New B-BBEE codes expected to improve enterprise development - CNBC Africa

New B-BBEE codes expected to improve enterprise development

Southern Africa

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Only a few of the top 100 Johannesburg Stock Exchange-listed (JSE) companies currently procure core services from small black businesses.

This trend is however expected to change under the new Broad-Based Black Economic Empowerment (B-BBEE) codes of good practice, which will also encourage the support of small and medium enterprises (SMEs) and black businesses.

 “Yesterday we launched a report that looked at the Top 100 JSE-listed companies and at how they perceive enterprise development, and what strategies they implement to make enterprise development work. We looked at three main themes that came out of that code,” Impact Amplifier partner Pascal Fröhlicher told CNBC Africa on Thursday.

“The first theme was around what’s the perception of the strategy in that field. What we found out is that one of the main trends in that regard is how to get enterprise development closer to its core of the strategy of the actual corporate.”

Many emerging black businesses are not ready to be included in large corporate chains for revenue generation. Corporates have however provided a number of services to encourage this supply chain partnership by providing business development and incubation services to black businesses.

The aim of this service provision is to help stabilise the businesses and eventually lead them into the corporate supply chain.

“The second thing we found out is how this money is actually deployed. So the money can be deployed in different ways. There’s a lot of support services that are needed around that money to make that intervention more effective, and also make it more relevant for the business that is actually doing that,” Fröhlicher explained.

“And the third trend that we looked at was around impact measurements. Once the money is deployed, how can a corporate find out what actually worked and what didn’t work, and what actually had the impact that it’s supposed to have.”

The plan of the new B-BBEE codes is to get supplier and enterprise development closer together, and to provide an incentive to companies to use part of their enterprise development spend on their own suppliers.

This trend, according to Fröhlicher, will then be accelerated and will be in the interest of the company to create small businesses that are stable enough to be relied upon as a supplier.

There is however a perception of risk associated with black businesses and their capacity to deliver on core functions. Enterprise development services will therefore be provided to create more stability and increase reliability perception.

Enterprise development has become significantly important in South Africa’s corporate sector and corporates in turn have been positive towards enterprise development.