FINANCE FORUM •
WHITE PAPER ASSESSES EFFECTIVENESS OF ESD IN SA
Supplied by Edge Growth and the Gordon Institute of Business Science
South Africa appears to have a relatively robust financial and capacity-related development landscape for SMMEs . For more than twenty years , various enterprise and supplier development ( ESD ) programmes and initiatives have been implemented by government agencies , private sector organisations and other role players to support the growth and development of SMMEs , with a specific emphasis on historically disadvantaged individuals .
These programmes have long been heralded as a key driver of economic development , job creation , inclusive growth and fostering entrepreneurship . However , “ There is a problem with ESD programmes in South Africa . We are finding out the nature of the problem and what can do about it ,” notes Professor Kerrin Myres .
Despite being valued at R20 – R30-billion per annum , inadequate attention has been given to ascertaining whether these programmes lead to SMMEs ’ long-term sustainability .
It is for this reason that small business development specialist , Edge Growth , approached the Responsible Finance Initiative and the Centre for Business Ethics at the Gordon Institute of Business Science ( GIBS ) last year to assist in thorough research into assessing whether ESD efforts are achieving their mandate of enhancing the development of black-owned SMMEs in South Africa .
October 2024 saw the official launch of a white paper entitled “ Enhancing Enterprise and Supplier Development Ecosystem Effectiveness in South Africa ”. Authored by the Gordon Institute of Business Science ’ s Professor Kerrin Myres , Anne Cabot- Alletzhauser , Amanda Khoza and Professor Anastacia Mamabolo , this research reasserts the need for more impact measurement metrics and better benchmarks to assess “ success ”.
Cross-sectional qualitative research was conducted between October 2023 and March 2024 , consisting of 41 interviews across the full enterprise and supplier development programme ecosystem .
Some of the key insights Varying degrees of commitment to transformation result in inconsistent levels of compliance and engagement with ESD programmes : While some respondents reported that transformation was considered an imperative for the country ’ s economic development and for the growth and stability of industries , others had somewhat of a cynical approach which has led to a compliance mindset .
The sector is fraught with corrupt activity , both overt and implicit .
This insight suggests that ESD effectiveness begins with the overall business philosophy regarding the role of business and the need for a high level of commitment to transformation as a mechanism for bringing about a more equitable society .
Business-like approaches to ESD offer business benefits and help to address implementation challenges : Where corporates recognised the strategic significance of
Nabeela Vally - Edge Growth .
ESD , implementation efforts were broadly and deeply integrated into the core business model , and a long-term view was adopted , ESD was more likely to be effective .
Supplied by Edge Growth
Those corporates where ESD is either entirely separate from the business operation or at best engages at arm ’ s length , seemed to result in short term ESD programmes that were more tactical in nature and failed to generate much in the way of real impact . Here it is clear that an ESD strategy which is linked to the corporate strategy and integrates the needs of the business directly into ESD programme , is associated with enhanced effectiveness .
The ESD ‘ ecosystem ’ is not an ecosystem at all – it is allegedly corrupt and competitive : One of the more alarming findings of this research was the feedback by respondents who noted that the sector is fraught with corrupt activity , both overt and implicit . Many corporates , BDSPs and many SMMEs act in their own interests rather than contributing to a common vision of transformation , with little regulation of the ESD ecosystem and limited collaboration between the public and private sector .
Here ESD effectiveness could be improved through an enhanced , well-functioning and collaborative ecosystem that is able to selfregulate and share best practices and data about what does and does not work , along with a code of ethics and quality standards .
SMMEs are generally disinterested in and are cynical about ESD but some are engaged and appreciative of the opportunity : Many of the entrepreneurs who started and ran businesses were not particularly attentive to the efforts of the ESD ecosystem players to support them , and even appeared to lack knowledge and understanding of the scorecards intended to benefit them . Here , listening to the voice of South African SMMEs directly , rather than assuming that we know what they need , will lead to better designed , executed , and evaluated ESD programmes .
www . africanmining . co . za African Mining Publication African Mining African Mining • February 2025 • 33