The role of preferential procurement in promoting historically disadvantaged SMMEs : evidence from Ekurhuleni Municipality

ENGLISH ABSTRACT: Small, medium and micro enterprises (SMMEs) play an important role in the economic growth anddevelopment of any economy. They contribute to the goals of growth, equity, job creation andpoverty reduction in different ways. Given the importance of the SMME sector, governmentsthroughout the world including the South African government, have focused their attention on thedevelopment of this sector to promote economic growth, income distribution and employmentopportunities.Most SMMEs in South Africa fail due to a variety of reasons, including a lack of access to markets,which is one of the critical factors for the survival and growth of SMMEs. The government of SouthAfrica has introduced the Preferential Procurement Policy Framework Act (Act 5 of 2000) toaddress the challenge of market access for SMMEs. The Act is aimed at utilising the purchasingpower of government as an instrument of SMME development. SMMEs, especially those owned byhistorically disadvantaged individuals, are afforded an opportunity to access markets they wouldotherwise find difficult to penetrate.Given the importance of access to markets to SMMES, the study seeks to analyse the role ofpreferential procurement in Local Government with specific reference to Ekurhuleni MetropolitanMunicipality (EMM), as an instrument of promoting the development of historically disadvantagedSMMEs in South Africa.