By Emma Montocchio, Decusatio
As a company, we are very fortunate to be able to work on several high social-impact initiatives in the fields of youth entrepreneurship and youth employability and this gives us a unique perspective around ways that organisations can deploy their B-BBEE budgets for maximum impact.
Below we have outlined some ideas around projects we are working on to highlight that you can think innovatively about how you deploy your spend:
One of the big shifts we are seeing in the markets – particularly with multinationals – is that it is no longer just about “B-BBEE”. Organisations are now having to comply with a number of Environmental, Social and Governance models as well as the UN Sustainable Development Goals (SDGs).
This is an important development as the conversations are shifting from South Africa specific to aligning with global goals and reporting.
One of the pain points around many of the Enterprise Development initiatives out there is a question about sustainability. Funding a small business sounds good in principle but if that business is not sustainable, it often feels like a case of throwing good money after bad.
SMEs in South Africa have very high failure rates and the goal is to de-risk the projects to the best of your ability. Enter the micro-franchise model.
Franchising has long been one of the most successful forms of entrepreneurship in the country as owners are given an established formula and they are able to scale them while playing off an existing skills base and marketing collateral.
Some examples of the micro-franchising opportunities that we are involved in include mini sanitary pad manufacturing factories, computer training centres, beauty spas and accounting businesses.
Access to markets remains one of the single greatest challenges that SMEs face and many businesses are reluctant to use suppliers who don’t have a track record.
Without being able to test their systems, develop cashflow inside of the business and grow their internal skills base they are unable to provide any evidence of success to future clients.
When the issue of “off-take” agreements is raised with many larger businesses, the first response is: “We don’t have a need for the services so we can’t see how to involve them in our supply chain”
It is all about thinking laterally.
For example, we have a beautiful model that we currently work with involving sanitary pad manufacturing micro-franchises which are women-owned and managed. Businesses commit to off-take agreements for ESD / SED purposes and then donate the manufactured pads to charities or schools of their choice.
The micro-franchises enjoy full order books, and the corporate is ticking multiple elements in terms of their scorecard and social recognition.
Due to historical spatial planning issues, a major challenge that South Africa faces is the lack of social mobility: People don’t work where they live.
This in turn means that your staff are spending much of their salaries on transport costs, just to get to and from work.
What we really want to be doing is creating jobs where people live.
We do quite a lot of work with the Youth Employment Service (YES) who have rolled out “hub” models in communities such as Saldanha Bay and Alexandra and these provide local jobs for the surrounding communities. These include catering, manufacturing and technology-related options and provide funders with the opportunity to secure both SED and tax donation (Section 18A) recognition as part of their strategy.