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MEC Nomusa Dube-Ncube: Public Sector Procurement Forum

6 Apr 2021

Address by the MEC for Finance and Leader of Government Business Nomusa Dube-Ncube, Public Sector Procurement Forum

Programme Director: Ms Happy Ngidi

Chief Marketing Officer at Proudly South African, Mr Eustace Mashimbye

Chief Director: Industrial Procurement Department of Trade and Industry, Dr Tebogo Makube

Auditor General South Africa: Business Executive Ms Ntombifuthi Mhlongo

SABS & SAATCA Registered Auditor SABS, Mr Zukisa Nkonzo

Proudly South African Board Members

Experts and Academics in the procurement sphere

Senior Government Officials

Members of the Business fraternity

Members of the Media

Fellow Citizens

Good Morning and Happy Freedom Month!!!!!

I often point out that we can proclaim today that progress has been made in achieving some of the tenets of the Freedom Charter except two clauses and these being the economy and the land.

Ladies and Gentlemen, I believe that we are therefore called upon today to discuss ideas on how to translate the political freedom into economic freedom for our people.

Having said that, I wish to express my appreciation to the leadership of Brand SA, Proudly SA and the team behind the co-ordination of this important session.

Since yesterday evening and this morning, I have been receiving comments and suggestions from entrepreneurs and ordinary members of society.

They have been looking forward to this engagement as they believe that we will collectively outline our Programme of Action on how to use public and private procurement to rebuild and transform our economy.

Since we started 2021, I have been reiterating our commitment, as the custodian of procurement and supply management system, to use our procurement for the benefit of emerging entrepreneurs across all corners of the province.

Today, I wish to state that we are firm in our position.

Emerging entrepreneurs, the marginalized businesses and those in the informal economy must benefit from the R133 billion Provincial Budget that we have allocated to various government departments.

We have identified our procurement spend as a vehicle to transform our economy in view of the fact that Covid-19 pandemic has destroyed out economy resulting in a worse economic downturn.

It’s been reported that globally, public procurement represents on average 15% of Gross Domestic Product (GDP). Clear this is a strong indication that public administration is the lifeblood and a backbone of the country’s economy. 

As you all know, the negative impact is far wider and devastating than that of the Great Depression that started in 1929 and lasted until the late 1930s.

Therefore, as Provincial Treasury, our main role during this period is to ensure adequate deployment of resources to all government departments and entities.

We are playing an active role in the rollout of the Economic Reconstruction and Transformation Plan.

We view Job creation as a primary means through which economic growth and quick recovery can occur. 

We want to achieve this by distributing the benefits of economic growth more widely and consequently reducing dependency on the welfare system.

Our strategic focus is the following:

  • Creation of employment through unleashing agricultural potential;
  • enhancing industrial development through investment into the key productive sectors of Reviving the manufacturing Sector, Agricultural Sectors tourism, Informal Economy and SMEEs and Cooperatives, Telecommunications and Digital Economy, Oceans Economy, and the Green Economy and Renewable Economy, transport and logistics,  and service sectors; and many others
  • Expansion of government-led job creation programmes, promoting SMMEs and Cooperatives and entrepreneurial development and promoting innovation and localisation.

Ordinary members of society must have their lives changed for the better through the Economic Reconstruction and Transformation Plan.

Programme Director, in the interest of time, I will go straight to areas where we want to make an immediate impact in terms of procurement spend.

Social Infrastructure

Programme Director, investment in infrastructure development constitute one powerful strategy for job creation, food security and building our economy to defeat poverty.

The strategy involves the programme of improving the economic infrastructure including the following: construction of schools, public health facilities – roads and other social infrastructure.

These includes fencing, dipping tanks, communication networks in the form of rollout of broadband, electricity provision, water harvesting and irrigation schemes for small farmers.

In addition, we have taken a position that the enhancement of industrial development, construction and manufacturing is fundamental to the creation of employment, economic growth and development within the province.

Importantly, towards the end of 2020, manufacturing sector contributed 17.4% to KZN Gross Value Added. A total of 334 714 people were employed in the sector, of which 295 557 were formal and 39 200 are in informal sector.

By intervening in the construction and manufacturing sectors - we want emerging small players such as SMMEs and Co-operatives to be involved in the entire value chain.

We have also have identified our key strategic assets to be the catalysts of manufacturing and industrial development.

