“There is a problem with ESD programmes in South Africa. We are finding out the nature of the problem and what can do about it,” noted Professor Kerrin Myres.
South Africa has developed a substantial framework for supporting small, medium, and micro enterprises (SMMEs) over the past two decades, with various enterprise and supplier development (ESD) initiatives aimed at aiding historically disadvantaged individuals. Despite these efforts, which are valued at R20 billion to R30 billion annually, there has been insufficient evaluation of their long-term effectiveness for SMME sustainability.
To address this, Edge Growth partnered with the Responsible Finance Initiative and the Centre for Business Ethics at The Gordon Institute of Business Science (GIBS) to conduct comprehensive research. The result is the newly launched white paper, “Enhancing Enterprise and Supplier Development Ecosystem Effectiveness in South Africa,” authored by Professor Myres and her team. The paper emphasizes the need for robust impact measurement and appropriate benchmarks to gauge ESD success.
The research involved qualitative interviews conducted between October 2023 and March 2024, revealing several critical insights:
- Inconsistent Commitment to Transformation: Varying levels of dedication among businesses to ESD led to differing compliance and engagement levels. While some viewed transformation as essential for economic growth, others adopted a more cynical, compliance-focused attitude.
- Business Integration in ESD: Companies that integrated ESD into their core operations saw greater success. Those that treated ESD as a separate initiative tended to produce less impactful outcomes.
- Corruption in the ESD Ecosystem: Alarming feedback indicated that corruption permeates the sector, with many stakeholders prioritizing personal interests over a unified vision for transformation.
- SMME Engagement: Many entrepreneurs expressed skepticism about ESD initiatives. Direct communication with SMMEs is vital for developing more effective support programs.
The insights gathered highlight necessary actions to enhance ESD effectiveness, with Edge Growth emphasizing the crucial role of SMMEs in South Africa’s economic future. Nabeela Vally from Edge Growth remarked that this research could spark vital discussions and actions within the SME sector. Stuart Townsend, also from Edge Growth, expressed the need for collaboration to bridge gaps between businesses and entrepreneurs, aiming to improve job creation and overall impact.
Click here to see the full white paper.