- Many large South African corporates have established Enterprise Development Programmes and Supplier Development Programmes.
- EDPs are designed to support and grow small, medium, and micro-enterprises owned by individuals from previously disadvantaged groups and provide support by way of financial assistance, mentorship, training and other resources.
- SDPs aim to integrate local small businesses into the supply chains of larger corporates.
- For more financial stories, go to the News24 Business front page.
There are many important things a small and medium enterprises (SMEs) need in order to succeed beyond raising enough working capital to turn an idea into a fully fledged business, or accessing finance to fund a business’ next stage of growth.
These include factors like skills development, employee training and mentorship.
In South Africa, women and black-owned businesses can access these vital resources through enterprise and supplier development programmes.
What do these programmes do?
Enterprise and supplier development (ESD) programmes are initiatives that are established to help large South African corporates and other companies comply with the Broad-based Black Economic Empowerment (B-BBEE) Act and its Codes of Good Practice.
This act aims to address the widespread inequalities and discriminatory practices that were a part of South Africa’s history before democracy.
The B-BBEE framework includes various elements that promote economic inclusion and the empowerment of previously disadvantaged groups.
In accordance with the act, South African businesses are graded on their black economic empowerment status on the basis of five main elements: ownership, management control, skills development, preferential procurement and socio-economic development.
In addition to addressing inequalities that exist between racial groups and genders in South Africa, the act also serves to bridge the gap between large corporates and small businesses.
EDP vs SDP: unpacking the distinction
Many large South African corporates have established Enterprise Development Programmes (EDPs) and Supplier Development Programmes (SDPs) in order to comply with legislation and contribute towards building a more inclusive working environment and nation.
Typically, EDPs are designed to support and grow small, medium, and micro-enterprises (SMMEs) owned by individuals from previously disadvantaged groups. These programmes provide support by way of financial assistance, mentorship, training and other resources to help these businesses become more competitive and sustainable.
On the other hand, SDPs aim to integrate local small businesses into the supply chains of larger corporates. This involves not only procuring goods and services from these businesses but also providing them with the necessary tools, training and support to enhance their capacity and performance.
While enterprise development emphasises overall business growth and capacity building, supplier development is more targeted towards improving suppliers’ abilities to meet the procurement needs of larger companies, fostering long-term and mutually beneficial relationships within the supply chain.
SME’s participation in enterprise development or supplier development programmes is sponsored by the corporate that receives the B-BBEE points.
Some companies invite small businesses to apply to be part of their programmes, while others work with suppliers already in their supplier database. It is important for SMMEs to approach companies directly for more information.
Benefits for SMEs
Enterprise and supplier development programmes provide significant benefits for South African SMEs, helping them develop their businesses and gain a competitive edge in the market.
In addition, access to funding and resources helps SMEs scale their operations, improve cashflow management and expand their market presence. These programmes also promote collaboration and knowledge-sharing to help businesses thrive.
Integrating SMEs into their supply chains through supplier development programmes benefits larger corporates because a diverse supplier base enhances operational efficiencies and innovation.
A local supplier success story
Charmaine Dladla founded NBX Construction and Projects in 2016, but the company remained dormant until 2020 when her brother-in-law, Thato Xaluva, joined as managing director.
In October 2020, NBX registered as a supplier of maintenance services with Business Partners Limited and soon after the business joined the Business Partners Limited supplier development programme.
The programme provided NBX with a mentor to identify challenges and opportunities, resulting in a tailored growth plan focusing on organic growth, market reputation and access to funding.
Over the past three years, NBX has made significant strides, securing more contracts and larger projects, expanding their maintenance services and extending their operations from Gauteng to the North West province.
Xaluva and his team are now exploring opportunities in the public sector.
Participation in the supplier development programme provided NBX with essential support, expert guidance, and resources, helping them overcome challenges and unlock potential in the construction industry.
Their story highlights how transformative enterprise development programmes can be in fostering sustainable growth for SMEs.
René Botha is a regional investment manager at Business Partners Limited.
