Strategic Procurement Influence on Poverty Reduction & Wealth - - PowerPoint PPT Presentation

Strategic Procurement Influence on Poverty Reduction & Wealth Creation: A Case for Swaziland

Leading global excellence in procurement and supply

• Dr. M. Phillip Dahwa FInstLM, FCIPS, FCILT, FIOM,SFIIRSM

Head: Regional Development & Integration Email: m.phillip.dahwa@cips.org.za Tel: 0027824424889

Facts about Swaziland

• 1. Population
• 1.4 Million
• 2. Economy
• Receive +/- 90% imports from RSA
• 60% Exports through RSA
• Currency pegged to the ZAR
• Gvt. major funding from custom

duties from Southern African Customs Union

• Approx. 70% of population depend
• n subsistence agriculture
• Sugar & wood pulp – major foreign

exchange earners

Global Economic Developments

• 1. 2007, sugar industry changes leading to a 17% decline

in EU sugar prices

• 2. Customs revenues dropped due to drop in RSA

imports

• 3. 2009 Global financial crisis implications on world

economies including Swaziland major trading partner:

• Republic of South Africa
• European Union
• USA

Domestic Issues Affecting Economic Growth

• 1. Weak business environment that discourage private

investment

• 2. Weak fiscal policy that fail to prioritise public

investment

• 3. An overvalued exchange rate that hampered exports
• 4. Highest HIV and AIDS rate that weakened productivity
• 5. Private sector (SMEs) are underdeveloped
• 6. Foreign Direct Investment is low
• 7. Historical high level of Gvt. expenditure

Implications of the Prevalent Challenges

• 1. In 2011, Swaziland experienced a severe fiscal crisis

that set back economic and social development due to:

• Sharp fall in SACU receipts;
• Gvt scaled down on major infrastructure projects;
• Government limited access to borrowing;
• 2. Risks to inflation are on the rise
• 3. Slowed economic growth
• 4. Over 50% unemployment in the 15 – 24 age group

Cont..

• 5. High levels of inequality, poverty (63% of population in

2010); food insecurity (29% of population in 2010) and unemployment (29% of population in 2010).

• 6. Cuts in capital and social spending, undermining future

growth

• 7. Gvt arrears of about 4% of GDP at the end of 2011,

including debts to private contractors, the crisis has hurt an already struggling labour market and made things worse for small and medium enterprises (SMEs)

The Economic Recovery Strategy (ERS) In 2011

Objective is to “raise annual economic growth to 5% and create 30000 jobs by 2014” Key sources of growth:

• Foreign Direct Investment
• Domestic investment
• Human capital
• Infrastructure
• Trade etc

Where do we go from here?

• 1. Blame the government?
• 2. Blame foreign investors??
• 3. Blame the leadership???
• 4. Not a problem for procurement professionals????
• 5. Just wait and see what happens next come 2014?????
• 6. I don’t know??????

“Together We Can Help Improve The Situation”

Procurement Primary Objectives

To acquire goods, services and works competitively through contractual arrangement by the public sector:

• At the right price
• From the right source
• At the right specification that meets users needs
• In the right quantity
• For delivery at the right time
• To the right internal customer

Objectives of Strategic Procurement

• Supports socio-economic objectives of achieving

poverty reduction and creation of wealth:

• Facilitating the use of public sector for public ends
• Efficient utilisation of resources or fiscal discipline
• Better value for money – goods, services and

works

• Support the development of particular

marginalised industry, SMEs, groups and regions

A Case For Swaziland SMEs

• Local, regional and international supply market

development factors to consider.

• Africa’s perceptions “foreign good local bad” effects on:
• Wealth creation
• Export market
• Job creation
• Poverty reduction
• Sustainable development

Challenges Faced by SMEs In Africa

• High cost of doing business / too bureaucratic
• Statutory / administrative discrimination
• Unequal treatment / distortions in the competitive

business environment

• Fraud and Corruption
• Lack of capacity in the area of procurement
• Changing business environment
• Public and Private sector partnerships

Cont...

Public and private procurement practices of patronage and favouritism when awarding contracts. Critical Success factor:

• Commitment to professionalization of public

procurement

• Grow local talent in technical and leadership competence
• Deliberate attempt to close culture gap between public &

private sectors

Grow local procurement talent and capability

People Development

Leadership ‘Self-awareness to self- responsibility’ Technical ‘Quest for technical excellence’

Conclusion

• Efficient and effective private and public procurement

practices can therefore contribute to national development.

• Public procurement is the largest spending process for

governments and can influence socio-economic development

• Leadership / Political will to promote people

development in procurement technical and leadership competences

• Together we can!

Thank You!

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