What is Enterprise Supplier Development in South Africa?

29 Oct What is Enterprise Supplier Development in South Africa?

Enterprise Supplier Development in South Africa is a means for medium and large companies to contribute effectively to black owned suppliers within their business supply chain and black owned businesses. How can a company contribute to Enterprise Supplier Development in South Africa?ESD is an element that will in the long term help black owned businesses realise economic growth. Enterprise and Supplier Development is one of the 5 elements in the revised Broad-Based Black Economic Empowerment (BBBEE) Codes. These codes list ESD as one of the qualifying contributions which can reflect positively on a company’s BBBEE scorecard.  Many businesses are regarding this element as a positive factor and not just a means to earn points on their scorecard.

This is a priority element for both Qualifying Small Enterprises (QSE’s) and larger businesses with a 40% minimum threshold target in relation to expenditure with black owned suppliers. If this minimum score is achieved, nine  points can be earned on the company’s B-BBEE score.  There are many ways that companies can empower black owned emerging businesses and earn points – a positive for a company’s overall BEE strategy and for the economy.

Companies can support supplier enterprises that are independent, have a turnover of less than R50m (QSE or EME), with black ownership greater than 51%.  If established companies can actively become involved in supporting smaller businesses, it will do much to encourage the growth of these enterprises, which in turn creates jobs and economic opportunities for black owned supplier companies and black entrepreneurs. It can also earn the measured entities up to 15 points on their scorecard. Government also hopes that ESD will stimulate the transfer of skills from established companies to newer businesses, creating cash flow and opportunities for future loans or grants.

With more and more companies driving Enterprise Supplier Development, South Africa can achieve long term growth and much needed transformation.

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