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The impact of enterprise development in South Africa

BEE codes
A new report published in July 2013 states that the injection of billions of rands into enterprise development (ED) by the South African corporate sector has not realised its potential to impact on socioeconomic transformation, nor has this commitment accomplished the intentions of the BEE Codes. The Enterprise Development Report launched by Impact Amplifier and New York University’s Center for Global Affairs (July 2013) drew from 60 of the top 100 JSE-listed companies, which represent some of SA’s largest ED programmes. 

Enterprise development is defined as the act of investing time and capital in helping people establish, expand or improve businesses. Enterprise development helps people to earn a living; it helps them out of poverty; and it leads to long-term economic growth for themselves, their families and their communities.

Not only is enterprise development one of the elements of BBBEE, it is also accepted at a global level as an effective way to combat poverty. 

The objective of enterprise development is to create sustainable businesses which grow and lead to job creation, which in turn contributes to economic growth. Enterprise development in South Africa will allow for the growth of more businesses that can provide those entering the job market with opportunities, and will ensure that the provision of these opportunities is sustainable. ED programmes should be aimed at transferring skills and wealth, and to leading to sustainable growth. For this reason, ED initiatives must be carefully thought out, and strategically approached. 

It is important that enterprise development should remain a strategic priority for the country, and that companies become more involved in the provision of opportunities for local entrepreneurs. The on-going efforts of private enterprise will ensure that the country as a whole will be able to face the increasing pressures of a globalised economic environment. 

The Impact Amplifier Report has identified three main challenges that are hampering the transformative potential of enterprise development. These are: the business skills deficiencies of small entrepreneurs; the gap between the objectives of enterprise development and their application; and the lack of measurement frameworks to monitor the impact of enterprise development programmes.

With the changes to the ED element proposed by the amendments to the Codes, viz. that companies should invest in their supply chains, companies are going to have to think strategically about their approaches to ED. And since Enterprise and Supplier Development will count for 40 points on the new scorecard, it is no longer going to be as easy to score full points for ED. The amendments are going to force companies to invest more in their beneficiaries by linking ED to procurement. It is envisaged that this will mean that companies will be more committed to the success of their ED beneficiaries so as not to jeopardise their own supply chains.

Corporate South Africa is being given the ideal opportunity, through the BBBEE Amendments, to build more sustainable businesses and to play a greater role in socioeconomic transformation. Around the world there is a business value which holds that investment and improvement in local economies ensures profitability and economic success for all. A focused approach to building sustainable small businesses can contribute greatly to such transformation and profitability.

Yasmine Miemiec is the BEE Institute’s Enterprise Development and Socio Economic Development facilitator. BEE Institute is a professional body that provides valuable support, services, information, and training to businesses and practitioners that have adopted the BEE scorecard and wish to implement Sustainable BEE ™.

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