The impact of enterprise development in South Africa

In 2013, the Enterprise Development Report by Impact Amplifier and New York University’s (NYU) Centre for Global Affairs reported that the South African corporate sector’s injection of billions of rands into enterprise development (ED) did not have a successful impact on socio-economic transformation. Additionally, the report found that the commitment by the companies did not accomplish the intentions of the Broad-Based Black Economic Empowerment (B-BBEE) Codes. And these were not just any companies. The report drew data from 60 of the top 100 companies listed in the Johannesburg Stock Exchange (JSE) and that represent some of SA’s largest ED programmes.

What is enterprise development?

Enterprise development, or ED, is the act of investing time and capital to help people establish, expand or improve business. Enterprise development helps people earn a living or find a way out of poverty, and leads to long-term economic growth for themselves, their families and their communities. It is one aspect of B-BBEE and is accepted, at a global level, as an effective way to combat poverty.

What is the objective of enterprise development?

The main goal of enterprise development is to create sustainable businesses that grow and lead to job creation, which, in turn, contributes to economic growth. In South Africa, enterprise development can lead to the growth of more small businesses, can provide those entering the job market with opportunities and can ensure the provision of these opportunities are sustainable. Enterprise development programmes must be aimed at transferring skills and wealth that lead to the sustainable growth of a business, and should be developed in a strategic manner.

It is important that enterprise development remains a strategic priority for the South African government and that private companies and large corporates become more involved in the provision of opportunities for local entrepreneurs. Ongoing efforts of private enterprises will ensure that the country is capable of facing the increased pressures of a globalised economic environment.

What are the challenges to enterprise development?

According to the Enterprise Development Report, three main challenges hamper the transformative potential of enterprise and social development:

  1. A lack of business of small entrepreneurs;
  2. The gap between the objectives of enterprise development and its application; and
  3. The lack of measurement frameworks to monitor the impact of enterprise development programmes.

The amendments to the B-BBEE Codes state that companies must invest in their supply chains. This means that many businesses now need strategic approaches to their enterprise development programmes in order to obtain the 40 points required for Enterprise and Supplier Development on the new B-BBEE scorecard. Companies will be forced to invest more in their beneficiaries by linking their ED programmes to procurement, therefore becoming more committed to the success of their ED beneficiaries in order not to jeopardise their own supply chains.

The role of enterprise development in South Africa

Through the B-BBEE amendments, corporate South Africa is being given the ideal opportunity to build more sustainable businesses and play a greater role in socio-economic transformation. Around the world, investment and improvements to local economies is a highly regarded business value that ensures profitability and economic success for everyone. A focused approach to building sustainable small businesses through enterprise development programmes will contribute greatly to this kind of transformation in South Africa.

At USB-ED, our programmes offer new ways of thinking strategically about enterprise development and sustainability. Through our Corporate Governance and Sustainability Enterprise course, executives and other decision-makers will learn how to investigate business responses to the challenges and opportunities presented by sustainable goals within the developing 4IR business environment of South Africa. Follow this with our short Master Class in Strategy Execution course to learn how to successfully implement and execute your enterprise development programme across your organisation.

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

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