The multi-faceted role of ED for the corporate investor
Having recognised the inextricable link between economic prosperity in South Africa and the emergence of entrepreneurs and Small and Medium Enterprises (SMEs), numerous companies are starting to invest in Enterprise Development (ED) programmes. Dr Lia Vangelatos, who is the acting head of Anglo American’s highly successful ED arm, Zimele, elaborates on the multi-faceted role that the corporate investor is increasingly playing in ED.
Enterprise Development (ED) is rapidly emerging as one of the most important facets of the South African economy, with numerous companies beginning to realise the tangible benefits, spinoffs and synergies that will accrue from heightened involvement in this sector.
Undoubtedly, increased and effective ED has a high correlation to improved economic growth, reduced unemployment and poverty, and national prosperity.
The immense potential offered by this sector is the driving element behind the multi-faceted investor role that companies are gradually starting to undertake. Pertinently, the implementation of successful, inclusive ED business models generate win-win situations for all parties, by not only fostering a wide-spread socio-economic difference, but also facilitating and furthering core company objectives.
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 a value adding initiative, with the intention of achieving meaningful and measurable outcomes, rather than as a philanthropic or Corporate Social Investment (CSI) proposal. 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 up-front what, where, when and how the funds will be used, as well as targeted outcomes and benefits, are all essential aspects, and will provide a suitable base to increase the scale and reach of the ED programme.
It is also vital to ascertain associated costs as well as any service provider costs, and refer to accreditation agencies’ requirements, in order to ensure that expenditure is duly recognised. Companies should also take cognisance that 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.
Further, 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 definition of the kind of qualitative and quantitative support required by an SME is case specific, and can assist in the launch and longevity of the SME.
For many years, Anglo American has 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.
In fact, we have helped make a real difference in the development of emerging black business through our dedicated enterprise development arm, Zimele, since 1989, long before black economic empowerment (BEE) was legislated.
Zimele has helped to build numerous sustainable, commercially viable enterprises, and empowered entrepreneurs to operate in the mainstream economy through a strategic blend of financial support and mentorship, which allows the companies we invest in to stand on their own feet and to grow.
Anglo American has strived to share its best practice ED model with many corporates, government and interested parties, with the aim of not only raising the profile of ED, but to also create enhanced dialogue surrounding the issues at hand, and encourage more such successful initiatives.
A notable factor within this model is that whenever SMEs that are linked to Zimele tender for contracts at Anglo American, Zimele has no involvement whatsoever in that process and it is completely conducted on an arms-length basis.
This firm commitment and desire to actively encourage the development of ED has enabled Zimele to create a tangible difference in the communities near its operations. In fact, from 2008 to 15 December 2011, its four funds have provided R567 million in funding, supported 1,085 companies, and completed 1,481 loan transactions. Further, funded businesses have employed 19,575 people, and achieved a collective annual turnover of R2,3 billion.
In conclusion, committing to a comprehensive role as an ED investor should be a top priority for companies in South Africa. Accelerated engagement in ED will ultimately result in the creation of numerous sustainable SMEs, enhanced entrepreneurial activity and job creation, and contribute to a more favourable investor perception. This will ultimately result in a positive and real difference being generated in our country’s communities for many years to come.
For more information about the Enterprise Development please visit www.edconference.co.za
Ends
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Notes to editors:
About Anglo American:
Anglo American is one of the world’s largest mining companies, is headquartered in the UK and listed on the London and Johannesburg stock exchanges. Anglo American’s portfolio of mining businesses spans bulk commodities – iron ore and manganese, metallurgical coal and thermal coal; base metals – copper and nickel; and precious metals and minerals – in which it is a global leader in both platinum and diamonds. Anglo American is committed to the highest standards of safety and responsibility across all its businesses and geographies and to making a sustainable difference in the development of the communities around its operations. The company’s mining operations, extensive pipeline of growth projects and exploration activities span southern Africa, South America, Australia, North America, Asia and Europe. www.angloamerican.com
About Zimele
Since 1989, Zimele has successfully empowered numerous black Small and Medium Enterprises (SMEs) and entrepreneurs, and generated sustainable job creation and socio-economic development in predominantly peri-urban mining communities.
Zimele enables the companies it invests in to stand on their own feet and to grow, through a strategic blend of financial support and incubator-style mentorship.
This is achieved through four funds which provide business opportunities, training, capital and networking hubs for historically disadvantaged South Africans (HDSAs) and SMEs. These funds are the Anglo American Khula Mining Fund, the Supply Chain Fund, the Community Fund and the Green Fund.