SME Procurement & Funding — Where the Two Worlds Collide

Winning a tender and being able to pay for the stock to deliver it are two different problems, and Lerato Sebata says too many small businesses meet the second one only after the award letter arrives.

Where procurement ends and funding begins

Sebata, who founded ROI Integrated Group in 2016 while still employed, told host Lungile Msomi that procurement and funding are not separate conversations but complementary ones. Procurement qualifies a business to supply; funding is what lets it buy the materials and fulfil the orders. Her firm works both with the buying side, advising procurement teams, and through an enterprise and supplier development division that prepares small suppliers to bid.

She sees her role as a convener. Buyers and suppliers, she said, do not speak the same language, so a tender is often misread by the very companies meant to answer it. "Somebody had to do it," she said of bridging that gap.

Financial statements come first

Her main advice is to prepare the money side before bidding. Financial statements show whether a business is liquid and profitable and whether its working capital can carry an order. Funders ask for the same documents: purchase order financiers want to know the business can repay them and that the client will pay.

She added that the vetting is the same whether a lender is looking at a multinational or a young small company, which she thinks works against SMEs. Reform, in her view, has to start with regulators deciding which checks really matter for small firms.

The experience trap

Tenders are scored on points, and experience earns them. A newcomer competing against bidders with five or ten years of reference letters and proof of work will keep losing. "It's a method of proving that you can," Sebata said, but the system rarely lets a first-timer start.

Some tenders also remove bidders at qualification when their financial statements are missing, and an order can grow overnight. A cleaning-supply contract, for example, might jump from 50 units to 500. She pointed to the set-aside provisions in the new procurement law as a possible fix, but said they would only bite if departments are held to targets, rather than being awarded preferential points as they are now.

Who is left behind

She also criticised empowerment programmes that, in her view, benefit the incubators running them more than the businesses inside them, many of which are years old and need targeted help rather than a start-up curriculum. By sector, she said ICT is held back by reluctance to share ownership, mining is weak at measuring results after a project ends, and the energy sector is still dominated by long-established companies.

Both bias and structure play a part for women-owned businesses, she said, with women in technical sectors having to prove themselves twice as hard on paper. She also noted that information is a barrier: a telecoms company's supplier programme drew few applicants until it was properly advertised, after which it received more than 500 applications in a day.

Growing beyond one buyer, and what comes next

On expanding into neighbouring markets, Sebata said buyers should welcome it: a supplier with other clients is a lower risk than one that depends on a single customer, and the buyer in turn avoids relying on one supplier. Her stated aim for the next five years is to "democratize procurement knowledge" so that more businesses understand what it takes to qualify.

She also described the Tender Summit as a platform where buyers, policymakers and suppliers meet, alongside purchase order funders, invoice financiers, development funders and Sanlam's business-growth funding, with sessions on using AI for bid submissions and a pitch competition.

Mentioned in this episode

• Tender Success Summit: The event Sebata describes, where buyers, funders and suppliers meet.
• Why South African SMEs are locked out of tenders they could win: Our own look at the access barriers discussed here.
• Tender compliance checklist every SME needs: What bid evaluators check before they score you.
• National Treasury: The regulator Sebata says must enforce the procurement rules.