What is the future for Enterprise and Supplier Development (ESD) and Socio-Economic Development sector in South Africa?
This is a question which has dominated media headlines over the last few months as Minister Parks Tau announced his “Transformation Fund” aimed at being a government managed player managing ESD funds – a move which was perceived to be disruptive to existing corporate-led initiatives.
As a consulting firm which assists South African businesses to deploy ESD and SED funding and to help them align with their Sustainable Development Goals (SDGs), we spend a lot of time tracking trends and news related to the sector. Each month we publish a list of trends that we are following which we draw from a variety of sources.
These are the trends we have identified.
Analysis of website traffic suggests water and healthcare are topical
A key data source for us is our ongoing analysis of our website traffic and Google Search trends / queries.
If we look at the month of April, the following keywords are attracting traffic:
- Eskom solar registration fees impact
- Healthcare ESD
- Kaackai
- Blossomcare Solutions
- Period Poverty
The Eskom query was particularly topical over the past month with Eskom hinting that it would levy registration fees on solar installations. We argued in our recent article that this would create a challenge on multiple fronts and it is good to see Eskom reconsidering the implementation of these fees.
KaacKai is one of our partners in the South African water space who are doing some innovative things and with South African water infrastructure under pressure. You can find out more about their solution here.
Blossomcare Solutions are one of our key partners who support the fight against Period Poverty in South Africa.
Water: A shift from large infrastructure to small and modular
There is no question that water infrastructure is under strain and requires significant investment on both maintenance as well as new distribution routes. This has posed a challenge with much of the narrative being that the focus is on big, expensive solutions which in turn is holding back the rollout of projects.
One of the key learnings from the loadshedding crisis and the subsequent adoption of rooftop residential solar was that small solutions rapidly deployed can have massive long-term benefits.
We were encouraged to read this article from Dean Muruven from Boston Consulting Group (BCG) on South African Business Matter entitled: “Think Big, Act fast, start small: A path to water solutions in South Africa”
USAID funding cuts hits South African healthcare
Another major story making headlines in the last 6 weeks has been the fractious relationship between the US and South African governments and the abrupt funding cuts to healthcare organisations.
While the South African cuts are part of a wider global review of USAID, they have severely impacted a healthcare system which was already stretched to breaking point.
Writing for Daily Maverick, Tania Broughton has highlighted that not only have organisations been forced to immediately retrench hundreds of staff, they are also caught between a rock and a hard place as onerous South African labour laws have meant that organisations without funding are now having to pay retrenchment costs.
Economic Empowerment for the Disadvantaged (EED) vs. B-BBEE
B-BBEE legislation in South Africa is facing significant pushback from a number of stakeholders as many question the effectiveness of the legislation to drive economic change.
A development we are following closely is the suggestion from the Institute of Race Relations (IRR) who are proposing that B-BBEE be replaced with something called “Economic Empowerment for the Disadvantaged (EED)”
Interestingly this proposal is not being dismissed outright and there is a fascinating interview on BizNews where the IRR showcases how they are engaging with parties including the EFF and MK and lobbying support.
Challenging the success of SME support initiatives as part of B-BBEE
Adding fuel to this fire, there is an interesting statistic shared by our team from Decusatio Investor Relations and Communications comes from a recent Daily Maverick article which notes:
“In 2009, SARS reported that there were 685,523 vendors, of which 72% were active (493,576). In the last financial year, vendors totalled 959,000 on 31 March 2024, of which 488,118 (50.9%) were active. Despite the “stealth” expansion of the VAT threshold, the number of VAT-paying SMEs has shrunk.”
This begs the question – is it possible to socially engineer an economy or do we need to embrace free markets and make it easier to start and run small businesses?
Our view is that ESD and SME support initiatives do have a role to play, but unless we can unlock true economic growth, it will be very difficult for us to “grow the pie” in SA.
Have an Impact Investment Trend we’ve missed?
We are always looking for opportunities to collaborate with organisations to highlight their social impact and Corporate Responsibility Initiatives. If you are doing interesting things in the world of Water, Solar, Healthcare, or Entrepreneurship, then we are keen to learn more about what you are doing.
If you would like to setup a discussion to chat to our team, please do not hesitate to contact us.
