Partnerships supporting SMMEs
During the initial stages of lockdown, SMMEs found it harder than ever to continue to do business, with a high percentage closing their doors. At the same time, the country’s unemployment rate skyrocketed.
There’s always been a focus on SMMEs as a panacea to the unemployment challenge, and there’s a growing focus on them becoming suppliers to government in the ICT space – as well as on the development of these SMMEs to enable them to do so.
The government has been advised by SITA to choose strategic OEM partners in the ICT space. According to SITA’s mandate, these OEMs need to be advisors to government and state-owned entities when it comes to ICT procurement. “The only way in which we can confidently advise on SMMEs as suppliers is if we empower them with the competencies they require,” says George Masemola, Business Unit Manager at Axiz.
SMMEs require tools and mentorship if they’re to meet the government’s lofty vision for them. Masemola says a partnership is required to empower SMMEs with the skills and expertise required for them to succeed. “OEMs, distribution partners, the public sector and SMMEs need to work together to achieve government’s strategy.
“The OEM, as the custodian of the skills, needs to have a process to filter those skills down to the SMMEs. A distribution partner can facilitate this skills transfer by identifying credible SMMEs that can acquire those skills so that, eventually, they can service the public sector. You could regard this as a partnership between the private sector and the public sector.”
The OEM’s relationship with government and SITA is key in that it provides solutions to state organisations that need them. However, there are two things in any public-private partnership that one must consider: firstly, SITA’s primary purpose is to make sure government buys technology cheaper and more efficiently than anyone else by negotiating good deals and preferential rates. Secondly, there’s the national objective of enhancing the development of SMMEs.
The challenge is that SOEs can’t identify qualified SMMEs to deliver on ICT. This is where OEMs are able to step in and connect public sector entities with SMMEs that will be able to successfully deliver the technology they require.
Emile Burger, MD of Micro Focus South Africa, says: “The OEM must support the public sector in these endeavours and part of doing so is to skill SMMEs, teaching them about product suites and offering, helping them to identify where they best fit in, focusing not just on government but private sector customers.”
A few models have been put in place to guide and assist government entities as they transact. For instance, there’s a model to assist government to ensure economy of scale across all state-owned entities: all government institutions must pay the same price for commodities. This freemarket agreement ensures all government and state-owned entities pay the same price for whatever they procure.
The freemarket agreement represents an obligation to make sure there’s a distribution of wealth among participating SMMEs or South African businesses. The decision to focus on supplying government through SMMEs is an unusual one, says Masemola, as OEMs traditionally have a tiering process whereby SMMEs can only participate in deals that fall within certain brackets.
“It doesn’t matter the size of the budget for the solution or service, by supporting SMMEs with the necessary skills and experience, the OEM should be able to have confidence in these SMMEs’ ability to deliver. This approach is necessary in order for SMMEs to grow.”
He says the OEM needs to be open in terms of how it responds to opportunities from a freemarket agreement perspective, but it needs to ensure it supports the successful SMME throughout the process.
As highlighted earlier, SMMEs need support from OEMs to accumulate both experience and references; all too often the challenge faced by SMMEs is that they don’t have either. With the OEM’s help, they can get skills, experience and references through opportunities in the private sector, which allows them to compete in the public sector space.
“All OEMs have strategic partners in the private sector space that want to partner with SMMEs, which can be leveraged to the SME’s advantage. This is the only way to empower SMMEs to be able to compete. It also assists the OEM to be more competitive as it will have more SMME partners able to compete in the public and private sector,” says Burger.
This type of initiative will assist SMMEs to become successful in their own right in the public and private space. The aim is to help them grow their business through a partnership model, collaboratively working on an approach to how to deal with government, ultimately benefiting the country and its SMMEs.
The bottom line is to establish the requisite capability and skills within South Africa’s SMMEs. This will translate to economic benefits whereby SMMEs will be able to support government in the ICT space and by so doing, generate revenue and create employment within the unemployed youth, which is the ultimate goal, says Masemola.
“The partnership model requires visibility so that people in the public sector understand the relationship and the benefits thereof. The end goal is to open the public sector market for SMMEs,” he concludes.