Creating value in the supply chain is a key component of enterprise development

As consultants, we have the privilege of advising and implementing various projects and initiatives across a large spectrum of disciplines, geographic areas and parts of society. As transformation consultants, this has meant we focus on change strategies, changing perceptions, changing skills and processes as well as changing our environment (operating and physical).

Sometimes this leads to job creation, to improved operating efficiencies and optimal operating models but, mostly, we know our expertise is in making people realise the value derived from change.We started consulting in black economic empowerment (BEE) as early as 1999 because it was and still is relevant to our change journey in South Africa. Through this activity, we have participated in the journey of transformation that the policy itself has undergone.

From the initial days of a narrow-based approach – where everything was about ownership, with limited participation and even more limited benefit – to today’s model which, although far from perfect, now achieves some level of consistency, has a more broad-based approach, but specifically where we can now monitor the actual results.

Let us take one element of BEE: enterprise development. Until recently the worst performing element of BEE, enterprise development requires a company to invest, in monetary or non-monetary terms, 3% of its net profit after tax each year, into activities that ultimately stimulate the development of small, medium and micro enterprises through support, funding, training, goods, services, preferential payment or any other myriad issues.

A recent estimation in a report from a financial services organisation measures this investment at approximately R12 billion per annum. This would need to be at least comparable to the government’s investment in social development, rural upliftment and/or economic development in any given year.While the private sector initially viewed this requirement as a BEE ‘tax’, four years later it has assessed the opportunity that lies behind successfully implementing this element to create sustainable opportunities for growth.

Practical examples

In the spirit of enterprise development, Woolworths has developed organic farmers; South African Breweries has supported farmers to produce the right crops for beer production; Tsebo Outsourcing Group (Fedics and Drake & Scull) has nurtured hundreds of agri- and protein producers, bakers and cleaning companies to support its operations nationally, and so the list goes on.

The mandate for us is to develop a model that is sustainable, that creates value in the supply chain and delivers return on investment in the long term.The critical success factor is collaboration: working with the community, in the community, for the community to transfer skills and ensure, therefore, we do not shift dependence, but rather promote independence.

The government understands this better than anyone. The Industrial Policy Action Plan, the Growth Plan, the BEE legislation and several other policies are geared around economic growth and providing for all South Africans.They are specifically targeted at ensuring, as the largest procurer of goods and services, that the government’s expenditure in these areas positively influences job creation and enterprise development.

However, is the government realistically seeing the successes of these strategies? It would appear in so many instances that the motivation for change is personal gain or self-interest. I guess if we question whether we are able to change at all levels, we need to be looking at changing the way that the government interacts with the private sector.

Accusations of the lack of transformation made by ministers to industry as reported so regularly in the media are destructive, not proactive. Instead of public criticism, the parties would do well to collaborate.Imagine a private sector business stimulating agricultural programmes, with the support of the government’s funding set aside for agri-processing through the Industrial Development Corporation?

Imagine the power of telecommunications provided to every South African, as a mechanism to provide access to education?Government policy says it will do it, but the implementation has been plagued by corruption. Several information and communication technology firms are already doing it – why do we continue to compete for the same end goal? The key is collaboration.

Imagine the government allowing an outsourced model to project-manage the implementation of these programmes with regular quarterly reporting, audits and measurement of beneficiary value, strong record-keeping and beneficiary engagement as stipulated in the BEE Codes.Australia’s federal government announced recently that those Australian businesses promoting sourcing of goods and services from previously disadvantaged communities would receive preferential status on government tenders.

The Eastern countries engage with us frequently to understand the BEE model, as they love its applicability and strength as a robust model for job creation and sustainability.Our consultants are working aggressively with our customers to change the way we address BEE, for it to be a model for sustainability reporting.Change is taking place everywhere and yet we are still grappling with the fundamentals of implementing our own policy.

Strategy is only as good as the ability to implement – it is time.

Dionne Kerr

Executive director

Siyakha Consulting