Can corporate procurement help create the next generation of entrepreneurs?

Nearly half of the 10 million students that graduate across Africa each year, are unable to get jobs. One of the only ways to bring down those numbers in a sustainable way is to create an enabling environment for young entrepreneurs to not only start businesses, but to continue to run and maintain them.

As it stands right now, though, many countries are failing to foster this kind of environment. The 2016/2017 Global Entrepreneurship Monitor (GEM) shows that two-thirds of early-stage small and medium-sized suppliers closed their doors predominantly because of problems accessing finance to carry on operating.

How do we change this reality? Dumisani Mkhonza, COO, Head of Solutions, Enterprise & Supply Chain Development (ESD) at Absa, considers where corporate supply chains and the business world fits into the equation, in this month’s SmartProcurement.

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Nature vs nurture

The ‘nature vs nurture’ debate is a well-worn one, covering whether behaviour is genetic or learnt. Proponents from each side are passionate in their beliefs – and this is no less true in the entrepreneurship space when we consider whether the people who create and grow these small and medium-sized enterprises are born or forged by their life experiences.

Writer for Forbes, Freddie Dawson, argued that it is not as simple as that, with most entrepreneurs falling somewhere in the middle of the spectrum. In fact, Dawson cited widespread agreement that entrepreneurs are five percent born with their inventive ideas and personalities, and 95 percent crafted by their situations and life experiences.

This is good news for South Africa and countries across a continent whose growth is largely driven by these pioneers at the helm of small and medium-sized enterprises (SMEs). Research indicates that SMEs comprise 91 percent of formalised businesses in South Africa, providing 60 percent of the labour force with jobs and contributing approximately 34 percent to the country’s GDP. In sub-Saharan Africa however, SMEs are even more instrumental in creating jobs, providing 80 percent of people with formal employment.

The need to harness the potential of these growth drivers of development can therefore not be overstated, particularly on a continent with the scale of challenges that Africa faces. Political and economic volatility, widespread unemployment and stagnant growth levels are currently the largest issues hindering African countries from realising entrepreneurship’s true potential in eradicating unemployment and inequality.

Corporate buyers and a supply chain development

Financial institutions have partnered with bespoke online procurement portals such as the Supply Chain Network, to link approximately 59 000 SMEs with 7 000 corporate buyers and a supply chain development programme allowing corporate clients support the SMEs in their value chains.

It cannot be up to governments alone to reverse or curb this trend, but requires concerted effort by multiple stakeholders in both the public and private sectors to nurture sustainable SMEs. Not only do we need to incorporate more effective entrepreneurial training and skills development into our schooling system, but we also need to ensure that the country’s bigger businesses are playing their parts.

By establishing enterprise and supplier development approaches that minimise the challenges of starting and running a business, as well as by providing them the support they require to become sustainable businesses, corporates can contribute to turning the tide.

Broadly, this could involve corporates actively working to provide ways for small and medium-sized business owners to access and be part of corporate supply chains, as well as setting aside a portion of their procurement spend for these kinds of businesses.

While it is heartening to see widespread advances in corporates making it part of their mandates to support and grow entrepreneurship, we need a concerted push in order to make our country’s current and future entrepreneurs a greater force for change. If players from across sectors and industries collaborate, we will soon see entrepreneurship become an enduring engine of growth and economic development.

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