Black businesses are set to benefit hugely from the Gauteng government as the state seeks to reverse and deracialise the economy by bringing historically disadvantaged groups into the mainstream.
Gauteng Premier David Makhura on Monday during his State of the Province Address said his government would be spending 91 percent of its procurement budget on black businesses.
"The Gauteng provincial government has reached a critical point wherein 91 percent of our procurement budget of R46 billion over the MTEF [medium term expenditure framework] is directed to empower black people, women, youth and people with disabilities. Of the 12,000 companies that conduct business with our provincial administration, 10,000 of them are HDIs [historically disadvantaged individuals], including township enterprises," said Makhura.
Makhura's announcement transcends the national government's call for 30 percent to be set aside for black SMMEs in government procurement. That policy was seen as a way to inject much-needed growth in the SMME sector while transforming and shifting the control of the economy from majority white people.
He said government was now moving towards assisting black businesses and township enterprises to become more sustainable by participating in the other sectors of the economy. That will include assisting and encouraging black firms and township enterprises to get involved in localisation and manufacturing initiatives so that they can produce goods locally and sell them to domestic and foreign markets.
Makhura laid out how the province would convince large businesses to assist smaller black businesses.
He said the province would be "setting conditions for big companies doing business with government to sub-contract at least 30 percent of the main contract to qualifying black firms and township enterprises in a manner that ensures their meaningful participation, [and] strengthening our supplier development programme to ensure that new and emerging black firms benefit from major contacts in the private sector in terms of skills and technology transfer".
Makhura said it was important for black business to build capacity and manufacture goods themselves to ensure that the money being paid to them doesn't flow out to other businesses that are white owned.
"The principal challenge is that most of the HDI groups tend to rely on sourcing capacities such as materials, skills, and finance from established white businesses or importers, thus transferring the empowerment away from themselves. As we rollout the R42 billion infrastructure budget over the next three years, we need to ensure that there is a decisive shift to the true empowerment of black firms so that they become more sustainable and more transformative so that they can contribute to industrialisation and local manufacturing initiatives," he said.