UNPACKING ENTERPRISE AND SUPPLIER DEVELOPMENT

Enterprise Development (ED) and Supplier Development (SD) are crucial components of Broad-Based Black Economic Empowerment (B-BBEE). If you ask a novice like me, who isn’t a B-BBEE specialist, I might say their goal is to empower black businesses. However, their actual aim is to enhance local procurement, improve local supplier programs, and increase financial support for black-owned entities.A report by the B-BBEE Commission highlights challenges in meeting these targets.

In 2022, less than 60% of targets were met for skill development, enterprise and supplier development, and management control across all sectors. In 2017, this figure was less than 50%.Despite these challenges, small business owners, especially those in the townships are resilient and determined. Many are running multiple businesses, often without assistance. However, the two main obstacles to their growth in 2024 are the lack of access to funding and the impact of ongoing load shedding.

These insights are concerning findings from the 2023 State of Entrepreneurship in South Africa Survey conducted by the Entrepreneurs’ Organisation (EO) South Africa chapter.Transformation remains a hot topic, with only a few dedicated individuals leading the charge for real change. Neo Molefe, from Transcend Corporate Advisors, is one such person. Specialising in corporate strategy development, B-BBEE implementation, and scorecard development, Molefe and his team provide tools and mechanisms to help South African businesses address inequalities. “We assist many of our clients in complying with current BBBEE legislation, helping them build sustainable transformation strategies and fit within the scorecard framework,” explained Molefe when describing his company ,” he shared with TransformSA and participants in our weekly Twitter Space discussion.

We invited Molefe to the Twitter Space as an expert on B-BBEE and transformation, and he generously shared his information. His well of knowledge was ever pouring, which came as no surprise to us.As a director at Transcend Corporate Advisors for the past seven years, Molefe has been instrumental in driving transformation in South Africa. Despite his success, he remains humble, reflecting on his upbringing in Thaba-Nchu: “Growing up in the early ’90s meant there weren’t many opportunities for us. This is what inspired me to succeed,” he once shared with TransformSA.Enterprise development has evolved over the years, now known as Enterprise Development and Supplier Development. Molefe took the time to unpack this evolution for us, shedding light on its transformation.

As a guest speaker at our talk on Enterprise and Supplier Development that we host weekly on Twitter Spaces, Molefe passionately discussed Enterprise Development and emphasised the significant impact of B-BBEE in growing small businesses. “The whole idea was to make it a bit more broader. Although most people still refer to B-BBEE as BEE. Whereas BEE was much narrower and only benefitting certain individuals. On the other hand, B-BBEE is much broader. It is a similar methodology with enterprise development, it was very narrow when it was introduced in the sense that any enterprise could be supported under the BEE. However, when they amended the codes they realised that there is a specific focus now to try and target specific enterprises within an ecosystem of various organisations. And make it more focused,” he explained.There is a distinction between a supplier development beneficiary and supplier development beneficiary. Molefe said a Supplier Development beneficiary is a company that’s part of a measured entity’s supply chain, registered as a supplier on their database. On the other hand, an Enterprise Development beneficiary is not registered on the measured entity’s supplier database.”Supplier Development beneficiaries are companies that supply major entities, while enterprise development enterprises are not in the supplier database.

The goal is to focus on empowering enterprises within the ecosystem,” explained Molefe.Molefe clarified that Supplier Development and Enterprises are separate BBBEE elements. “Enterprise development accounts for 42 points out of 100 on the scorecard, making up about 40%. Within that, there are three sub-pillars. Preferential procurement is one element, and the other two are enterprise development. When you remove the procurement element, the distinction becomes more apparent. The codes were amended in 2019, specifying that a supplier development beneficiary cannot be an enterprise development beneficiary,” he explained.

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