By Catherine Wijnberg, CEO Fetola
The forecast is that by 2030, as much as 90% of new jobs in our economy will be created by small, medium and micro enterprises. In reality, though, fewer than 30% of all SMMEs survive beyond three years – so there is a gulf between this dream of job creation and the reality of its achievement. But whose problem is this?
We already spend billions of Rands on enterprise & supplier development (ED & SED), so it’s not a budget issue. Moreover, hundreds of corporates and multinationals currently meet the minimum requirements of the BEE scorecard, so it’s not a compliance issue.
Is it perhaps an attitude problem? Or a problem of misunderstanding?
An attitude problem is easy to spot. That person or company that merely ticks the box and gets the points without really considering the long-term impact or benefit of the exercise, or worse – those that try to cheat the system and get the points anyway.
The problem of misunderstanding though is that we don’t know what we don’t know.
When it comes to supplier development – essentially the practice of nurturing and supporting new and emerging black-owned suppliers in the supply chain – there are willing corporate and government role-players wanting to make a difference, and we have eager SMEs wanting to do business with them, but the gap between the two is wide. It is a gap that most people are unaware of. It is a gap of understanding, of expectation, and behaviour.
The challenge is two-fold. Firstly there is a huge power imbalance between the corporate world and that of the small and growing business. They also speak a different language, have very different systems and ways of operating. This often leads to a mismatch of expectations – with small businesses excluded from the supply chain and feeling resentful, and corporate buyers frustrated by low levels of performance of small businesses, and under pressure to squeeze these unsuitable providers into their buying schedule.
The net result is that supplier development often becomes a frustrating disappointment; a begrudging compliance exercise with limited returns, instead of an incredible opportunity for business to make a lasting and positive impact on our economy and our country.
In truth, few really understand these challenges or how to resolve them, and only a handful of people and companies have begun to actually deal with them head-on.
What is clear is that when it comes to investing in emerging small enterprises, we can no longer afford to simply spend the money and tick the boxes to satisfy BEE scorecard requirements. Business needs a long-term strategy, and a firm focus on investing their ESD funds effectively to create a brighter future for themselves, and every South African. Collectively we have the resources to generate real, lasting growth of small businesses, a greater circulation of wealth amongst the population, and a thriving equitable economy.
As someone whose career and calling has been the development of the small business sector, I am proud to be part of the inaugural Business Day Supplier Development Awards. Sponsored by ABSA, the Awards aim to acknowledge individuals and organisations who are bridging this divide and implementing ground-breaking supplier development programmes that make a real impact.
To date, more than 400 entries for the Awards have been received, including significant players like Nandos, Sasol, Sun International, De Beers, Old Mutual, Massmart and the Distell Group. This suggests that supplier development is being taken seriously in South Africa with corporates, parastatals, government institutions and smaller Qualifying Small Enterprise (QSE) businesses looking well beyond the scorecard to do the right thing.
Transformation of a supply chain works when an attitude of supporting and uplifting others is deeply embedded in the company culture, and influences decisions in every aspect of the business, not just supplier development. These organisations understand the importance of the whole economic and social ecosystem where small businesses and large corporates work together and thrive. Sustainable growth, lasting empowerment, and positive benefits for all stakeholders is possible. It’s time for big business to make a big impact.