Development of SMMEs: Is Corporate SA Making Impact?

Most of the work that I do is around small business (SMME) development. From assisting in managing business hubs to doing one-on-one coaching (specializing in Access to Markets) in ESD programmes, I study small business development daily. We have a number of SMME development programmes in South Africa. They are born from the efforts of corporate SA to grow small businesses in the country, mostly due to transformation policies. Often, I question their impact.

I will not take away that there are success stories though. There are companies that have made huge strides when it comes to this. Some companies have successfully grown small businesses into big suppliers. They lowered the entry barriers using transformation policies and capacitated small businesses to cope with large orders. I will not paint a gloomy picture, but this does not mean I do not have concerns.

These are 4 areas of concern that I think we should look into to really start making impact.

Aligning Impact to Current Challenges of Small Businesses

Enterprise Development was first introduced in 2005 with the draft B-BBEE Codes. It is basically all about the efforts that are made by large companies to grow the operational and financial capacity of small businesses. In 2013, Supplier Development was introduced which is similar, but for suppliers. This current definition is problematic because it is open to interpretation. Hence, you can come up with initiatives that do fall under that definition, but fall short when it comes to impact that is aligned to current economic challenges. A good example is that when loadshedding first became an issue in South Africa, I expected a lot of small business development initiatives to focus on alternative energy. However, we saw the same types of training as if nothing happened.

Customizing Impact Measures for Small Business Development

Going back to the definition of Enterprise Development and Supplier Development, it is often hard to create impact measures on a definition that is open for interpretation (Unless you as an organisation customize it for the sector of your beneficiaries, their geographic location and other specific factors). For example, businesses in the Northern Cape are affected by different factors from those in KZN. We saw that with floods. While policy can give you guidance, it is the role of the transformation leaders in corporate SA to align impact. So far, I am seeing less of that.

Focusing on Quality vs Quantity

Picture this: You are hosting a 10KM race and your target is to get 10 000 runners to enter. Indeed, you get 10 000 runners on the day but 6000 decide not to run and hang out by the drinks tent. With the 4000 that does run, 2000 do a few KMs and then join the runners at the drinks tent. They do not finish the race. In this instance, did you achieve your target? The answer is yes and no. The "no" is louder than the "yes" in this instance. A lot of small business development programmes feel like this scenario. We need to stop chasing numbers.

Sharpening the Vision of Township Economy Revitalisation

Township Economy Revitalization is a low hanging fruit for corporate companies that truly want to make an impact. It provides commercial value to companies that can sponsor such ESD programmes. Let us make an example with an ESD strategy that focuses on the industrialisation of township economies. The easiest thing to do is to influence the grocery basket. Meaning, allowing township economies to manufacture their own personal and domestic hygiene products (toiletries). I once read a statistic that says an average person/household spends around R800 on such products. Meaning, the market per number of households in townships is big. If a company that produces raw materials that are needed to produce those products creates a ESD programme that will empower township SMMEs to manufacture them, there is a large commercial value. As those township businesses manufacture more of the personal and domestic hygiene products, they will source more materials from the sponsor. What they initially put in to start this programme will be nothing compared to the revenue they will generate in this new market.

I think it is time for maturity from transformation leaders in corporate SA. Chasing numbers, manipulating impact and using small businesses as pawns is the opposite of that. This needs to stop. It is 2024 and the issues that we are having in our country are no joke. To those transformation leaders that have excelled, we are so grateful.

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