SMMEs in South Africa: Enterprise Supply Developments need to up their game
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In the Absa Insights podcast series, The Money Show’s Bruce Whitfield engages in conversation with the bank's sector experts about investment possibilities in Agriculture, Consumer Goods and Services, Enterprise Supply Development and Telecommunications, Public Sector and, Natural Resources and Energy.
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Any entrepreneur who has ever tried to start a business can attest to how difficult it is.
From access to funding, competitive markets, business development support, tenders and mainstream supply chains – if small and medium enterprises are set to stimulate economic transformation in South Africa, Enterprise and Supplier Development (ESD) is paramount to its success.
However, Keitumetse Lekaba, Managing Director at I am an Entrepreneur believes that there is not enough support available to SMMEs and that the days of implementing Enterprise and Supplier Development in South Africa as a tick box exercise should end.
In her view, corporates that sponsor ESD initiatives do so to score BBBEE award points and often do not place enough emphasis on making an impact on the growth and survival of the SMME sector. This problem, coupled with the lack of developmental support is the biggest cause of the failure of these businesses.
We need a very structured and very directed support structure to support SMMEs with the needs that they have within their businesses and not to run a one-size-fits-all approach, which is currently what is happening in the industry – which doesn’t work.Keitumetse Lekaba, Managing Director – I am an Entrepreneur
So, how can ESD initiatives be more effective?
Lekaba says the objectives are clear.
"It is about job creation, it’s promoting economic transformation, it's creating competitive markets – the objective is clear, we just need to work around getting the objectives right."
According to her, the biggest problem with ESD strategies at the moment is its one-size-fits-all approach. In most cases, entrepreneurs who are in the start-up phase of their business venture are placed in the same training sessions as entrepreneurs who require assistance with growth strategies.
The responsibility of the ESD companies and ESD incubators is to help these SMMEs with knowledge... and use people that have already been in the space to help them grasp and have enough knowledge and expertise to take their business to the next level.Keitumetse Lekaba, Managing Director – I am an Entrepreneur
She believes that the power lies in matching entrepreneurs that have done it before with aspiring entrepreneurs who need support to take their businesses to the next level.
There are SMMEs out there with brilliant, brilliant ideas and they don’t know what to do with them.Keitumetse Lekaba, Managing Director – I am an Entrepreneur
What do other countries get right that we don’t, asks The Money Show’s Bruce Whitfield.
While COVID-19 and issues around shipping and transport have impacted supply chains across the world, Botswana has refused to sit back and wait for things to improve and have instead, set a targeted approach to their localisation mandate to give SMMEs a fighting chance.
Sadly, South Africa's localisation mandate is not up to scratch.
While our country has tried to localise projects, Lekaba says "the lack of infrastructure, people’s integrity behind the scenes – the wrong people are getting the contracts, the wrong people are getting the tenders to help the country with localisation and the right people are not really getting the jobs."
She believes that SMMEs are ready to work but are not getting the opportunity to work.
What the other countries have that we don’t have is that everyone that is involved understands the benefit of getting it right. It’s not a selfish approach to localisation – they see the benefit, and everyone really wants to make the country and entrepreneurship in the country work and people have the same strategic focus on entrepreneurship, which I think we really lack in South Africa.Keitumetse Lekaba, Managing Director – I am an Entrepreneur
They really have a no-nonsense approach to corruption, they have a no-nonsense approach to looting, they have a no-nonsense approach to bribery, which is what we need to still overcome in our country.Keitumetse Lekaba, Managing Director – I am an Entrepreneur
Despite some of these flaws in South Africa's ESD initiatives, Lekaba says that there is also quite a lot of good happening in the entrepreneurship space.
"The right people with the right hearts have to lead the mandate to actually want to make sure that the localisation projects work," she concludes.
For data-driven insights that match foresight with sustainable possibilities, re-visit our Absa Insights page regularly to listen to thought-provoking conversations with Absa Corporate and Investment Banking sector experts in the Absa Insights podcast series.
Source : https://cib.absa.africa/home/insights-and-events/