1. Pleasee-mailyoursuggestionsto
pumulani@beehivecapital.co.za.
GOVT: Among the tools that we have used to encour-
age the creation and growth of SMEs is the promulgation of
the BEE Codes of Good Governance and, in particular, the
ESD pillar.This encourages the inclusion of SMEs in the value
chain of Big Business.
PumulaniIN B&W
Pumulani
Ncube
and Supplier
ConversationsMany an economist is on record as saying
that government does not create jobs but
that conducive government policies do.
The government, through the National
Development Plan (NDP), has laid down a
blueprint for creating jobs for the period
to 2030. However, the target for the jobs to
be created as dictated by the NDP will not
be met without assistance from the private
sector, particularly in view of the fact that the
NDP anticipates that the majority of these
jobs will be created by small to medium-
sized enterprises (SMEs). Big Business can
play a role by assisting small companies via
mechanisms like the Enterprise and Supplier
Development (ESD) initiatives as laid out
in the Black Economic Empowerment (BEE)
Codes. As the ESD space has evolved from
finding short cuts and easy ways to attain
scores to a space where, as part of getting
business, companies are required to submit
reports detailing ESD activities on the part
of the entity bidding for business, disturbing
trends are starting to emerge in the market in
respect of ESD and the development of SMEs.
A summary of these issues is better captured
by an imaginary conversation involving Big
Business (BB), SMEs and Government (GOVT).
Enterprise
Development

2. BB: Although we are in broad agreement with the BEE
Codes, the challenge for us as Big Business is implementing the
ESD Code, the reason being that we do not have enough qual-
ity SMEs that we can support through the provision of ESD.
10 years. As a result, we are finding that most of our mem-
bers do not have the requisite in-house skills to manage
such programmes. Also, some of our members do not view
these programmes as being a core part of their businesses.
In most cases, funds are donated to fund managers
who manage the funds on our behalf and still attain
the requisite points.
GOVT: As government, we believe that the ESD
initiative should be viewed as an integral part of a
company’s supply or distribution chain. In terms
of creating a pool of BEE practitioners, we have a
Management Advancement Programme with Wits
Business School and the Unisa Graduate School
of Business Leadership. This programme will be
upgraded to a degree with a view to developing 3 000 BEE
practitioners within a period of three years.
SMEs: As SMEs, we appreciate all the opportunities
afforded to SMEs through the various ESD programmes.
However, SMEs are tired of being trained continuously
when most of the time what they need is access to mar-
ket opportunities and access to funding in order to benefit
from these opportunities.
GOVT: Training and capacity building are important
aspects of equipping SMEs, but, in order to survive those
crucial first two years, a guaranteed contract from the com-
pany establishing an ESD programme would stabilise the
business – and, obviously, the SME has to be able to meet
the required standards.
SMEs: Instead of all this money being spent on train-
ing programmes, it could be used to leverage private and
developmental funding and thereby fund participants on
the programmes. Without equity investment, it is hard for
participants to access this funding.
BB: We as big business have been at pains to explain
that we are not in the business of buying from black sup-
pliers purely for the sake of it. We are in the business of
buying products that will enable us to supply quality
goods to our customers. Without customers, we would
not be in business.
GOVT: As Big Business grows, it should play a role in
growing small business. For example, if we look at the tel-
ecoms industry, we realise that most of the founders of the
mobile industry were employees of the state-ownedTelkom.
What is clearly apparent from this conversation is that
ESD is neither the silver bullet that will create all the required
jobs nor the silver bullet that will ensure the survival of all
SMEs. What the above shows is that, if all stakeholders came
together over a period of time, ESD would have the ability to
create and accelerate the growth of SMEs. We have no doubt
that, in the next few years, we will add more success stories
of participants from the ESD programmes that are currently
being implemented.
What is clearly apparent from
this conversation is that ESD is
neither the silver bullet that will create
all the required jobs nor the silver bullet
that will ensure the survival of all SMEs.
PumulaniIN B&W
SMEs: We encounter many companies that present
BEE scorecards indicating that they have attained the full
15 points in respect of the ESD pillar. The problem is that
these companies are not able to provide details of the pro-
grammes where the ESD budget has been deployed.
GOVT: Are SMEs saying that, in certain quarters, the BEE
verification process is not robust enough and should there-
fore be undertaken by the government? It would seem from
the preceding that some companies are implementing ESD
initiatives contrary to the spirit of the codes.
SMEs: We believe that the private sector normally does
a good job when it comes to self-governance, an example
of this being the South African Institute of Chartered
Accountants. However, we see no reason why the South
African Accreditation System (SANAS) and others cannot
do the same in regulating themselves. What we do know is
that companies establish various structures which, while not
illegal, are often not within the spirit of the law. We believe
that every company which scores maximum points on the
ESD pillar should be able to provide statistics on those
participating in the programmes.
BB: As big business, we want to include as many SMEs
as possible in our programmes. However, we are faced with
a number of challenges: firstly, statistically, 80% of start-ups
fail within the first two years; secondly, we just do not have a
big enough pool of‘quality’SMEs that we can work with; and,
lastly, we are seeing a culture of entitlement where we are
expected to buy from SMEs purely because they are black- or
woman-owned.
GOVT: There are studies that suggest that most entre-
preneurs fail with their first two or three ventures. However,
they use the failures to eventually create successful ventures;
therefore, positive failure should be encouraged.
SMEs: Research indicates that there is approximately
R20 billion of ESD funding available in the market that is
not being utilised for various reasons. Why does this money
remain unspent, and what is happening to this money?
BB: The BEE Codes have been in existence for just over