Caught in the tender trap

Are investors reluctant to do business in South Africa because they are afraid of suffocating in red tape?
WHY ARE SO many investors, both local and abroad, reluctant to do business in South Africa? The July edition of the Aida Parker Newsletter suggests that the reason is they fear that, once in operation, they could suffocate in mountains of red tape. It quotes as an example a friend whose company recently tendered on a contract to supply some small items to Vodacom.

The CEO received a 40-page questionnaire from Brian Heineberg & Associates, described as quantity surveyors and development consultants. The document, entitled "Economic Empowerment Goal Declaration", asks these highly intrusive questions:
  • What is the enterprise's annual average turnover (excluding VAT) during the lesser of the period for which the business has been operating or the previous three years?
  • Insert personal income tax number if a one-man business and personal income tax numbers of all partners if a partnership;
  • List all partners, proprietors and shareholders by name, identity number, citizenship, PDI status and ownership and voting percentage;
  • Did the firm exist under a previous name? If "yes", what was its previous name? Why was it changed? List the previous owners/partners/directors;
  • Identify any owner or management office bearer who has an ownership interest in another firm;
  • The sum of the average annual turnover of all business concerns which engage in the same category of business;
  • Identify any owner or management official who is an employee of or has duties in another business enterprise;
  • How many permanent staff members are employed by the firm?
  • How many staff members have joined the firm in the last six months? Full-time? Part-time?
  • List the major items of equipment, plant and vehicles owned by the firm. Present financial liability (Rands);
  • List the personnel or firms who provide the following services: accounting, legal, auditing, banking, insurance;
  • Identify any amounts of money loaned to your firm, indicating the loan source, date and amount;
  • List the four largest contracts/assignments completed by your firm in the last three years. Work performed? From whom? Contact person and telephone number? Contract/fee amount?
  • Provide the names, identity numbers, functions and monthly contractual hours of all Executive Directors and identify who are Previously Disadvantaged individuals;
  • Set out the names, identity numbers, functions and monthly contractual hours of all senior managers and identify who are Previously Disadvantaged individuals;
  • A brief job description should be provided in respect of each Senior Manager.

And so it goes on. Page after page of endless, often incomprehensible, questions, presumably designed to meet the requirements of the highly controversial Labour Relations and Basic Conditions of Employment Acts.

As the CEO comments: "What I receive from the sale of simple, non-essential items could conceivably be less than the bill submitted by the monitoring company. It must be a really sick mind that devised many of the questions. As the supplier, the only logical question I have is whether the purchaser has the funds to pay my account."