Establish monitoring systems
Posted Friday, March 14 2014 at 09:14
I write to express disappointment with the way government agencies are suffocating SME’s in the economy.
The vicious circle of suffocation begins with the SME’s bidding for a tender. The bidding process begins with the SME applying for various clearances which include among others securing an income tax clearance from URA and a bid security from a financial institution especially where the bidder does not have a cash cover.
Securing the bid security from the bank, therefore, means the SME begins the process of interest accumulation on his/her account immediately the facility is approved by the bank.
Upon submission of the bid to the procuring entity, the SME then has to wait for an undefined period of time before the bid evaluation and award process is completed, yet in the meantime, not only is the interest on the bid security accumulating but also the volatile exchange rate is adversely affecting the SME’s quotation and remember given the competition and existence of foreign-backed investors who enjoy direct supplier credit, the quotations are very price sensitive.
Upon winning the tender, at times after anywhere between three- six months after submission of the bid, the SME has to mobilise funding from the banks to finance the procurement of goods and also obtaining a performance guarantee, a process which takes a minimum of one month in expeditious banks and on and on goes the process
The SME’s may, therefore, be forced out of business by the delay in receipt of payment and the garnishing effect of URA.
Delayed payments ripple adverse effects on relationships with; our landlord both for official work and residential premises, our employees as we experience high staff turnovers, low staff productivity and increased pilferage due to delays in payment of salaries, the general public, as delays in payment of bank facilities leads to advertisement or naming and shaming of so called bank defaulters in the news media which adversely affects our credit worthiness.
I, therefore, request the authorities that are to establish a payment monitoring system or a complaints desk in some already established and functioning institution e.g. PPDA or the Private Sector Foundation or whatever, where we can run and bring to their attention our plight without any fear of us being denied future business.