Advantages Of Local Procurement

Introduction

1.1 Local procurement is when a company or government gets people, goods/products, equipment, services and suppliers from a local source. Its main objective is to create business opportunities so that local companies especially SMEs can benefit. This also helps local companies to be competitive and profitable.

The Local procurement accord was signed in 2011 by various stakeholders .In June 2014 the deputy president Cyril Ramaphosa reiterated the local procurement accord. The accord states that the government is setting itself a target of procuring 75% of goods and services from South African producers with the main aim of boosting the local economy and create job opportunities.

• Leveraging public procurement is one way the government

(Ecomonic Development Department of South Africa , 2011)

Advantages local procurement

• It has been found that SMEs contribute to about 51% to 57% of the South African economy, which makes them an important factor in the economy.

• Obtaining Goods and services locally will highly benefit our small business enterprises. They will be able to grow and make their businesses profitable.

• Buying locally will make it easier and cheaper for firms to inspect their suppliers and build ling trusting relationships.

• When we buy locally the money rotates in the country and grows the economy. More jobs will be created as entrepreneurship will blossom.

• Firms can get their products at a shorter time and cheaper costs.

Yes I do believe local procurement can be achieved because of the mechanisms that are put in place to help SMEs grow. The deputy president Cyril Ramaphosa indicated that there will be an increase in getting affordable lending and removing access interest rates. Based on the Accord procurement document and the preferential procurement policy, one can see that the 75% target can be

• The implementation of the preferential policy must be taken serious. Buyers must be trained and acquire skills in the preferential procurement area.

• Firms must be very strict and keep to their payment policies because when SMEs are not paid on time this reflects very badly to the SMEs reputation and they are likely to lose their customers or shutdown.

• Most SMES take up loans to start up and stay afloat. When the purchasing function does not pay on time they are likely to incur interest on their loans, be listed as bad payer and going forward will not be able to borrow from banks because of a bad reputation of not paying.

• Large firms sometimes prefer to deal with large suppliers as they do not trust SMEs to give them the required quality. Larger firms needs to start trusting Small businesses and help develop them

• Tenders and contracts documents must be made simpler and also easily accessible. There is a lot of legislation and complications with contracts that makes it hard to fully understand the requirements of a tender.

• Contract terms must be design to help the target participant-i.e