A lack of common understanding and a comprehensive national empowerment strategy are hindering the accelerated implementation of appropriate national preferential procurement policies in South Africa.
Addressing delegates at the Black Management Forum`s annual conference in Johannesburg today, Telkom CEO, Sizwe Nxasana said the process of righting past wrongs required a "systematic and genuine" empowerment strategy to bring black people and others who faced discrimination into the mainstream of the economy - including into ownership, procurement and training relationships with State-owned enterprises (SOEs).
"Empowerment is not only about immediate economic gains. It is also about where we see ourselves as a country 10, 20 or 50 years from now, and part of the challenge is to begin articulating that vision," said Nxasana.
He said that, in sharp contrast to the undue focus on price that the Preferential Procurement Act of 2000 was based on, Telkom had adopted a holistic empowerment strategy to focus on invalidating the barriers that disadvantaged groups face.
"We at Telkom recognised the power of affirmative procurement way before the enactment of the Preferential Procurement Act, and have developed an affirmative procurement programme that works.
"We have demonstrated that it is possible to yield tremendous economic empowerment and balance this against the need to procure quality and suitable products that allow us to deploy our products and services into the market quickly enough to create value for our shareholders and meet the needs of our customers," said Nxasana.
He explained that Telkom`s procurement policy aimed to make it easier for black companies to do business with Telkom, and included black economic empowerment as a criterion in adjudicating all submissions from suppliers. It also encouraged the development of entrepreneurship and business skills within the black community, and provided incentives to suppliers with acceptable economic empowerment policies and track records.
"A milestone during 1997, was the establishment of a black supplier network. More than 300 black-owned suppliers were interviewed and the results were recorded in a database set up for this purpose. An important strategic supplier concluded a shareholding agreement with economic empowerment interests exceeding R250 million during that year," said Nxasana.
He added that Telkom was also providing training for black businesses that were new suppliers, or had the potential to become Telkom suppliers. The training focused on three main areas: business skills (including bookkeeping, marketing and pricing), quality training and productivity.
"Our country finds itself with unique and difficult legacy problems that call for innovative solutions. Empowerment initiatives are less effective if they are not coupled with development initiatives aimed at improving their capacity to do business, and it makes business and economic sense to invest in the development of emerging suppliers," said Nxasana.
As one of the major communications operators, Telkom`s supplier development programmes supported its aim of developing a representative and vibrant communications sector, and increasing the capacity of local suppliers to meet the growing demand for products and services created by the expanding needs of South Africa`s economy.
"An advanced communications sector has tremendous benefits for our economy as this will help create the much needed jobs as well as relieve pressure on our foreign currency requirement," said Nxasana.
Telkom` total spending with BEE companies rose to R3 billion in 1999/2000, reflecting a year-on-year increase of 100%. For the first time, the company spent more with black SMMEs than with large suppliers, although both enjoyed substantially increased business with Telkom from the previous year.
Of the R3 billion spent on economic empowerment, R456 million went to purchases from black SMMEs and R435 million to large black suppliers. An amount of just over R2 billion went to suppliers with significant economic empowerment programmes.
Nxasana said that a coherent national strategy needed to be implemented to speed up the pace and implementation of appropriate and national preferential procurement policies within a black economic empowerment framework.
"Empowerment strategies should be integrally bound with strong commitments to constant evaluation and measurement of impact, followed by further innovation and changes. The commitment should also come in the form of discipline and focus on the part of black business itself," he said.
Share
