Why big corporate CSI initiatives need to help build more SMEs

Updated on 5 January 2016

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Why big corporate CSI initiatives need to help build more SMEs

Big corporates have a responsibility to help small and emerging social enterprises as they play a vital role in accelerating innovation and economic growth in the continent and globally. This is according to SAP Africa executive chairman, Pfungwa Serima.

SMEs are important because the rate at which entrepreneurs are able to create new business models and new, strategic markets has so far eluded large corporations and governments, he adds.

“Small businesses are, however, often crippled in their growth phase due to inadequate operational backbone and inadequate guidance on how innovation comes into play for them,” Serima says and adds that this is where big business can assist entrepreneurs by offering support and incubation particularly during the critical growth phase.

Serima quotes a report by the Gordon Institute of Business Science (GIBS) and FNB’s Entrepreneurial Dialogues, State of Entrepreneurship in South Africa, which indicates that “business incubators assist emerging companies to survive and grow during the start-up period when they are most vulnerable. The incubation process improves the survival rate of start-up companies by assisting them in becoming financially viable, usually within two to three years”.

Corporate social responsibility (CSR) is one of the ways in which big corporates can help social entrepreneurs overcome the challenges in the startup phase of their business, says Serima.

Big business’ CSR to the rescue

Around the world, big corporates are striving to become more sustainable and are becoming increasingly aware of the impact of their activities, says Peter Conze, Country Director, German Technical Cooperation (GTZ) South Africa, Lesotho and Botswana, in a whitepaper on Social Responsibility in South Africa.

“They are striving to make their businesses more sustainable by applying the principle of corporate social responsibility within the company, in the wider environment they operate in, and in their relationship with suppliers and customers.”

“In line with their own economic interests, businesses – small and large, domestic and international – are starting to share responsibility for the ecological and social situation in their immediate environment. Examples include the protection of human rights, drawing up and implementing employment and environmental standards and minimising corruption,” Conze explains.

Creating a supportive ecosystem for entrepreneurs to thrive

Serima states that another factor that further poses a challenge for SMEs is the lack of understanding in most emerging economies of the environment in which entrepreneurs operate.

“Understanding what motivates entrepreneurs and supporting their businesses in the early stages will help the private sector set a successful path for longer term innovation and business growth, and will fundamentally change the scale of social impact like never before,” he says.

To ensure a viable environment for these businesses to flourish, Serima says, there needs to be an ecosystem of partners who promote entrepreneurship and collaboratively support social enterprises.

“Enterprise building is an important business focus for SAP, the company is committed to finding innovative ways to solve both social and business issues in Africa. The company believes the private sector plays a vital role in creating a level playing field, driving innovation, and building an environment that enhances education and entrepreneurship to foster economic growth and fosters this as part of its investments in Africa,” says Serima.

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