By Vaughan Winiata, advisor and consultant with HTK Group, a business advisory group specialising in working with Maori businesses.
In December last year the Government said it will look for ways to use its buying power to accelerate the economic recovery for Maori businesses.
If that doesn’t get your attention, maybe this does, our Government currently spends $42 billion a year on procurement of goods and services and wants to spend more with Maori.
With that sort of spend coming from a place where payment is guaranteed it’s not surprising that small businesses clamber over each other for a slice of the pie.
It’s also not surprising that it’s an area where Maori small businesses have not performed well. Understandably, any Maori business wanting to be a benefactor of the government purchase order books and score a piece of that $42 billion pie needs to be proficient in terms of understanding how Government procurement actually works.
For those who do not know, procurement is the sourcing and purchasing of goods and services for business use from an external source. Procurement as a government agency function operates within a strict set of policies and guidelines that dictates the choice of suppliers, products, as well as the way suppliers are communicated with.
With all of the above in mind, and focus on Maori small business, cabinet ministers Nanaia Mahuta, Stuart Nash and Willie Jackson have spearheaded a new procurement target that requires at least five percent of the number of Government Agency contracts awarded go to Maori businesses from this year.
What defines a ‘Maori business’ you may well ask? From a government procurement perspective such businesses must have at least 50 percent ‘Maori’ ownership.
A key point to clarify is that the five percent target is for “the number of contracts” and not the value of the contracts.
This is a very moot point because it is far easier to comprehend (and measure) value, eg: five percent of the $42 billion annual government spend is $2.1 billion. To give the last sentence some context, the contract to pave the streets of Auckland and the contract to supply the toilet rolls for the council’s offices are technically two contracts, but will not be of the same value, and far from it.
With government agencies now mandated to take the five percent target policy into account when going to market for any contract, the opportunity is very real. So if you are a Maori business and want to have a crack at being a supplier to government, where do you start?
You start with Amotai. Who, or what is Amotai, you ask? Amotai is a government agency and best described as a ‘Supplier Intermediary’. In short, Amotai specialises in navigation of the bi-directional pathway between two potential partners being, Maori businesses looking to supply goods and services and the government procurement teams looking to buy goods and services.
The Amotai business model is very similar in many ways to the very successful Australian government initiative called ‘Supply Nation’ that began in 2009 and in the four year period 2015 – 2019 increased annual government spend with indigenous businesses from A$31 million to A$952 million. While the Supply Nation numbers tell an impressive story, I believe Amotai can support Maori businesses to blow the Aussie numbers clean out of the water. It’s my belief that a realistic long-term goal for Maori businesses is a 15 percent target by value slice of that $42 billion pie. For those of you (like me) who are not flash at arithmetic, that’s $6.3 billion.
As a Maori small business advisory specialist, I’ve followed Amotai closely for the past 12 months. From its initial start-up as one Auckland office, it has expanded to nine regional offices. At last count it was engaged with no less than 550 businesses, with some 35,000 Maori small businesses comprising six percent of the 550,000 businesses in the SME sector, it’s fair to assume that Amotai has room to grow.
With the dynamics of our economy experiencing massive change these past 12 months, there is no question that the Maori small business sector can, and will, play a key role in our economic recovery, but here is the rub.
We need to know where we are at right now and carefully track how we are performing. At this moment, no one in government can produce that data in a timely manner and back it up with any real authority. We need to get those cards on the table ASAP.
Hard discussions need to be had and the big questions need to be answered. As a number of government contracts, what does the five figure represent?
How are Maori businesses currently tracking (nationally and regionally) against that number? There is no reason why this shouldn’t be a public dashboard that shows simply where we are today and where we aspire to be.
I am not trying to tell anyone how to suck eggs, but that approach is good business practice. Without that information the five target may as well be pie in the sky.
So where from here?
First things first. If you are or know of a Maori owned small business, then the joining of Amotai as a member is fundamental. We at the coalface of the small business community must be more forthcoming in terms of engaging.
Amotai can only play its support role once we the Maori business owners and operators take the first steps to introduce ourselves. The bigger and better the Amotai database becomes, stronger is the proposition to offer the government agency procurement teams.
The wider small business sector of 550,000 businesses is historically notorious for its fragmentation and lack of cohesion, and it has never had a known leader or clear leadership, for which I have advocated for in past LG magazine columns.
In this regard, Amotai presents a real opportunity for Maori small businesses to both debunk that myth and play a pivotal role not only in the wider small business sector, but also in the recovery of our wider economy.