"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
"Participation Builds Unity"
"MADE IN AFRICA - FOR AFRICA"
ENDORSED
THE BLACK BUSINESS SUMMIT
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Outcomes Document
DAY TWO
Chairman (Morning Session) – Lebo Gunguluza,
A number of problems faced by entrepreneurs are solved by using the franchise model, such as:
* Training and ongoing support in a proven business format is provided to inexperienced entrepreneur
As with all business – franshising is not a get-rich-quick scheme – it requires commitment and hard work.
In answering a question regarding the saturation of regions, Ms Gordon said that many regions are saturated by franchises that have been around for many years, but that entrepreneurs should look at the newer franchises that have emerged and also for new business ideas that can be franchised.
Criteria for MTN Support of Projects and Programmes:
Examples of MTN’s CSI include:
Mr Khoza explained how MTN has increased the cost effectiveness of their CSI programmes by leveraging support from other companies and sponsors. For every R1 spent by MTN on their Science and Technology Programme, R7 is leveraged from other companies and sponsors.
What business can do:
Mr Khoza answered that any organisation or company can contribute. CSI does not have to be in terms of money, but can be time, expertise and advise contributed free of charge to those who need it. What is important is commitment and how a company uses what is has.
What is the benefit or return on investment for CSI?
* Demonstration to government and society that you are a caring corporate citizen in Africa
Mr Khoza mentioned that MTN was part of a lobby group of big business and private investors in Africa who have joined to lobby the World Bank, IMF, WTO etc regarding challenges facing companies in Africa.
The question was posed whether this was an elitist network or if participation was open to all African businesses. Mr Khoza replied that the lobby group consists of large companies such as Barclays, and MTN, who network, share resources and work together to lobby world institutions in Washington, DC.
As a black entrepreneur, Mr Gunguluza named some issues affecting the young black entrepreneurs in South Africa. He also mentioned that these young black entrepreneurs would benefit most from a summit such as this – and they are not represented. A commercial revolution is needed.
7 steps that would revolutionise the system in favour of black entrepreneurs:
Mr Gunguluza stated that the South African Black Entrepreneurs Forum will rise, because it is driven by black entrpreneurs for black entrepreneurs.
Mr Gunguluza replied that the real issues were access and knowledge. The government should increase information and aggressively communicate with the grassroots about opportunities and how to utilise them. He said it should be the biggest spend of the government, in the same way HIV/Aids awareness is being promoted. The mindset of the people must be changed so that they will understand the opportunities available and the process that goes with it.
A representative of the Black Management Forum commented that they would like to partner with the South African Black Entrepreneurs Forum and young entrepreneurs.
In response to Mr Gunguluza’s comment that affirmative procurement is overrated and an easy way out, the question was posed: How can corporate SA adopt black entrepreneurs?
In the US and Britain, the middle class consumes 70% of goods and services. In South Africa, the top 10% of income earners consume 46% of goods and services. A strong South African middle class would increase the market immensely. Eastern interventions seem to work better in South Africa than American models, specifically the Malaysian “affirmative action” model.
The State is using its power to engender corporate activity in terms of BEE. The government’s role in BEE is reflected in intervention through licencing, regulations and laws and their buying power.
The Mining charter in 2002 is historically important, being a blueprint for empowerment and a signal of greater State intervention. We must guard against this intervention and enforced compliance leading to the “Ali Baba’ syndrome, where those benefiting from the charter get contracts and then sell them off to business, getting rich but learning nothing in the process.
However, President Mbeki ruled out empowerment charters for every sector and sweeping black empowerment legislation. The government will continue to leverage empowerment through its existing financial requirements for dealing with the State.
Nevertheless, BEE in the private sector has been driven mainly by legislation, procurement requirements and PIC business in the Financial Services Sector. This reactionary approach should be addressed – more proactive involvement in BEE by the private sector, as a strategic move, is required.
What business can do:
As President Mbeki stated, it is not about taking from one group and giving to another, but eradicating poverty so that all have more spending power.
South Africa is not on track in terms of real black economic empowerment. The private sector must push empowerment as a commitment to the continent and as a strategic long-term plan for increasing the consumer market.
President Mbeki stated “Economic empowerment is defined as a broad based process and the scorecard approach covering ownership, management, employment equity, skills development, procurement and corporate social responsibility.” The case study focused on CS Holdings’ experience and achievement of their BEE objectives, which they share with other companies.
What business can do:
Critical success factors are:
Mr Craddock referrred to the City of Tshwane, in which the economy has grown significantly over the last 10 years but employment figures are decreasing. It poses the question, where is the growth concentrated?
Black Economic Empowerment is a business imperative to create a market place for Telkom (and all other South African companies) to create a market place for their services. The company believes "Structural alignment is an absolute necessity to meet strategic business objectives”.
