The Black Business Council (BBC) on Wednesday welcomed South African government’s commitment to strengthening policies for public procurement in a bid to support black economic empowerment, industrialization and development of small businesses.
Presenting his Budget Speech in Parliament, finance minister Malusi Gigaba said that the National Treasury would submit the Public Procurement Bill to Cabinet next month so it could be gazetted for public comments.
Gigaba said Treasury’s director-general would issue a directive to all government departments to pay their suppliers in 30 days, or risk being charged for financial misconduct.
The commitment to pay suppliers on time would result in a lot of small business emerging after being stifled by lack of working capital, BBC secretary general Geroge Sebulela said.
We have been taking about it, and for the first time we have seen the minister of finance taking 30-day payment quite seriously,” Sebulela said.
“Many businesses have closed because of lack of working capital. Therefore this is going to alleviate that particular problem.”
Sebulela said the lobby group also welcomed the one percent increase in value-added tax (VAT) from 14 percent to 15 percent, saying that Gigaba had done a good job in trying to satisfy everyone under difficult conditions.
“There was no way the minister could not look at VAT increase because there was a huge deficit on the revenue. Our worry was the huge exposure of government on guarantees [to state-owned enterprises] of about R170 billion and now has gone up to R220 billion, which means it would have been very difficult for SOEs to pay for suppliers if they were to require some funding,” Sebulela said.
“With that little turn that the minister has done, he was able to maneuver. It’s painful but that is the pain we can resist because he is trying to balance the fiscus position of government.” (via African News Agency)