These assets include Durban and Richards Bays Ports, the Richards Bay IDZ, the Dube Trade Port, new Clothing and Textile SEZ and Automotive Supplier Park which already before it could start has attracted billions of investments from industry players such as Toyota etc.

We wish to confirm that SMMEs and Co-operatives are already involved in the construction of some manufacturing plants in our IDZs.

The companies are Wilmar Palm Oil which is investing R1, 3 billion and Nyanza Light Metal – a chemical company investing R4, 3 billion.  Construction should have started in March but was affected by the lockdown. The construction has started.

At the Dube Trade Port, there are 9 investments worth R3.2 billion that have been approved. These investments presents opportunities for emerging small players and will create an estimated 2 342 direct jobs.

We have said, our entities such as KZN Growth Fund must provide much needed funding to the small players through Black Industrialists programme. This funding will enable these small players to participate meaningfully in the construction and manufacturing sectors.

Clothing and Textile is the largest manufacturing employer in the province and one of the most labour intensive sectors.  More than 90,000 people in the formal sector and close to 10,000 in the informal sector.

We have taken a decision to intervene in order to ensure the diversification of manufacturers from fashion to PPE because of high demand of PPE from local manufacturers. We have been extending support to SMMEs and Co-operatives owned by women and the youth.

We are facilitating training on basics of garment design and different categories of fashion. We are empowering them with skills such as Drawing and Illustration, Basic Fashion Photography and Creative Computing.

Instead of importing from Asia and other continent, we are encouraging the Buy Local campaign. This is an area that we wish to strengthen with Brand SA.

We have announced that we will enforce localisation and ensure that government departments and municipalities procure goods and services locally, in line with government policies.

We want enterprises such as SMMEs and Co-operatives, owned by Africans in particular, women, youth, disabled people our veterans - to benefit as they remain excluded from the mainstream economy. With the outbreak of Covid-19, they have suffered triple exclusion.

We have allocated more than R3, 3 billion to the Department of Economic Development, Tourism and Environmental Affairs. Part of the budget focused on assisting small players in the Operation Vula commodities, such as manufacturing of Soap and Detergents, Paper and Pulp, Bakery, Furniture and Clothing and Textiles and many more.

Infrastructure budget

Programme Director, the largest portions of the infrastructure budget in this province (inclusive of both Equitable Share and Conditional Grant funding) go to the departments of Transport (R7.96 billion), Education (R2.59 billion) and Health (R2.01 billion).

With an allocation of R11.644 billion, the Department of Transport is embarking on the construction and maintenance projects where women and youth owned companies stand to benefit.

Another area is that of the provision of subsidised bus services and learner transport services. We have stated that emerging entrepreneurs must benefit out of this allocation.

Programme Director, in rebuilding and transforming our economy, we are investing in the education infrastructure.

We are seriously ensuring that our education system make an individual self-sufficient such that each learner is able to make a decent leaving on leaving school.

In this regard we are constructing classrooms, laboratories, libraries and administration buildings to strengthen efforts aimed at ensuring the acquisition of skill and knowledge to drive different sectors of our economy.

In line with national priorities, we have allocated the highest proportion of our total budget of R133.670 billion to education at R53.184 billion.

Operation Pay on Time

I must hasten to point out that, apart from insisting that emerging entrepreneurs must be considered as contractors, we are seriously looking at delays in the payment for services they render to government.

Closer coordination is being forged between the Department of Public Works, as an implementing agent of infrastructure projects, and client departments.

We have also said Provincial Treasury, working with Heads of Departments, CFOs and Managers of Supply Chain Management Units must ensure that those who do business with government are paid on time.

Amongst the causes of high failure of emerging business is the failure of government departments to pay on time.  The inability of government departments and some municipalities to pay on time is something we are addressing.

Ladies and Gentlemen, we have also allocated R48.412 billion to the department of Health. Part of this money will go towards the construction of massive capital projects and refurbishing of several public health institutions.

We have assigned an Infrastructure Crack Team in Provincial Treasury to work with departments to ensure that all infrastructure delivery projects are completed.

We are dealing with the inability of government departments to fully spend on their capital works which at times causes the money to be returned to National Treasury.  

Another problem we are addressing is the lack of technical capacity to supervise adequately and ensure timeous spending.

Partnership with Private Sector

Ladies and gentlemen, this engagement must be viewed as part of ongoing efforts aimed at extricating our people from poverty.