Telkom’s policies include procuring goods and services from previously disadvantaged suppliers (black owned, empowered, influenced and Engendered), enabling them to participate meaningfully participate in the mainstream SA economy.
Telkom’s procurement parctices are:
The goal is to create buying power among the majority of South African people, creating a marketplace for Telkom to trade within. SME contribution to national economies in countries such as the US and Japan extends to 50%. Employment is the result of SME activity, and as such SME activity is the goal not employment.
Telkom has identified Capacity Building Programs in line with their belief that long term sustainability is dependent on a supplier’s ability to read, understand and react to market dynamics.
These programmes are available from Telkom and include:
The key to success is not maverick spending on BEE but structured investment. For BEE initiatives to succeed in an organisation in the long term, the contribution of its operations is vital.
How to Opitimize opportunities Offered by Telkom:
The Telkom Tender Bulletin is available at www.telkom.co.za under “Procurement”. Look out for “Set Aside Business” which is set aside for black suppliers only.
Other black empowerment initiatives offered by Telkom includes for example a short-term payment policy, in which invoices of black empowerment suppliers are paid before the 30 day period to assist them with cashflow.
Chairman Peter Metcalfe commented that BEE companies must also change their attitude from demanding empowerment recognition but to offer a good service or product and secondary to that offering the buyer the opportunity to also benefit from an association with a BEE company.
A business linkage between buyers and sellers or a centralised purchasing organisation would result in economies of scale and reduce the duplication of effort.
Dr Ndlovu briefly detailed her experiences in building up Motheo construction as a black woman in a white male dominated industry. Dr Ndlovu studied the Implementation Manual of the Housing Subsidy Scheme and other Housing Assistance Measures and realised that no upfront capital was required to start a project as two payments could be received before the first brick was laid – for designs and town planning approval, done by consultants willing to work on risk. This made it possible to begin building homes in a community without having the nearly impossible task of raising finance.
Motheo eventually had to invite two white males into the business, demonstrating the lack of construction skills of women in a very male dominated industry. A joint venture with another woman-led construction company ensured qualification for Affirmable Business Enterprise (ABE) (67% black woman equity stake) and a successful tender for the Department of Public Works. This contract immediately disqualified Motheo from ABE status as their turnover for any one year exceeded the limit. Dr Ndlovu commented that it was almost a case of being punished for being successful.
Dr Ndlovu mentions in the transcript of her speech that there are other obstacles to overcome for example the financing structures of tenders and the contractual tems and conditions, which are one-sided in favour of the government. In addition, women owned construction companies tend to be too small to access the Skills Development fund.
However, Motheo has had some success in working with beneficiary communities, training them, empowering them to continue building their own houses long after the contract has been completed, as well as capacitating contractors and providing them with skills to manage their own businesses.
Ms Zuma quoted: “It’s a man’s world – not for long!” and shared with the delegates the names and biographies of a few very succesful women in South Africa.
Ms Zuma concluded that black business would benefit greatly from including women in their business. The reality is that women still have a long way to go in a “man’s” world, and noted that the IT industry in particular suffers from a lack of female participants. But with hard work, supporting each other and empowering themselves through education, women can turn a man’s world into “everybody’s world”.
PANEL DISCUSSION
The question was raised whether a database of professional women existed. Women in Business and TWIB (Technology for women in business) do have databases, but they do not include all professional women.
Chairman Peter Metcalfe suggested that women create their own forum along the lines of the Black Economic Forum.
Another delegate commented that women may not really need a forum, they have been succeeding despite the odds already.
The SA market consists of 90% Previously Disadvantaged Iindividuals and 52% of them are women – business must to tailor projects to develop this market.
* Preconditions for successful empowerment:
The way forward:
Ms Haupt spoke about winning people and remaining positive.
* Winning people:
PANEL DISCUSSION:
Another delegate commented on Mr Moodley’s discussion of tender pricing being considered on a cost plus margin basis. Mr Moodley said that to fix something, one has to carry the cost. BEE is implemented to fix the wrongs of the past and as such carries a price. Buyers and distributors should be transforming.
Mr Mfayela explained the concept of call centres – a huge industry in the US and UK. The call centre industry is labour intensive and expensive in terms of space required. The solution for these companies is to move their operations offshore. This presents a great opportunity for South Africa, where labour and space costs are lower.
The criteria used by these countries in selecting an offshore site are:
Other countries, such as Ireland and Australia have taken advantage of the opportunities related to offshore call-centres and have achieved great success (Ireland has reduced unemployment from 20% to almost nothing).
South Africa must utilise this opportunity quickly, as new competitors such as China are emerging to take up this opportunity. South Africa has strengths such as physical proximity to the US and UK and an available workforce (high current unemployment) with high school education at moderate cost and low attrition. A few weaknesses need to be overcome, such as that English is not the first language of most South Africans and basic training must be provided.
