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Tender awards don’t reflect demographics

Monday, 24 August 2015   (1 Comments)
Posted by: SAFCEC Communications
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Tender awards don’t reflect demographics

The beneficiaries of tenders awarded by the KwaZulu-Natal government does not reflect the demographics of the province, but contrary to expectations in some quarters, Indian businesses were not claiming the lion’s share.

These are some of the findings of a task team formed by Premier Senzo Mchunu in 2013 to analyse provincial tenders awarded since 2004. The appointment of the task team – comprising Economic Development MEC Michael Mabuyakhulu and then Finance MEC Ina Cronje – was sparked by concerns raised by the pressure group, Mazibuye African Forum.

The forum had claimed Indians controlled the provincial economy and called for their exclusion from affirmative action and black economic empowerment. Addressing the procurement indaba in Durban last week, Mabuyakhulu said the study had revealed the enormity of challenges in the awarding of tenders. “The study, for example, showed that in 2013/14 the province spent just over R1 billion on 100% African-owned companies. This equals 30% of the total procurement spend,” he said. He also said R1.2bn (34%) was spent on white-owned companies, while Indian-owned companies pocketed about 33% of the procurement spend.

But, Mchunu, also speaking at the indaba, said spending on African-owned companies had declined in 2013/14, by 8 percentage points from 38% compared with the previous financial year, while spending on their white counterparts increased by 8 percentage points from 26% during the same period. The spending on Indian-owned companies increased from 32% to 33%, Mchunu said. No explanations were given for the changes, nor could the Daily News get a copy of the entire report. “This is the provincial government only. We have not come to eThekwini to check what is happening,” he said, adding tender analysis was also not done in other municipalities in KwaZulu-Natal. Mabuyakhulu said the awarding of the tenders in three financial years showed that there was no relationship between expenditure on tenders and provincial demographics.

An ideal world

“In an ideal world, one would expect procurement spend to reflect the demographics, but, of course, given the history of South Africa, the current state of affairs is no surprise. “There are fundamental reforms that need to be implemented in order to change the status quo,” he said.

Mchunu shared Mabuyakhulu’s sentiment, saying: “We need to address this matter as quickly as possible.”

The 2011 census showed that Africans made up 86.8% of the KwaZulu-Natal population, whites 4.2%, Indians 7.4% and Coloureds 1.4%.

Mabuyakhulu said it would be the “height of expediency” to blame a certain racial group, particular those previously oppressed, for the state of affairs. “What this imbizo should be seized with is to devise radical means of ensuring that procurement expenditure is reflective of the demographics of the country and our province, taking into account our sad history.” He added that if the matter was not addressed, it was likely to be hijacked by those who may have other interests. “Recklessness in dealing with this disconnect may threaten the very economy that we are trying to grow at an accelerated pace,” Mabuyakhulu told the indaba.

Mchunu urged the indaba to come up with mechanisms to strike a balance in equitable distribution of tenders in the light of the study’s findings.

“We have to change the procurement system such that expenditure does reflect demographics in the province. We have to do that,” he said.

Source: IOL News Article


Nigel Cornfield says...
Posted Thursday, 09 June 2016
This is faulty logic. The issue to be addressed is not how to award tenders to balance a supposed demographic inequality but rather how to increase the competency of the previously disadvantaged to enable them to provide the services efficiently and economically. You can not redress a competency problem by procurement policies.

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