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Integrating small entrepreneurs into value and supply chains profitably
NBF and Southern Africa Trust workshop
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The NEPAD Business Foundation and Southern Africa Trust held a workshop on integrating entrepreneurs into the value and supply chains. Speaking at the workshop, Muzi Chonco, Sustainable Development Manager at South African Breweries, said that brewing is typically a local business, which makes the development of local entrepreneurs a key to SAB's growth.
Modelling inclusive business mechanisms
Inclusive business models, in order to be optimal, have to be directly integrated into the value and supply chains of the respective implementing companies. Two models have proved effective and comprise packaging such models in special purpose vehicles, where inherent risk is somewhat distanced from overall business risk, and direct supplier-financier or principal-procurer arrangements.
Reviewing related risks and realising payoffs
Financially, companies face risk of realising negative returns owing to large investments in supply chains that are not large scale or commercial. However, diversification of the supply base through procuring from smallholder local farmers also reduces reliance on supply imports in some business types, if local large scale suppliers are unavailable. This procurement process simultaneously reduces transport costs, shortens supply lines and ensures high-quality raw materials for business.
The process of risk mitigation entails jointly developing business plans with small entrepreneurs, financing the acquisition of assets and working capital, assisting with ongoing company secretarial and administrative services, creation of a training and development plan for the transfer of skills to partners, mentoring and coaching. These components are critical in order to hedge against supply side risks. To enhance corporate governance within the SMMEs, like Anglo American, businesses can provide ongoing strategic, operational, financial and business support through representation on the board in a non-executive capacity. Overall, such interventions are costly but minimize the substantial risk of remote oversight where supply consistency is threatened.
Below are links to presentations by speakers:
- Overview of inclusive business models
- Dr Prega Ramsamy, Southern Africa Trus
- Integrating small entrepreneurs
- Thomas Malada, Standard Bank
- esSAygifts inclusive business models
- Nico Jacobs, esSAy gifts
- Inclusive small business in supply chains
- Muzi Chonco, SAB
- Removing the barriers to agriculture in SADC
- Henri Minnaar, NBF
- B4D Tools
- Ulrich Klins, Southern Africa Trust
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