Enterprise and Supplier Development (ESD) exists purely to push South Africa forward in its transformation. More and more incubators of small and medium enterprises (SMEs) have come to the fore since the inception of B-BBEE, however, despite developing a strong SME sector, progress in terms of SME development remains moderate. Part of the reason is that there is little dialogue and collaboration or joint efforts for a bigger impact, says Sipho Pilime, a Programme Manager at The Hope Factory, in this month’s SmartProcurement.
Businesses are half way through 2015 and many conversations on various business, government and public platforms in South Africa have, understandably, an increasingly desperate tone when discussing the economic state of our nation.
This is where we currently stand as a nation:
- * South Africa has a Gini coefficient of 0.70, where 0 represents absolute equality and one absolute inequality. This places the country as the most economically unequal in the world.
- * Unemployment remains high, especially in the key productive ages of 25yrs–50yrs.
- * It is estimated that only10% of South Africa’s 51-million population contributes to tax revenue and to the social grants that benefit 16.5-million people.
- *Economic growth is suppressed, with the GDP at a mere 1.7%, falling well below the +5% level in the rest of the continent, and without much improvement forecast owing to the current energy crisis.
Many corporates use a methodology known as the balanced scorecard (BSC) to unpack how they are doing against certain criteria. The BSC in most instances pegs certain gateway criteria that must be achieved in order for one to be eligible for an annual increase and that much-coveted performance bonus. As things presently stand, SA’s scorecard at least from a socio-economic perspective, is totally unbalanced and in no way sustainable.
Simply put, South Africans would not be getting their annual increase let alone a performance bonus.
Again, referring to the BSC analogy within a work context, an important and accepted first step in turning around and improving performance levels is taking ownership of the undesirable situation. Encouragingly, there are signs that South Africa acknowledges the need for drastic change; for our own economic sustainability and our position as a major player on the African continent, South Africa cannot afford to continue doing business in the same way.
What is not clear, however, is what South Africa needs to do to achieve the much-needed turnaround.
Given South Africa’s historic context, the much-discussed triple socio-economic challenges of extreme unemployment, poverty and inequality have and continue to be along racial lines. It is inevitable, therefore, that solutions to address these issues require a tailored redistributive approach. Hence government’s introduction of the B-BBEE Act, which came into force in 2007.
At the outset, B-BBEE was intended to realise its benefit by 2017. South Africa’s economic landscape was expected to be transformed and fairly inclusive in 10 years. Sadly, this is not the case, says Pilime.
The South African economy has not significantly grown and as a result we now have the much-debated, newly-introduced amendments to the B-BBEE Act to better drive the compliance agenda through, among other things, increased focus on preferential procurement and supplier development.
Furthermore, although BEE is intended as a transformation tool, it is applied on the ground as a compliance tool. Without discrediting the merits of B-BBEE, what is needed to turn this ship around is society’s buy-in to transform the socio-economic landscape. Without the support of sincere and open dialogue and buy-in, legislation on its own will only drive compliance at a minimal level (can anyone say e-tolls?).
This requires a deeper and closer engagement and collaboration by all key stakeholders. They need to specify what holistic transformation is and thereafter identify attitudinal and structural obstacles that currently stand in the way of this.
At its core, transformation is an issue of the heart. One that requires all South Africans (government, the private sector, NGOs and ordinary citizens, both previously advantaged and disadvantaged), to engage in a constructive conversation so that we can all play a role to grow South Africa.
Here are a few recommendations which seek to spark thoughts and dialogue towards creating a fairer and inclusive society which South Africans can look up to:
- Strong leadership – South Africa needs strong, courageous leadership, particularly, but not exclusively, from government in leading the deeper transformational discussion. Given the breadth and depth of holistic transformation, it cannot solely reside in any one government portfolio. This naturally implies inter-ministerial collaboration as well as openness to allow external viewpoints.
- National level – there is a need to create effective platforms where all key role players come together and share ideas that will enable the country to combat the negatives on the nation’s BSC. A continual dialogue and practical initiatives are needed to achieve maximum impact.
- Private sector – this sector needs to embrace transformation and realise that the longer term benefits will lead to holistic empowerment, a bigger skills pool and greater economic participation that far outweighs the cost, inconvenience and pain of B-BBEE compliance.
- The ESD industry needs to work together. Let us share our wins and harness our strengths – this is a job too big and crucial for any one of us to do alone.
- Black-owned business owners – black entrepreneurs need to be afforded opportunities for developmental assistance, preferential funding, supplier trade terms and more for sustainable business growth. This will entail asharpening of one’s business skills and attaining to operational, financial and governance excellence.
For more information please contact The Hope Factory.
