Keith Michael is the founder and chief executive Lebone Litho Printers, a 100 percent black-owned printing company and strong believer in local economic development. Photo: Supplied
Keith Michael
THE LOOTING and riots that engulfed parts of Gauteng and KwaZulu-Natal in July were a tragic event that gives us all cause to reflect.
The destruction of property, disruption of economic activity and, above all, loss of life have no place in our society and should never be repeated. Whatever you believe was the cause of the riots, the lack of opportunity through high unemployment, inequality, poverty and hunger was the dry powder that ignited when it caught a spark.
To avoid their recurrence, government, business, labour and civil society have to work together. Business has an important role to play in this through the creation of economic opportunity, while government has to create the conditions that allow for this to happen. The best way to prevent people from destroying property is to give them a stake in that property in much the same way as the best way to give young people hope is to give them a stake in the country’s future.
A good place for business to start is to use two sets of tools at its disposal: Enterprise and Supplier Development (ESD) and Corporate Social Investment (CSI). These can be used to help create and sustain business in townships and rural areas in order to create jobs. But for both to be used more effectively will require businesses to engage communities more deeply, be bold and imaginative and commit more resources to both.
Business already has sufficient incentive to pursue ESD and CSI as they are important pillars of the broadbased black economic empowerment scorecard. But, of course, this doesn’t mean these have to be pursued as a box-ticking exercise but as a business and social imperative.
For ESD, companies need to be bold and imaginative. The redesign of global value chains offers companies with South African operations an opportunity to assess whether township and rural businesses cannot be brought into their value chains and benefit directly from being key suppliers.
Is it risky? In the short term, yes. Is it costly? Maybe, but it has to be done.
Of the existing ESD programmes, South African companies simply have to take on more risk. The aim of ESD is to develop companies which can become suppliers to our business, and that process involves developing those companies, then awarding them contracts and paying them on time. At times, we have failed companies on this score.
ESD must help small black and female-owned companies overcome financial and non-financial barriers. That means we must work with banks and development finance institutions to fund small businesses.
We have to identify township and rural-based businesses, support them up to the right level, fund them and allow them multiple opportunities to fail before they make the grade as a supplier. That is the only way we will make a difference. ESD schemes such as the South African Breweries Owner driver scheme are flagships of successful programmes. We need more.
CSI is another way for companies to do good. But again they need to be more imaginative and not treat CSI as an opportunity to be charitable. The first point is not to assume that we know what communities need but rather, through engagement, assess what their pressing needs might be.
When we design CSI programmes, we must look for ways to create entrepreneurial opportunities. We must then design interventions that can be grown to be self-sufficient.
South African companies have been found to give more than the required one percent of net profit after tax to CSI, and programmes in areas such as education have done well, but again we need to commit resources across health and social welfare.
Lastly, we need to look after our employees better: pay fairer and, where possible, extend our health and wellness programmes to dependants.
South Africa’s corporates have a history of stepping up when required. Think of the decision by Anglo American in the early 2000s to provide antiretrovirals to workers, then to their families, to combat the rising tide of HIV/ Aids. The decision was taken in defiance of government policy inertia and, although driven by self-interest, still showed courage and foresight from which all of business benefited when Corporate SA drew up its Aids response.
The latest crisis calls for business to give an urgent but targeted response and it requires boldness and imagination. We cannot fail our communities.
Keith Michael is the founder and chief executive Lebone Litho Printers, a 100 percent black-owned printing company and strong believer in local economic development.
*The views expressed here are not necessarily those of IOL or of title sites.
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