Johannesburg - Education and job creation are the only way to create social equality in SA, and companies must transform or face the negative effects on their bottom line.
That’s the word from Jason Goldberg, director of Edge Growth, who argues big business has a crucial role to play in mitigating SA passing a tipping point.
“Education and job creation are the only ways to create social equality in the new South Africa. Even if you don’t care about those matters, how long is it likely that South Africa’s 20 million youth, without a future will remain peaceful and quiet, when nothing is visibly changing for them?
“As a generation whose heroes are revolutionaries with an ideology of radical economic transformation and emancipation, how long will they be patient?”
Goldberg says companies need to be cognisant of the country’s current unemployment and education situation, and must implement transformation to also reap business benefits.
Edge Growth, which has been around since 2007, helps corporate customers across industries integrate their enterprise development programmes into their procurement and supply chain strategies.
Enterprise development has changed under the new Broad-Based Black Economic Empowerment (B-BBEE) codes, which came into effect in May 2015.
Goldberg says, “if executed correctly, particularly the Enterprise and Supplier Development pillars can have a positive impact on business and stability in this country”.
Under the new codes, companies can earn a maximum of ten points on their scorecards for contributing towards Supplier Development initiatives. They can also score a maximum of 5 points on their scorecard for contributing towards Enterprise Development initiatives.
In addition, 2 percent of a company’s net profit should be spent on Supplier Development, while only 1 percent of its bottom line should be spent on Enterprise Development. These two elements are priority elements, and companies need to ensure they hit the 40 percent target so they don’t drop an empowerment level.
Goldberg explains the business case for effective enterprise and supplier development. “Compliance to the B-BBEE codes costs money, yet there are two pillars where the cost can be converted into true value for the business, namely; Skills Development and Enterprise & Supplier Development (E&SD). E&SD allows for the possibility of recouping costs invested in the supply chain, should these businesses be sustainable and scalable – which is of course the goal.
“The best and cheapest form of transformation is to pick good but young black suppliers, lend growth capital, give them growth contracts, provide Acceleration to help them build a sustainable, larger business, and then recoup loan repayments over time. Done this way, transformation can create jobs, empowered black suppliers, and cost very little in the end.”
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