Beyond Small Enterprise Development Supplier Funding

15 May 2018
At the 11th Annual Smart Procurement World Conference and Exhibition, Old Mutual led discussions around the important role of corporates in Enterprise and Supplier Development and Skills Development in the Small and Medium Enterprise (SME) sector.

Khanya Okumu, SME Development Manager at Old Mutual, addressed the audience, made up of procurement and inbound supply chain sourcing, procurement, purchasing and buying professionals from both government and the private sector and SMEs. She highlighted the importance of the private sector in driving socio-economic transformation for inclusive and shared growth in South Africa.

“It is our fervent hope that our participation in SME platforms, such as this, will aid in giving direction and encouragement to all stakeholders who, like us, are committed to making a significant contribution to the creation of a more equitable South Africa. We believe we have the potential to help strengthen trust, goodwill and collaboration between the public and private sectors. Most importantly, we provide the springboard for SMEs to gain better access to the mainstream economy and markets,” stated Okumu.

Although it is now common knowledge that funding small suppliers is key to igniting the engine of inclusive economic growth, the evaluation and development of relevant skills play an equally significant role in powering the economy. It is this focus on skills development that underpins the operating principles of Old Mutual's Entrepreneurship Ecosystem.

The Old Mutual Entrepreneurship Ecosystem seeks to promote entrepreneurship through a holistic approach that encompasses the above-mentioned interventions at schools, financial education training and non-financial business support. These interventions include mentorship and training for SMEs in the value chain. The desired outcome is an enterprise that leaves an Enterprise Supplier Development (ESD) programme empowered to survive and thrive in the business world. Monitoring and evaluating these enterprises are essential to track growth and success, but also to identify areas of weakness that need further intervention.

Khanya Okumu explains the financial group's premise that a small supplier run by people who possess the right skills will have a firm foundation and the potential for sustainable long-term growth. For this reason, skills development and financial education are high on the agenda of the Old Mutual entities driving this ecosystem. Skills development (as it relates to entrepreneurship) is primarily driven by the Old Mutual Foundation, Black Distributors Trust and Masisizane Fund.

The private sector's role in post-investment business support and capacity building is as critical as its role in financing SMEs. Providing finance and access to markets without appropriate skills development programmes to make these investments sustainable would be a fruitless exercise.

There is a need to build both technical skills as well as overall business management skills. Old Mutual believes that effective enterprise and supplier development can best be achieved through partnerships that leverage incubators and accelerators as well as government programmes and/or initiatives.

As great as the potential for job creation is, SMEs cannot be expected to be the Holy Grail in an economy in which growth has crawled to a near halt. Old Mutual believes that making a real impact in increasing the potential salary-earning or employable workforce requires a multi-faceted approach:

  • Integrate skills training into early education to instil an entrepreneurial mindset and encourage innovation. The world is changing and the skills required to be productive are changing as well.
  • Stipulate clear regulations and a commitment to quality interventions at policy level to incentivise skills development and skills transfer from large corporates to small businesses.
  • Drive a holistic approach to skills development. Mentorship, networking and overall business acumen are skills that can make a business stand out from its competitors.

When the above work harmoniously together, as an effective and efficient ecosystem, reliant on each other's strengths and support mutually beneficial objectives, the likelihood of success is increased.

At the heart of Enterprise and Supplier Development is the notion that large businesses should move beyond compliance (box-ticking) and towards the heart of transformation. By directing development interventions and activities in a responsible and focused manner, the skills level in small businesses can be raised to ensure their transition into viable, growing enterprises.

As a company in the financial services sector, Old Mutual must comply with the requirements of the Financial Sector Codes (FSC). The codes outline the following elements in as far as Broad-Based Black Economic Empowerment (B-BBEE) is concerned:

  • Ownership
  • Management Control
  • Skills Development
  • Socio-economic Development and Consumer Education
  • Empowerment Financing and Enterprise and Supplier Development (including Enterprise Development and Preferential Procurement)
  • Access to Financial Services

Old Mutual supports Enterprise and Supplier Development through the:

  • Provision of Enterprise Finance
  • Provision of Business Support and Capacity Building
  • Provision of access to markets through contracts

Enterprise and Supplier Development provides the link between enterprise development and preferential procurement. In short, ESD is about creating livelihoods as well as wealth. To move from creating only livelihoods to creating sustainable wealth, the skills gap must be closed.

Okumu concluded, “Enterprise and Supplier Development has various touch-points which impact the transformation landscape. Through the provision of contracts and finance, enterprises are able to participate in the economy and thereby contribute to GDP as well as job creation and retention.

Old Mutual sponsored the participation of 10 SMMEs at the Smart Procurement World Conference to showcase their businesses, thereby giving them exposure to a variety of business support platforms and opportunities that can assist Old Mutual clients in gaining additional access to markets.

The SMEs that are showcasing their businesses are:

  • CTC Sports
  • Vision Décor and Event Solutions
  • Exquisite Stationery
  • Lexforensica (Pty) Ltd
  • Biza Holdings
  • Flavalite Innovations
  • Human Insights
  • Hosi Technologies
  • AV Network
  • SM Tax