Policy change benefits local small businesses
Locally owned companies to get preferential procurement opportunities
REALISING the need to encourage the growth of small local businesses, the City of uMhlatuze has amended its procurement policy to ensure fair opportunities for all.
In July last year the council took a resolution to amend the municipality’s Supply Chain Management (SCM) policy with the aim of addressing the issue of empowerment.
The changes will see foreign-owned companies partnering with local businesses that will hold at least 40% of project share.
The changes will also see the municipality spending 40% of its annual procurement budget on historically disadvantaged individuals (HDI), which include women, youth and disabled people.
HDIs will also be eligible to bid on tenders arising from the remaining 60% of the procurement budget.
A competitive bidding process will encourage increased participation of local businesses by implementing ‘unbundling’ strategies, which will see, for example, the construction of 10 bridges carried out by 10 different contractors.
To achieve the 40% spend and support community-based vendors, uMhlatuze’s policy changes dictate that non-local large companies that win tenders must allocate 25% of the project to local emerging subcontractors that are considered HDIs.
Similarly, if a tender of R10-million and above is awarded to a well-established black contractor, 25% of the project is to be subcontracted to HDIs.
This 25% is to be divided between two or more subcontractors.
To minimise the risk to contractors needing to subcontract to HDIs, the City of uMhlatuze could nominate appropriate subcontractors from its database of community-based vendors.
To this end, all local contractors are urged to register with the municipality or update their details.
All companies that register with the municipality are thoroughly vetted to ensure they are indeed local.
uMhlathuze Municipality’s Ntokozo Khumalo, Manager: Supply Chain Management, will later in the year report on the progress and effectiveness of these changes.
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