Western Cape Enterprise and Supplier Development (ESD) Partnership

The Western Cape ESD Partnership – is a partnership created by Accelerate Cape Town, Catalyst for Growth, the City of Cape Town, and the provincial Department of Economic Development & Tourism – as an initiative where corporate and government ESD practitioners may cooperate and share learnings. The Western Cape ESD Partnership aims to drive higher levels of collaboration between corporate executives responsible for ESD, buyers of Business Development Services (BDS), and officials managing entrepreneurship programmes. In the first of a series of ongoing conversations, we heard from B-BBEE Commissioner, Zodwa Ntuli and CEO of ASISA, Leon Campher.

In order to set the legislative context to the WC ESD Partnership, B-BBEE Commissioner, Zodwa Ntuli, opened the inaugural session. She indicated that B-BBEE is very broad and consequently can become extremely complicated at the implementation level. She highlighted the importance of initiatives like the Western Cape ESD Partnership, and said that through these conversations business and government become aligned, ensuring that B-BBEE is executed in the right way; i.e. it moves beyond a tick-box exercise and truly aids in redressing the imbalances of the past, creating economic inclusion for all. Zodwa reminded us that B-BBEE will continue to be in place for as long as the inequality in our country exists, and she said that it is up to all of us to accelerate meaningful transformation in order to alleviate the tension our society is experiencing.

At the inception of the B-BBEE Commission in 2016, a great amount of focus was placed on quality of initiatives. With quality top-of-mind and a focus on true empowerment, the Commission believes that B-BBEE will deliver on its intention and ensure that black South Africans are able to make an impact and meaningful contribution to business. Zodwa said that fronting has become more complicated and she urged corporates to steer clear of this, as it is enormously disempowering and serves to exacerbate inequality rather than redress it. Shifting focus to desired impact, Zodwa said that it is not the role of big business to place restrictions on the ESD beneficiary, particularly with respect to restraint of trade clauses – these limitations only stifle the SME and severely impair sustainability. Business should focus on implementing a long-term, results based ESD programme that will encourage growth, align the SME to the corporate supply chain and in doing so, improve sustainability of the SME.

With respect to skills development, Zodwa said that this is a crucial part of B-BBEE, and she shared with us that the codes have been amended to give effect to non-staff members – including SME supplier staff as beneficiaries. There is no shortage of funds to help with the empowerment of black South Africans, however, there is a lack of legitimate programmes through which these funds can be deployed. Referencing 2017 statistics, Zodwa said that several JSE listed companies were not capable of meeting 50% of their targets. All support and investment in ESD should be based on evidence of success, and we should become ever more discerning with respect to intermediaries we choose to appoint to assist in our ESD programs.

Speaking to trusts, Zodwa expressed concern that companies are guilty of increasingly sophisticated fronting activity. Of particular concern was the manner in which trusts are manipulated, as the level of control that is being exercised is being diluted, with black owners far removed from key decision-making roles. Corporates should not exploit vulnerable SMEs and should instead encourage SMEs to proactively enter their ESD programs where they can be adequately supported and grown.

Zodwa concluded by reminding the audience that government also had a responsibility to implement B-BBEE policy for itself. The State is often guilty of circumventing B-BBEE policy despite its status as one of the largest procurers of goods and services in the country.

We then heard from one of the largest ESD intermediaries operating in SA, ASISA CEO Leon Campher, who said that with ESD being a combination of preferential procurement, supplier diversity, and enterprise development programmes, the development of SMEs is a strategic imperative and not something that should be left to the procurement department only. He said that it is good business practice to collaborate in the ESD space and develop SMEs – even if we are fierce competitors in our respective markets – because we can learn from each other and also have the ability to scale, creating greater impact and improving SME sustainability.

Leon believes that there are three critical aspects to ESD namely; the developmental work which is done with the SME, creating access to market and lastly, funding. Leon emphasised the importance of independent M&E for corporate ESD programs. Many corporates evaluate themselves on ESD programmes, often resulting in a flattering impact assessment which may not be entirely accurate with respect to the long-term success and sustainability of the supplier beneficiaries.

He closed the session by saying that we should stop thinking “I” and “you”, the focus should be on the collective “we” – creating a collaborative eco-system is of the utmost importance if we are going to get South Africa to succeed. Enterprise and Supplier development should not be about corporate practitioners winning awards or listed companies developing competitive advantage, instead we should return to the original intention of the legislation – to grow and support black SMEs. The session ended with a lively Q&A and now that the context has been set in this kick-off discussion, we look forward to our next ESD event in Q3, which promises to be more interactive in nature as we grow a collaborative ecosystem of ESD practitioners and buyers.

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