“The implementation of successful, inclusive ED business models generates win-win situations for all parties, by not only fostering a widespread socio-economic difference, but also by facilitating and furthering core company objectives.”
Dr Vangelatos adds that besides the public goodwill that will be generated, companies can substantially bolster their capabilities and efficiency by linking ED programmes to their core business, and procuring locally in terms of activities such as repairs and maintenance, transport and catering.
“However, before engaging in any ED programmes, corporate investors should be aware that it is far more prudent to structure these programmes as value-adding initiatives aimed at achieving meaningful and measurable outcomes, rather than as philanthropic or corporate social investment proposals. ED should be viewed as a critical part of doing business, with the central driving element of creating long-term sustainability built on commercial objectives. Knowing upfront what, where, when and how the funds will be used, as well as targeted outcomes and benefits, are all essential aspects and provide a suitable base to increase the scale and reach of an ED programme.
“It is also vital to determine associated costs as well as any service provider costs, and refer to accreditation agencies’ requirements in order to ensure that expenditure is duly recognised. While the size, scale and objectives of the programme are important factors for consideration, any initial funding amount can always be increased once it has been verified that the programme is successful and achieving its intended outcomes.”
Dr Vangelatos points out that while a corporate investor should be fairly hands-on in their involvement in the ED programme, this participation should be defined within set parameters in order to guarantee its success. The kind of qualitative and quantitative support that each SME needs varies from business to business, and taking cognisance of this can assist in the launch and longevity of the SME.
For many years, we have recognised the significant role that companies can play in ensuring that ED is maximised in terms of the positive impact it can have on the country. Since 1989, long before black economic empowerment (BEE) was legislated, the Group has made a significant difference in the development of emerging black business through Zimele.
“Zimele has helped to build numerous sustainable, commercially viable enterprises, and has empowered entrepreneurs to operate in the mainstream economy through a strategic blend of financial support and mentorship,” says Dr Vangelatos. “This ensures that the companies we invest in are able to stand on their own feet and to grow.”
We have strived to share our best practice ED model with many corporates, government and interested parties, not only to raise the profile of ED, but also to create enhanced dialogue around the issues at hand and to encourage more such successful initiatives.
A notable feature of this model is that when Zimele-supported SMEs tender for contracts at Anglo American, the process is conducted at arm’s length and Zimele has no involvement whatsoever.
This commitment and desire to actively encourage the development of ED has enabled Zimele to create a notable difference in the communities near its operations. From 2008 to 2012, its four funds have provided R708 million in funding, supported 1,393 companies, and completed 1,972 loan transactions. Additionally, funded businesses have employed 25,364 people, and achieved a collective annual turnover of R3.47 billion.
“Committing to a comprehensive role as an ED investor should be a top priority for companies in South Africa,” says Dr Vangelatos.
“Accelerated engagement in ED will boost the creation of sustainable SMEs, jobs and entrepreneurial activity, while contributing to more favourable investor perceptions. This will ultimately result in a positive and real difference being made within South African communities for many years to come.”