We cannot do this alone but we need the support of many stakeholders in the private sector some of whom are following our discussions today.

With the outbreak of COVID-19, we have partnered with retail shops to ensure that they procure agricultural products from emerging farmers.

We have said, this province must no longer be the net importer of agricultural products.

We have partnered with food chains and retailers such as Uniliver, Massmart, Spar Group, Pick n Pay, Boxer Cash and Carry and Mr Price.

We invited them to embrace the Radical Agrarian Socio-Economic Transformation (RASET) Programme.

Through RASET), we are utilizing our influence as a purchaser of goods and services to ensure the redistribution of wealth. We identified products and services that should be provided by previously disadvantaged groups such SMMEs and co-operatives.

We have committed to double our efforts in order to remove the red tape in public procurement for the benefit of small players.  We are placing an emphasis on supporting the poor, who through our history of apartheid are locked in the vicious cycle of poverty.

 

Though I have reported about this in the past, but for the benefit of our discussions, I do want to point out that during the first 3 months of COVID-19, we successfully coordinated the procurement of perishable food through the 5 prioritized District Development Agencies (DDA) for months. 

We supplied emerging farmers with fifteen refrigerated trucks, ten bakkies and ten two-ton trailers to transport food. We also supported DDAs with revolving funds of more than R15 million to pay the emerging famers on time.

More than 27 public hospitals and retail shops were secured and are supplied agricultural products such as vegetables weekly by emerging farmers. The agricultural products valued at more than R44 Million.

Some of the notable achievements we perhaps may want to highlight for the purpose of our engagement include the fact that our emerging SMMEs and Co-operatives were assisted to be involved in farming and in supplying the following:-

  • PCK Distributors: Weekly orders for Potatoes, Cabbage, Green pepper, butternut and Banana.
  • Fieldcrest (Boxer agent): making weekly orders for Cabbage and butternut supplying Boxer Shops.
  • Port Natal (Market Agent): making weekly orders for Butternut and Cabbage
  • Agrihouse: making weekly orders for green papers, tomatoes, cabbage and butternut;
  • Oxford Market: for Lettuce, tomatoes, butternut, cabbage and potatoes;
  • Massmart is also purchasing goods from our emerging farmers.
     

Price Hikes and support to the Informal Economy

Programme Director, as I conclude, I wish to also highlight another important intervention by government.

Since the beginning of lockdown, national and provincial government has been working with law enforcement agencies to monitor price hikes.

As part of part of protecting consumers and growing rural and township economies - we have also focused on strengthening the purchase power of small players such as Tuck Shop owners.

We agreed as government that through EDTEA, we must help them acquire stock and for the refurbishment of their outlets.

This will ensure compliance with Consumer and Customer Protection Regulations, as well as Environmental Health and Food Safety standards.

Critically, we have identified Ithala owned buildings and industrial parks across all municipalities.

These are being converted into Bulk-Buying facilities where commodities required by Spaza Shops will be available at cheap prices.

We are cutting off the middle-man and want these facilities to keep materials in bulk and be accessible in local municipalities where small players are located.

Ladies and Gentlemen – because of time constraints I wish to conclude my remarks by reiterating our commitment to work with Brand SA.

We have a Public Private Partnership Unit in the Provincial Treasury which will focus on the strengthening of this partnership involving Brand SA and retail shops and overseas markets.

 We want to ensure that locally manufactured products are available in major retail shops and overseas markets.

One of the most iconic pieces of Zulu clothing is the circular-shaped hats called izicolo.

These are hats made from grass, traditionally worn by married women, and often measure over a metre across to protect the wearer from the harsh sun. For men, animal skins and feathers are the traditional items of clothing. We witnessed this during the Planting of His Majesty.

The Indian Sari is undoubtedly one of the most popular traditional Indian garment which could be found in KZN.

We want to embark on a Buy KZN Campaign to encourage the buying of local designed garments.

In addition, the abundance of timber products, creativity and technical skills make KwaZulu-Natal a serious contender for a top slot in the furniture industry.

However, this has been partly hampered by lack of co-ordination and appropriate marketing of timber products in the province. With the partnership with Brand SA, we will focus on wide range of consultation with stakeholders in this sector. We will also be prioritizing the participation of emerging furniture producers in national and international markets. 

Linked to this, is our arts and crafts. KwaZulu-Natal has appreciated the role of arts and crafts as alternative economic options.

With those words, I thank you.

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