One of the effects of the new B-BBEE Codes of Good Practice is that it’s forcing big businesses to realign their supply-chain management models.
One of the elements in the new B-BBEE Codes is the requirement that big businesses support the development of small enterprises and suppliers. This element is the highest contributor among all five elements of B-BBEE Codes, scoring up to 40-points.
In what they hope will be a win, win situation, corporate players are bankrolling initiatives that develop small suppliers to become sustainable enterprises, with big businesses aiming to get high B-BBEE scoring, and thus become favourable for big government and private tenders.
Realignment with BEE Codes
First National Bank (FNB), yesterday, launched it’s multi-million rand SME fund, Vumela 2.0 Programme, in partnership with Edge Growth. Edge Growth specialises in enterprise and supplier development, SME growth and BEE compliance.
Head of Enterprise Development at FNB, Heather Lowe, said the programme is more comprehensive than any other solution that is currently on the market and will help both big and small businesses.
“Our solution will help corporates meet the new B-BBEE requirements which could see some companies downgraded if they do not empower their supplier base. More importantly, the holistic nature of our model could yield a sustainable economic growth model among the participating companies,” said Lowe.
What is the Vumela 2.0 programme?
Vumela 2.0 is part of the Vumela Enterprise Development Fund, a private end-to-end enterprise and supplier development programme that helps corporates to sustainably transform their supply chain.
The fund will invest R200 million over three years, of which R160 million will be directly invested into SMEs. SMEs can use the funding for working capital, equipment or for any other requirements they may have in order to grow their businesses.
The R40 million balance will be directed towards post investment growth support as well as the design of a sustainable supplier development programme.
The fund, which is immediately available, aims to reach between 25 and 49 small businesses and to provide financing of between R2 million and R20 million.
The fund provides financing for early stage, high potential SMEs that are unable to secure capital from traditional providers. Over and above, SMEs assisted through the fund receive non-financial technical support to grow their businesses into sustainable enterprises.
There are no preferable industries in which SMEs must operate, just that they must be in industries where they will be able to create a lot of jobs.
The structure of the programme also includes the alignment of existing supplier development strategies with the business strategies of participating corporates.
This is done by identifying current gaps and future opportunities in supply chains and recommending appropriate action.
Daniel Hatfield, Managing Director of Edge Growth, said this is a sustainable approach to supplier development with a potential to create a conducive environment for job creation and economic growth.
“Not only does it bring a compelling financing alternative to the SME sector but the solution is innovative in the way that it breaks down the barriers that typically prevent SMEs from accessing contracts from big business,” Hatfield said.