Posts Tagged EME
Every company in South Africa has procurement spend. When the codes of good practice talk of procurement they include even the milk for the staff members’ tea, the paper for printing, the office fan, to mention but a few instances. More often companies tend to ignore the smaller amounts spend from their procurement calculation. This has led to some companies claiming that they are net importers and so they will not get any points under the Preferential Procurement element of the scorecard. The fact that imports are eligible exclusions from the scorecard calculation makes it sometimes even easier to score more points. Even more pleasant for a company that imports the majority of their procurement is the fact that the small amount of local procurement is likely going to be from small suppliers. The small suppliers are likely going to be EMEs (businesses with annual turnover below R5 million) or QSEs (businesses with annual turnover between R5 million and R35 million). For procuring from these businesses an entity’s spend gets an enhancement because such procurement counts under two indicators. More still, it makes the calculation of Preferential Procurement points easier to follow and also easy to get scorecards from the fewer suppliers.
The goal of BEE is not to make life difficult for anyone. It is about affording opportunities to those who did not have them before. It is also about making life easier for those businesses with an annual turnover below R5 million. Making huge demands on them will be like militating against investment and national prosperity. One potential client of ours is an EME (businesses worth less that R5 million annual turnover) and needs all the support he can get in order to thrive. I have always said patriotic huge corporates should take it upon their shoulders to make sure such businesses prosper.
Large corporates in South Africa are failing to absorb the swelling number of candidates looking for employment. This is due to various factors. The most recent one being that they have felt the impact of the global economic meltdown more than the the small enterprises. Most processes in large firms require much more advanced skills and expertise. The other reason is that it is easier for huge corporates to employ from internal sources instead of going to the external labour market.
On the contrary, small businesses have been employing many potential job candidates. This is because they do not have the money to pay very skilled and experienced employees. They do not have the manpower to head-hunt or advertise widely. They do not have complicated processes that require very skilled people. As a result, they can afford to recruit newly qualified graduates. In so doing they are playing a critical role in reducing unemployment and poverty levels.
In view of this, large corporates can play their part by supporting small enterprises, most of which are Black-owned, and earn points under their enterprise development element of the scorecard. The support may not be directly monetary but it can be helping them market their products and services, training their employees, paying COD and allowing discounts. The small enterprises’ capacity to absorb more people from the labour market will be boosted as a result. By so doing the BEE goals will be met sooner rather than later and the economy will grow at a better rate.