Why ED?
1. Cost effective accumulation of BEE points
In comparison to the other elements of the codes, the cost per Enterprise Development point is significantly lower. Below is an example of the relative cost of different BEE interventions for one of our clients . As you can see, the cost of ED interventions is significantly lower than the cost of the other BEE interventions, provided it is done in line with ‘best principles’ and the appropriate fund vehicle and business model is adopted (see ED Fund).
2. Flexibility with regard to the impact on the company’s core operations
In comparison to other elements of the BEE Scorecard, ED can be structured in such a way as to have either or a no large impact on your core operations, depending on your strategy.
3. Multiplier effect
The codes have been structured in such a way as to create a multiplier effect; if ED is performed on suppliers, the efforts are multiplied.
4. Broad Based Impact
This element of the codes has real potential to create economic growth and jobs by building sustainable businesses and linking them into supply chains. This will impact the very people the codes are designed to assist; the previously disadvantaged; i.e. the majority of the population with low skill sets and education levels.
The big picture
Globally, Enterprise Development is recognised as being the key to poverty alleviation through the development of sustainable businesses that create jobs. In South Africa, a country with 40% unemployment, ED could double the rate at which jobs are currently being created, becoming the most powerful force against poverty.
Enterprise Development is an even more important undertaking in SA than in other developing nations: SA has more difficult economic circumstances than other unequal, developing nations because it faces greater global competition (it is “more open” than Asia, India, China, etc.), and in many respects it is less competitive (with higher formal labour costs and less productive labour being key empirical ingredients). It also has the added responsibility of reconciling a historically divided country through the inclusion of disadvantaged people into the main stream economy.
Thus Enterprise Development in South Africa goes far beyond the simple ticking of boxes on a corporate BEE scorecard; it is an imperative to a sustainable future.