The government has a mandate to provide among many things; food, security, education, infrastructure etc. to enable a conducive environment for economic growth.
It has to source some of these services from the private sector due to its inability to offer all the required services; hence the private sector is encouraged to participate in public procurement.
1. Competition from larger firms with huge capabilities and experience than the SMEs.
2. Constraints in accessing information about market opportunities in public procurement in the public sector.
3. Low quality of goods and services from some SMEs due to financial constraints, lack of skilled expertise as compared to large firms who may be preferred by public institution.
4. Interference by middlemen who subcontract SMEs hence deeply affecting their profit margin.
5. The general perception that SMEs are not likely to deliver due to their small capacity makes them not get chances.
6. Most SMEs are unable to deliver large contract amounts due to the lack of funds and capacity.
7. Ethical issues such as corruption where SMEs are not able to bribe procurement personnel in order to get deals.
8. Some regulatory frameworks in the constitution and procurement act may not have places for SMEs.
9. Delayed payments by the government after providing services or goods.