led the way with very clear guidelines, relaxing the criteria for doing business with the state during the current crisis. National Treasury Instruction No. 05 of 2020/21: Emergency Procurement in Response to National State of Disaster, for example, is clearly aimed at making South Africa’s COVID-19 response supportive of broadly inclusive growth over the long term.

“The private sector should be guided by this intent,” says Mkhize.

For example, the lowest interest rates in 50 years present South African banks with an opportunity to relax loan qualifying criteria for those South African small businesses able to demonstrate that they have a COVID-19 response supply contract from either government or a leading corporate. Too often bank loan qualification criteria drive South African SMEs to loan sharks, nullifying the inclusive potential of lower interest rates. “We strongly encourage banks to ensure that these historically low interest rates actually reach and benefit South Africa’s small businesses – driving transformation through broader inclusion,” says Mkhize.

When lockdown and COVID-19 are over, “the services, skills, capabilities and markets that small businesses developed in the supply of South Africa’s COVID-19 response can be evolved into permanent businesses,” says Mkhize. Given the focus on local community inclusion imposed by lockdown, after COVID-19, local PPE suppliers, for example, could provide school, nurse and police uniforms to local institutions, or supply local sports teams or religious groups with apparel. Local suppliers could continue to cut grass and manage the maintenance of schools or continue to provide cleaning services to local hospitals.

In short, if South Africa uses convenience, local presence and capability as a guide in allocating work and funding to local community-based suppliers during this crisis, once the crisis is past the country will find that, “we have a much wider circle of people, scattered across communities throughout South Africa, with access to and – importantly – an understanding of the local market and the role they can play in it,” says Mkhize.

Black-owned and operated companies like Entsika have deep experience in helping previously marginalised individuals and businesses take on government or corporate work successfully.

During the current crisis, for example, Entsika is working to distribute and install water tanks amongst communities across South Africa. “We are also part of an information gathering and monitoring consortium, providing the GIS surveillance to get schools ready – and safe – to reopen across the country,” says Mkhize. Entsika plans to leverage these crisis response procurement opportunities into longer term business opportunities.   

Finally, it is critical that South Africa measure and report on how the country used COVID-19 procurement to drive inclusivity and permanent economic empowerment. In short, “how successfully have we used our national response to COVID-19 to include SMEs, and especially black-owned and women-empowered businesses, in permanent supply relationships within local communities,” says Mkhize.

Entsika has the technology and national footprint to guide, monitor and measure the success of projects across the country. Through Proactive Assurance mechanisms, for example, Entsika, ensures that new businesses dealing with government or corporates, “don’t make mistakes, waste money, fall foul of regulations, omit to verify delivery, or fail to account for funds,” explains Mkhize.

In short, the skills and insight exist in South Africa to rapidly integrate previously marginalised segments into our COVID-19 response. By adopting an accommodative approach to procurement South Africa can, “successfully leverage the untapped human, skills and material resources that exists amongst South Africa’s communities for long term inclusive growth,” concludes Mkhize.  

ENDS

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