Supplier development: Access is everything!
In every growing economy around the world, small and medium size enterprises (SMEs) are the engine of employment creation. It is through entrepreneurship that South Africa aims to create five million much needed posts by 2020.
Procurement professionals need to be aware of mechanisms created by local financial institutions that can support the development of emerging suppliers.
“Banks must go beyond traditional banking and find other ways of assisting with nurturing small businesses from their start up phase right through their growth, development and expansion phases with the aim of ensuring that enterprises are sustainable,” comments Sisa Ntshona, Head of Absa Enterprise Development, Business Banking Africa.
"While a plethora of public and private partnership initiatives and programmes, as well as funding mechanisms exist to stimulate and grow small enterprises, challenges still remain to truly enable an environment that supports and assents to job creation and the provision of employment. "
Ntshona told SmartProcurement that there are three crucial forms of access that emerging businesses need to become sustainable.
1. Access to markets
"The ability to penetrate existing markets or create new markets is not an easy feat when there are established businesses with many years of operations. For example, Absa’s virtual marketplace, called the Procurement Portal, allows suppliers to be visible to corporate buyers. They can search for specific suppliers in a particular region, of a certain profile and with a particular capacity. The Procurement Portal also encourages corporates to buy more services and products from SMEs, facilitates financial independence and offers a range of non-traditional funding solutions. So, find the market and the money will find you."
2. Access to funding
"Cashflow is the lifeblood of any company and especially SMEs. Non-traditional lending solutions are required that will assist SMEs with their working capital and expansion funding requirements. The funding decision cannot be based on the traditional collateral requirements most banks have, and caters for start-ups and established businesses. Whether the challenge is funding to deliver on a corporate contract, bridging finance for farming crop or sufficient capital to buy a franchise, Absa has a non-traditional lending solution that is suitable for business owners," says Ntshona.
Access to business support
"The last important challenge facing SMEs is of a more structural nature given the history of our country and its general lack of an entrepreneurial culture. The reasons for failure are not due to technical inability, but rather a lack of general business skills. Research shows reasons ranging from a lack of management competence (16%), poor bookkeeping and record management (12%), poor financial management (34%), and sales and marketing problems (11%)."
He says that Absa has established nine Enterprise Development Centres (EDCs) located throughout the country. These walk-in centres provide a supportive environment for SMEs and offer equipment and computers (with internet access), as well as knowledgeable staff to assist with anything from financial literacy to business skills, mentorship and networking opportunities.
To find out more, email ABSA at email@example.com