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Doing business with government as an SMME

Small businesses need access to shared service hubs for SMMEs, especially admin – Julius Mojapelo (Saica).

NASTASSIA ARENDSE:  Government has lowered the cost of doing business with free BBBEE confirmations for SMMEs. For more on this I am joined by Julius Mojapelo, who is a senior executive at Saica’s public sector division. Julius, thanks so much for your time.

JULIUS MOJAPELO:  Thank you very much, Nastassia. It’s a pleasure to be here.

NASTASSIA ARENDSE:  Take me through the rationale behind this particular initiative, which is aimed at helping small and medium-sized enterprises?

JULIUS MOJAPELO:  I think for a while there have been calls for lowering the cost of doing business in South Africa, especially for SMMEs – especially as we have confirmed that we feel like they are the hope for better economic growth in South Africa. So I think government has responded and this is one of those ways in which the response has come through in lowering the cost of getting BEE certificates, which are necessary when one is doing business with government – and the private sector in some instances.

NASTASSIA ARENDSE:  So which small, medium and micro enterprises qualify for this?

JULIUS MOJAPELO:  The amended codes that became effective on May 1 2015 have created classifications for exempt micro entities and qualifying small enterprises. Those are SMMEs that have a total annual revenue of below R50 million. So those are the SMMEs that we are talking about in this space.

NASTASSIA ARENDSE:  As the public sector division within Saica, just tell me a little more about what it is you actually do.

JULIUS MOJAPELO:  The public sector division at Saica, apart from servicing members of Saica that are based in the public sector space, has got a big drive to boost capacity in the public sector to be able to give proper service delivery to the citizens. And one of the ways we do that is to collaborate with government institutions to spread the message about some of the services that are available to the public, which the public might not be knowledgeable about. So this is one of those ways in which we promote the fact that there are BEE affidavits out there. In a lot of times the SMMEs don’t know and they are actually paying for a service they should be getting for free.

NASTASSIA ARENDSE:  As the public-sector division within Saica, I know that you do host seminars every so often, and they are aimed at helping SMMEs. In terms of the issues that come across and land on your table, and some of the questions that are asked, perhaps, at the seminars, at the end of the sessions, what are the most common issues that you find that SMMEs still struggle with?

JULIUS MOJAPELO:  There are three issues that definitely come to a head. One of them is the issue of the knowledge deficit about the procurement process and its transparency. So a lot of SMMEs are saying we don’t actually know how this thing works. It takes too long and we don’t understand why it is taking so long to get the procurement process completed.

But two other issues. One of them is also the issue of being paid on time by government. So we do find that a lot of entities are saying we don’t actually want to do business with government because history has taught us that government generally takes longer to pay you than other clients.

And finally the issue of funding on the government side. There are a lot of grants available when you are dealing with government – from the dti, and from other development agencies – but the information is not available to the SMMEs at their fingertips.

So those are some of the things that we’ve picked up in our engagement with the SMMEs.

NASTASSIA ARENDSE:  This BBBEE confirmation is a step in the right direction in reducing the cost of compliance and doing business as a small business in South Africa. Where else do you think we can help SMMEs outside of this BBBEE confirmation?

JULIUS MOJAPELO:  I think one of the big areas we need is to really start providing regular support to the SMME because, if you look at an SMME when you start, it’s a one-man show and you don’t actually have the time to do all the functions that a business manager is supposed to be doing. So we need to be able to look at shared services for SMMEs, where we can have hubs where SMMEs can plug in to be able to have support services that are centralised to take care of a lot of the admin, so that they can actually focus on growing the business. A lot of SMMEs get caught up in the admin of calling clients, following up and not actually growing the business per se.

NASTASSIA ARENDSE:  Alright, Julius, thank you so much for your time.

JULIUS MOJAPELO:  It’s a pleasure. Thank you.

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