South Africa has legitimate reasons to scrutinise public procurement. Corruption, inflated pricing, political interference and project disruption have undermined trust in the system and need to be addressed. But the focus on procurement abuse can also overlook another challenge: capable smaller businesses continue to face significant practical barriers to participating successfully in public procurement.
Joshua Kadish | image supplied
Two of these barriers occur at opposite ends of the process. The first is finding and accessing relevant opportunities. The second is securing the working capital needed to deliver once a contract has been won.
Both matter if South Africa wants a procurement system that attracts a broad and competitive pool of credible suppliers.
Tender information remains fragmented across multiple portals and sources, making it difficult for smaller businesses without a dedicated bid team to identify and track relevant opportunities. While much of this information is technically public, that does not necessarily make it easily accessible. Smaller businesses often have fewer resources to monitor procurement activity, assess which opportunities are suitable and prepare bids within the required timeframes.
The effect is that capable businesses can be excluded before they have had the opportunity to compete.
Winning a tender presents a different challenge. An SMME may have the skills, experience and capacity to fulfil a contract but still lack the working capital required to execute it. Materials may need to be purchased, employees paid, equipment secured and subcontractors settled well before payment is received from the public entity.
According to the 2025 FinFind Access to Finance Report, SMMEs employ 60% of South Africa’s workforce, contribute close to 40% of GDP and create 75% of new jobs. Yet South Africa continues to face a R35bn SMME funding gap, with fewer than 20% of SMMEs having ever accessed formal business finance.
Many viable SMMEs struggle to access working capital because they do not meet conventional lending criteria. Even where a business has secured a purchase order or contract, with a genuine customer and an identifiable source of repayment, limited collateral, irregular cash flow or a short trading history can still prevent it from securing finance.
This has consequences beyond the individual business. If capable SMMEs cannot compete because they cannot finance the cost of delivery, the pool of suppliers able to participate meaningfully in public procurement becomes smaller. A procurement process may be open to smaller businesses in principle, while in practice favouring companies with sufficient cash reserves or established credit facilities to fund delivery themselves.
Government payment delays compound the problem. Public entities are required to pay valid invoices within 30 days, yet National Treasury continues to report significant non-compliance. At the end of the third quarter of the 2025/26 financial year, 90 856 invoices older than 30 days, worth R15.5bn, remained unpaid.
For smaller suppliers operating with limited reserves, delayed payment can affect their ability to pay employees and suppliers and leave them without sufficient cash to take on their next contract. The result can be a cycle in which businesses that should be building capacity through public-sector work instead become financially constrained by it.
This suggests that we need to think differently about what successful SMME participation in public procurement actually means.
Awarding more contracts to smaller businesses is not enough if those businesses struggle to find appropriate opportunities, cannot finance the contracts they win or face lengthy delays in getting paid after completing the work. Procurement policy should consider the full journey from access to an opportunity through to successful delivery and payment.
Finance cannot compensate for corruption, poor project management or an incapable contractor, nor should easier access to funding prop up contracts that should not have been awarded. But where capable businesses are competing for legitimate work, removing unnecessary barriers to participation can strengthen the procurement system itself.
Making tender information easier to find and navigate would give more businesses the opportunity to compete. Expanding access to appropriate working-capital finance against credible orders would enable more capable suppliers to deliver. Paying suppliers within the required period would give successful businesses a better chance of taking what they have earned from one contract and using it to compete for the next.
These issues should therefore concern more than SMMEs and their funders. They affect the depth and diversity of the supplier market available to government.
A procurement system in which only businesses with the resources to find dispersed opportunities, fund delivery from their own balance sheets and absorb late payments can participate effectively is unlikely to be as competitive or inclusive as it could be.
The objective should not simply be to award more tenders to SMMEs, but to create the conditions in which capable businesses can find and compete for legitimate opportunities, finance the work, deliver successfully and get paid on time. Removing these barriers would broaden the pool of credible suppliers competing for public work and help make procurement more competitive, inclusive and effective.