Mr Mfayela said that job creation must replace job rotation in South Africa.
SETA’s Sector Education and Training Authorities is the fastest growing organisation in South Africa!
Perceptions about SETA:
The reality is
USE IT OR LOSE IT
National Skills Fund has R3 billion still unspent - Grants are paid as follows:
This represents an alternative recruitment model – instead of looking for competencies, companies can now look for people and train them through the SETA/NSF funds in the required competencies. This will also result in skills transfer.
Many business complain that there is no money for training, yet R3 billion lies unused in the SETA fund – the key is to be creative to access the resources that are available. For example, MBT Strategic Services, using the SETA funds, trained people in the Cape to speak Dutch and employed them in a call-centre outsourced from Holland.
CONFERENCE CONCLUSION - Peter Metcalfe
Participation! To succeed in creating sustainable black economic empowerment, business must work togther, collaborate and take action!
This Outcomes Document will serve as a way for the ideas and information from the Summit to be utilised. It will also serve as a basis for further Summits on Black Economic Empowerment.
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WebPage last revised: 25/09/2009
29 - 31 JULY 2003
SANDTON CONVENTION CENTRE
SANDTON - SOUTH AFRICA
Black Business Summit 2003
28-29 July 2003
President of the South African Black Entrepreneurs Forum
Bendeta Gordon, Director, Franchize Directions
Boosting BEE and SMME’s by encouraging successful black-owned franchises
* Extensive research and development is done by the franshisor to extend the life of the brand and this knowledge is available to the franshisee, ensuring his business survival and growth
* A brand and a corporate image is already established, cutting a significant cost for the franshisee
* Less capital is required for start-up and the trail-and-error of independent start-up is reduced due to franshisor experience
* Investors are assured of a business model that has been proven
* Marketing, research and development is done without the franshisee having to spend time doing this
* Chances of business survival is greater with a known brand, a proven business model and support from the franchisor
QUESTIONS
In response to a question from a delegate, Ms Gordon said that entrpreneurs looking at franchise opportunities should do research and investigate their options, to ensure they buy into the right franchise run by good and honest franschisors.
Dr Meshack Khoza, General Manager, MTN Foundation
Corporate social responsibility – is your company walking the talk?
* Must have a wide impact from grassroots to high levels echelons of society
* Projects must be sustainable
* Driven by local, national and societal needs
* Should foster local and international partnerships
* Should add value to MTN business and to South African society
* Profile MTN as a caring corporate citizen
Science and technology; School Connectivity; MTN Art Institute; HIV/Aids
* The lesson here to other businesses is that it is not how much money is spent by a company on CSI, but how the money is spent and leveraged by bringing other companies on board, being creative and increasing impact and sustainability
* It is important for African business to work together, because all African companies experience similar problems and can support each other.
QUESTIONS
How large should a company be to have a CSI programme?
* Secure buy-in from a wide range of stakeholders
* Enhance corporate image to government and society
* Build reputational capital and secure “licence to operate”
* Increase market share and raise company profile in Africa
* High profile media coverage
* Invest in Africa’s community
Lebo Gunguluza, President of the South African Black Entrepreneurs Forum
Empowering black business in the African Media – a case study
* Banks must change their approach (It is easier for the employees of a black entrepreneur to get credit at the bank than it is for the entrepreneur)
* Bankers must change their attitudes
* Telkom are closing small business down by not allowing prepaid business lines – no business can be run without communication
* Corporate Managers must support black projects through CSI and affirmative sponsorship
* Empowered and Elite blacks must nuture and mentor young entrepreneurs in truly African style
* Corporate South Africa must adopt black entrepreneurs and effect skills transfer
* White South Africa must share their trade secrets – share knowledge and transfer skills
QUESTIONS
A delegate raised the question of banks changing their approach and attitude, while Shadrach Appanna, Economist from the Development Bank of Southern Africa, yesterday claimed, in his presentation, that black entrpreneurs are not submitting correct documentation or following the criteria and rules.
* Adoption does not always mean giving money
* Assistance in the form of making available office space, a computer or access to a phone line to an entrepreneur until such time as he or she can stand alone
* Skills transfer and training could be another option
Colin Reddy, BEE Director, BusinessMap Foundation
BEE: The status and the path ahead
* If business changed their attitude and considered the BEE issue strategically, the ideal driver would emerge.
* BEE is the way to increasing the consumer market in South Africa significantly.
* The GDP has the potential to quadruple if most PDI’s are absorbed into the productive economy.
* In a quadrupled economy, there is enough room for all of us, white and black.
Makhuperetja Nyama, Executive Director, CS Holdings
Partnering for genuine economic empowerment: strategies for sustainable partnerships – a case study
* In order to achieve real black economic empowerment companies must move out of their comfort zones, transform and meet other companies half way.
