Suppliers may lose out after State cuts costs

Finance Minister Pravin Gordhan

Finance Minister Pravin Gordhan

While most South Africans may have applauded Finance Minister Pravin Gordhan for introducing strict measures to curb excessive spending by government, some business owners have realised that they are about to lose the government contracts they landed in the past.

Recognising that there has sometimes been flagrant spending by some government departments, be it at national, provincial or municipal level, Gordhan announced in his recent Medium Term Budget speech that a series of cost-cutting measures would now be implemented at a logistical level.

Expenditure on cars, business class flights for numerous officials, catering, entertainment, accommodation and alcohol purchases will come under Cabinet’s microscope in the current financial year and beyond.

And, it appears to be with good reason.

In one example of over-expenditure, Eastern Cape Education Department officials were allocated R53.7 million to cover catering costs for the current year.

This in a province where some schools do not even have the means to provide education, let alone remain open.

In all, R87.4 million across 12 Eastern Cape departments has been allocated for catering.

In another example, the KwaZulu-Natal government – through the Office of the Premier – had contributed R130 000 to costs relating to the venue and equipment hire as well as catering for a breakfast held at Sibaya Casino and Entertainment World.

Gordhan said officials would seriously need to explore using government facilities rather than outside venues for meetings.

However, for many of the business owners who provide these services, the logistical functioning of government has been pivotal to sustaining their businesses, and they believe Cabinet should recognise this fact.

For Thando Lucas, of Thando’s Guest House, Catering and Hiring in King William’s Town, her close proximity to the Eastern Cape government headquarters in Bhisho has placed her in an ideal position to assist provincial government officials.

Since moving to King William’s Town from Port Elizabeth more than 40 years ago, she has catered to every need of visiting government delegations, and has built up a sterling reputation as a result.

“We are always receiving officials from Mthatha and outlying municipalities who have to travel to Bhisho for government business,” she said.

“Some stay here for more than two weeks at a time. I also hire out equipment for conferences and have done a lot of catering over the years. I meet every demand, from drinks requests to giving them secure parking, and so I charge them accordingly.”

Lucas said she charged visiting officials less than R900 a day – which included three meals a day – which she believed was very reasonable in the current economic climate.

“I think the minister is right to crack down on people who are abusing finances, but for me the visits of these officials are essential for my business. They are getting value for money.

“In fact, the local government has even changed the way they do things. In the old days, officials would arrive at a place and didn’t know if it was dirty or whether it was comfortable. Now they send someone ahead of time to make sure a guesthouse is good. We are thankful to that, because it keeps up standards. I need that business a lot.”

For this reason, she cautioned Cabinet not to forget that government’s partnership with her business was of benefit to all.

Damien Anderson, of the Green Room design and events management company, oversaw last month’s International Mohair Summit in Joubertina.

As he points out, events such as these as well as local government conferences are essential to the economic growth of small towns like Joubertina.

“We have worked with government on advertising campaigns, be it directly or indirectly, for events like these, so the minister would do well to remember that the government officials who support these events are necessary to develop the local economy,” he said.

“Obviously we all like to see government attempting to do away with wasteful spending, but you also have to be realistic.”

“At the government events we have attended, you always have to overcater in whatever you do because things sometimes do go very quickly.”

He said as far as advertising cost-cutting was concerned, a failure to outsource to reputable businesses could backfire as everything would have to be done in-house and there may not be the necessary expertise or manpower to handle this component.

According to the minister’s spokesperson, Phumza Macanda, it was unclear at this stage how small businesses would be affected since guidelines for cost-cutting measures still needed to be put in place.

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