Inclusive and preferential procurement strategies perceived socio-economic impact on South African mining host communities

Abstract

Procurement and enterprise development is one of the cardinal pillars within the South African Mining charter to economic growth and sustainable community development within South African mining communities. It is a pre-requisite for all mining companies to acquire mining licenses to conduct mining operations. Most mining companies operating within South Africa have inclusive and preferential procurement policies and strategies as part of the Department of Mineral Resources and Energy (OMRE) mining charter commitments and compliance. The study aims to investigate and gauge the effectiveness of those strategies and their socio-impact within the immediate communities mining companies operate. A quantitative research approach was undertaken to collect data from respondents residing within mining host communities, mining company employees and subject matier experts through an anonymous online research survey. From a population of 500 people consisting of mining host communities’ residence, mining companies’ employees and subject matter experts 413 responses received, 403 were usable and analysed. Through the investigation of the three hypothesised relationships developed, it was observed that inclusive and preferential procurement strategies are inclusive in their implementation by mining companies within mining host communities, and mining communities should be able to self-sustain post mining operations closure. The results have also presented a strong positive relationship between all three hypothesised relationships namely (i.) lack of education and entrepreneurship, (ii.) barriers of entry to the job market and entrepreneurship and (iii.) inclusive and preferential procurement strategies as moderating variables for socio-economic impact and community development.