* The attitudes of entitlement to empowerment on the one hand and obligation to BEE must be changed.
* BEE should be implemented through desire, not legislation
* Base BEE on good business principles
* BEE investment should be 100% at risk
* Ensure BEE commitment and involvement over period of time
* BEE investment should be exclusive, no investment into similar companies
* Active participation by BEE partner is essential
* Culture fit – compatible cultures especially regarding leadership, integrity and commitment
* Organisation must be ready for transformation, especially the attitudes of the company employees
* Shared responsibility – both partners must invest time and resources, experience some degree of risk and cost, involvement at all levels throughout the business.
Neil Craddock, Senior Manager Black Economic Empowerment & Strategic Planning, Telkom
Achieving the business imperative – A Telkom case study
* Open tender Process
* DTI Subscription (Large contracts are advised to the DTI)
* Economic Empowerment
* Cross representation
* Business Code of Ethics
* Delegation of authority
* Sourcing manual
* Competitive mindset Program
* Legal and ethical issues eg forensic auditing to curb Fronting
* Evalution criteria
* Technical
* Quality
* Life Cycle costing
* Price
* Adding value locally (as opposed to what happened in the City of Tshwane)
* Criteria specific to tender
* BEE
* Black Ownership & Joint Ventures
* Black Control & Management
* Women and Disabled
* Project specific and general sub-contracting
* Affirmative procurement
* Employment equity & skills Transfer
* Tender Information
* Tender Courses
* Business Management
* Quality Management
* E-business
* Further courses are under development.
Assess your company’s core business
Approach Telkom to present your organisation
Telkom will identify suppliers on contract (who have outstanding affirmative procurement or sub-contracting commitments to Telkom)
Telkom will inform you of there suppliers for you to present your business case to these suppliers
Pursuing independent opportunities
QUESTIONS
In response to a question, Mr Craddock explained that in cross-section procurement there is not a specific BEE criteria depending on the comodity but the black empowerment requirement never goes below 10%.
David Monkman, MD, Anicap Venture Partners
State funding support for Black Business and SMME’s – co-ordinating the activities of the state’s development finance institutions – a case study.
QUESTIONS
In response to a question regarding why there are so many institutions to help SMME and not just one, Mr Monkman said that it would be more efficient for SMME to have one institution they can turn to to handle all aspects of assistance required (a venture capital type approach), however, it is easier for government to split the institutions along, for example, financial and advisory lines.
Dr Thandi Ndlovu, Chairperson, Motheo Group
Leading ladies in BEE: a woman’s role in the growth and development of Black Business – a panel discussion presentation
Charmaine Zuma, Manager: Tender Office, SITA
Leading ladies in BEE: a woman’s role in the growth and development of Black Business – a panel discussion presentation
A delegate commented that women owned companies could consider pooling their resources and functions such as payroll and HR to match SETA requirements and so access the SETA funds.
Saths Moodley, MD, Webnet Network Solutions
The winner takes it all! A discussion on South African BEE success stories
* Grow economy – sustainability and profitability
* Accept principle that we share a divided past and common future
* The private sector has a role to play in this future and create stability
* Empowerment advisory councils – for blacks, women and disabled
* Balance Scorecard – collective agreement on what is scored
* Align Public and Private measures with a broad based BEE strategy (lead or be led)
* Invest heavily into providing skills and infrastructure to schools and rural areas
* Less talk and more action
Marsha Haupt, Manager: Sales Support and Incentives, Standard Bank
The winner takes it all! A discussion on South African BEE success stories
* Make life happen and break barriers
* Work hard, smart and clever
* Have fun and passion for life
* Create opportunities and don’t give up
* “Blessed are the flexible, for they shall not be bent out of shape”
A delegate commented that some BEE oportunities were window dressing – not opportunities to make a real difference. Mr Moodley replied that blacks and women should not accept such terms and should also stand together and help each other.
Mfanu Mfayela, Group CEO, MBT Strategic Services
How sector skills plans can benefit industries, communities and individuals in solving the lack of skills crisis in the country
* 40% - Cost (Labour cost, incentives and grants)
* 30% - Environment (Infrastructure, political stability)
* 30% - People (Size of available labour market, literacy rates, educational levels of workforce)
The Skills Levy Fund is funded by industry not government
Voluntary learnership programme with high PDI encouragement offer grants, tax payback and rebates.
Bureaucratic
Non-delivery
SETA’s do pay
They are flexible in unique cases if the uniqueness is motivated correctly
Fast track the learning process
- 50% upfront
- 25% after 6 months
- 25% at completion
QUESTIONS
A delegate commented that corporates are smothering SME’s in South Africa by ignoring quality South African products and services and continuing to support overseas services and products, especially in the IT sector. Mr Mfayela agreed that his company also experienced such problems, but their solution was to shift their focus to the international market.
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