Innovative procurement policies for small, medium and micro enterprises empowerment and sustainable socio-economic growth in South Africa’s construction sector

Abstract

Background: Small, medium and micro enterprises (SMMEs) in the public sector construction are constrained by limited access to large-scale contracts, insufficient capital, and skills development barriers, this mostly being a result of traditional procurement policies that tend to favour established companies. This has limited SMME participation and exacerbated socio-economic inequalities.
Aim: This study explored how innovative procurement policies can enhance SMME participation in the construction sector, thereby promoting inclusive socio-economic growth and sustainability.
Setting: The research focused on the construction industry in KwaZulu-Natal province, South Africa, examining experiences of contractors and government officials involved in public procurement processes.
Methods: A phenomenological design was adopted using semi-structured interviews. Data were analysed through interpretative phenomenological analysis. The study was informed by innovation diffusion and inclusive growth frameworks to examine how innovative procurement policies enhance SMME participation in South Africa’s construction sector.
Results: The study found that existing procurement policies create barriers for SMMEs due to complex compliance processes, limited access to finance, and the dominance of large firms. Findings indicate that innovative procurement approaches such as e-tendering platforms, preferential scoring, and mandated joint ventures, have the potential of improving SMME participation in public sector construction.
Conclusion: Innovative procurement policies can significantly enhance SMME participation and contribute to a more sustainable, inclusive construction sector. However, systemic barriers remain and require policy and governance reforms.
Contribution: The study offers practical recommendations for designing procurement policies that drive sustainable socio-economic growth through SMME empowerment in the South African construction industry.