BLACK-OWNED and black-empowered firms can access millions of rands worth of free training, grants and interest-free loans and have access to preferential payment terms if they tap into enterprise development funds and initiatives run by large companies.
A number of large businesses have set up enterprise development programmes in a bid to meet Black Economic Empowerment (BEE) requirements. Some of the biggest and most well known programmes are being run by South African Breweries (SAB), Anglo American, Sasol and First National Bank.
Three years ago the then deputy minister of trade and industry, Elizabeth Thabethe commented that black entrepreneurs could potentially access about R10 billion a year in training and funding if corporates vamped up spending on enterprise development.
This could go a great way to assisting small enterprises with training, as government only spends about R2 billion on assisting small businesses a year.
But BEE consultant Keith Levenstein of EconoBEE believed a lot of large companies were earning BEE points more on the early payment of invoices, with only a few bigger companies like Sasol and the banks scoring points more on loans and by offering training services.
Levenstein also questioned whether the training some company’s gave black firms could necessarily be regarded as true enterprise development when many firms just looked for a quick and easy way to score points.
He believed to make a real impact contributors should stick with black-owned or empowered firms as long as possible when imparting skills and training.
He singled out the Construction Charter, which was gazetted in June last year and which requires contributors who want to earn BEE points to first conduct a needs analysis on potential beneficiaries and then chose from a list to target training at three areas which the black business most required.
The list includes things like procurement skills transfer, helping to establish an administrative system, legal compliance and technical skills transfer.
Levenstein said the best beneficiaries were those that were associated with a contributor in some way or other – either as a customer or because they were part of the contributor’s supply chain.
The concern that many companies were ignoring enterprise development in favour of high profile BEE ownership transactions appears to have subsided.
Three years ago a study commissioned by Presidency and conducted by Consulta Research, found that just 15% of all businesses were scoring enterprise development points.
But Andrew Bizelle of the Institute of Enterprise Development believed that more corporates had now taken to spending on enterprise development since the survey was released and added that interest in the area had grown considerably.
He pointed out that the number of corporates attending his seminars on enterprise development had more than quadrupled since then.
Bizelle attributed the reason for the slow progress in years before to the fact that it was practice that most corporates assigned BEE and enterprise development to their human resource department, when the latter was more a function of the finance and procurement divisions.
Launched three and a half years ago, Bizelle’s institute identifies and then trains entrepreneurs using enterprise development contributions from various businesses.
The contributions are held in a fund called Enterprise Development Services which is managed by Investec. So far 37 contributors have committed R60 million to the fund, which has 150 beneficiaries –120 of them with turnovers of below R5 million a year.
This article appeared in Business Day on 16 March 2010.
Stephen Timm is a