If you own a small business, 1 of the first things you need is customers for your goods or services. For many small businesses, a good source of those customers is local government, which deals with the daily provision of services indispensable to our daily lives at municipal level.

What opportunities exist for small businesses to become service providers to local municipalities, and how do you take advantage of them?

Structure of local government

The state is by far the biggest employer in South Africa, with around 2 million people serving in different levels of government. National government is also the biggest buyer of goods, services and infrastructure, as it tries to fulfil its mandate to provide quality services to all South Africans.

SA is divided into national, provincial, regional and local structures. Government at all levels procures goods and services, and the state tries to stimulate economic growth and job creation by doing business with small companies from the private sector. At local government level, municipalities make these decisions. They bring in local small businesses to provide daily services like water, power, sewerage and solid waste removal. 

Each municipality has a council that makes procurement decisions, and municipal officials who implement them. The municipal council consists of elected members who approve policies and by-laws for their area. The council must pass a budget and decide on service delivery and development plans for the municipality every year. The municipal administration officials, headed by the municipal manager, are responsible for employing and coordinating staff to implement all programmes approved by the council.

Doing business with local government

National government has established its Central Supplier Database (CSD) to register all business owners who are doing business with government. The CSD also applies to local provision of goods and services.

If you have a small business looking to provide local government with goods and services, you can self-register on the CSD, which currently has more than half a million prospective suppliers to government registered. To register a business that you own, you will need documents verifying your tax compliance, BBBEE compliance, supplier registration, bank details, and certification that you are not a tender defaulter, restricted supplier, or employed by the state.

For many years, SA has been trying to implement further reforms to make it easier for small-business owners to do business with government, with less bureaucracy and red tape. An important step in this regard was the implementation of a minimum wage some years ago. Other business reforms include making it easier to get construction permits, register business property, enforce contracts, and trade across national borders.

One of the most important of these reforms – the dependable provision of power – has proved itself beyond the reach of national government till now.

Opportunity knocks

The challenges facing government regarding the national grid and large infrastructure – such as the repair and maintenance of roads, water and sewerage systems – present many entrepreneurial opportunities. Recent moves by government to expand economic engagement with the private sector to provide such services means that small businesses that have the right profile and comply with procurement requirements are well positioned to secure contracts and future work streams – even if the political picture changes.

You can register as a small-business supplier to local government on the CSD. Nedbank offers strategic and financial advice to small businesses looking to grow their operations.