How Have Empowerment Policies Benefitted The Previously Disadvantaged?
Tankiso Mosie, managing director of Red Ribbon Papers, a tissue and hygiene manufacturing business, started his business in 2012 with just R250 in his pocket. Operating from his parents’ garage at the time, he bought toilet paper from a wholesaler, rebranded it and started selling it in his community in the Eastern Cape. Seeing potential in the business, his father gave him a R200 000 loan, which he used to buy equipment so that he could manufacture the product and have control over the quality of the toilet paper he sells.
Like many small businesses, Red Ribbon Papers struggled to get access to further funding until it received a R3.7-million cash injection from the Department of Economic Development, Environmental Affairs and Tourism in 2017, and another R50 000 in 2018 from youth empowerment agency, NYDA.
This enabled the company to build a small factory, buy equipment, raw materials, a bakkie and a trailer to transport the product, making it a fully functional factory. Additionally, the company received branding and marketing support from the Small Enterprise Development Agency (SEDA).
Today, Red Ribbon Papers employs 14 villagers from Ngcamgeni in the Eastern Cape and manufactures 10 000 rolls of toilet paper daily. These are supplied to the rural areas in the Eastern Cape and retail stores such as Pick n Pay.
Although Red Ribbon Papers had clients before receiving government support, Mosie believes that without government’s empowerment policies, his company wouldn’t have made it this far. “The financial support from government resulted in a growth leap, it put us three or four years ahead of other small businesses,” explains Mosie. “We have more diverse clients, more equipment and we are getting exposed to new markets as a result. As a company that’s working in the rural areas, we needed a lot of that coverage.”
Red Ribbon Papers is a 100 per cent black-owned community-based company with 49 per cent of its shareholders being women. The company prides itself on employing staff directly from the community, thus reducing unemployment among the youth in the area. “We didn’t want to recruit in a structured corporate way, so we set up a committee of community members who were able to identify the unemployed and most disadvantaged in the community,” says Mosie. Red Ribbon Papers then took these unemployed youths, trained them and provided them with employment as a way of giving back to the community.
Creating employment opportunities is also at the heart of Beyond Ability Talent Solutions, a company that finds jobs and economic opportunities for people with disabilities.
Opportunities vary from learnerships and internships to permanent employment and linking entrepreneurs with disabilities with procurement opportunities. Beyond Ability also ensures that people with disabilities work in safe environments by conducting disability building audits in workplaces. “It’s imperative to ensure that attitudinal barriers are removed in a client’s workplace and we do this by sensitising employers on how to relate to people with disabilities,” says Ntsoaki Phali, owner of Beyond Ability.
Founded in 2009, Beyond Ability partnered with the Department of Labour to effect change in SA by ensuring that employers are aligned with the requirements of the Employment Equity Act. Since its inception, the company has received non-financial support from the government’s enterprise development agencies such as SEDA to develop its website and corporate identity, and NYDA for bookkeeping services.
Over and above the support from the development agencies, the company has benefitted from empowerment policies such as the Broad-based Black Economic Empowerment (B-bBEE) Act. “As a result of the Act, our business was recognised as a valued supplier by most companies and automatically received preferential procurement,” explains Phali. “The B-bBEE Act expects companies to develop suppliers through the Enterprise and Supplier Development (ESD) B-bBEE element, which has transformed our business.” As a result, her business received business incubator support from various business incubation programmes such as Shanduka Black Umbrella, Raizcorp, SAB KickStart and the Branson Centre of Entrepreneurship.
Beyond Ability continuously mentors and trains entrepreneurs with disabilities through a seven-week business mentorship programme to help them start their own businesses and help their new business ventures become compliant with the B-bBEE Act. Phali makes sure that these small businesses attract investors and funding so that they can benefit from the business opportunities that are created by the government and private sector. “Hopefully, the participants themselves will employ others by creating the needed jobs and,in turn, the South African economy will grow,” says Phali.
Value of mentorship
The B-bBEE Act has also helped companies such as BEEnovation, which works in the transformation sector, grow immensely. BEEnovation works with clients to make them more BEE-compliant by helping them implement BEE efficiently and cost-effectively. Its clients range from family and medium-sized businesses to JSE-listed corporates.
“Firstly, and most obvious, is that our business model is based on empowerment, the B-bBEE Act and BEE codes attached to that act, and helping companies reach transformation based on these policies,” explains Lee Du Preez, managing director of BEEnovation. Du Preez adds that his company was a beneficiary of the ESD programme funded by Engen and implemented by Raizcorp.
According to Du Preez, private companies such as Engen were encouraged to support and develop small businesses because of government transformation policies.
As a beneficiary of the programme, he was taught how to run a business effectively and was also provided with mentors who trained him and taught him how to reduce mistakes, thus making his business sustainable. “Research shows that businesses last longer because of mentorship and support, not because they are financially viable,” says Du Preez.
Receiving government support has meant that BEEnovation, now in its sixth year of existence, was able to weather the storms and survive longer than most small businesses, which struggle to pass the two-year mark. Du Preez thinks that even though there are benefits to BEE policies, sometimes there are many fly-by-night ESD programmes that waste development spend and don’t produce effective results for beneficiaries or the donor company.
As a BEE beneficiary, Du Preez thinks it’s important that the support he received has a trickle-down effect. His company works with Enactus, a student-led organisation, which uses the power of entrepreneurship to effect positive social change in the world. Enactus helps rural and underprivileged communities mostly in KZN use entrepreneurial tools to address food insecurity issues as well as bring extra income into those communities. Du Preez serves as a business advisory board member on Enactus and helps the students understand business principles associated with their projects and getting access to resources. He also provides them with general business mentorship.
“BEE is the most powerful policy that exists for small business and large businesses if they understand how to use it,” concludes Du Preez.