10 June 2022

“Real impact” questioned as ESD interventions fail to convert into market opportunities

Submitted by Leigh Callipolitis Callipolitis
“Real impact” questioned as ESD interventions fail to convert into market opportunities

As debates around how to unlock future potential of mining and related exploration rights continue, the interconnectedness – and dependence – of stakeholders in the industry remains a critical consideration when it comes to mapping collective sustainable long-term success. With Enterprise and Supplier Development (ESD) a key means of bridging gaps and enabling positive community compacting, “beneficiaries” are understandably starting to question the impact of these interventions as they fail to convert into direct opportunities at mines. What good are programmes if no fundamental difference can be seen by SMEs in the short-term, and what does this ultimately mean for contributors to the sector? Nick van Rensburg, CEO of the Phakamani Group, explains.

As entrepreneurs and SMEs in the mining sector are exposed to more ESD solutions “geared for them”, we’re starting to see greater push-back in terms of the measurable value and impact of the solutions in terms of meeting actual on-the-ground needs of the very people they are designed for. This is to be expected given the socio-economic realities of many of South Africa’s peri-urban areas. Unemployment rates remain high. The real cost of living is rising unabated, and individuals, families and communities are being pushed closer and closer to the poverty line. It is hard to have hope and “wait” for promised – or expected – opportunities from mines or mining value chains in these environments.

While preferential procurement policies and transformation commitments in the sector have done much to build and support communities and their stakeholders, the need will (arguably) always outweigh the funding available for these initiatives. This makes it imperative that ESD interventions genuinely deliver on their intent and the promise of what they can and should change in communities. As such, the organisations and specialists designing and implementing these initiatives cannot simply roll out “new” versions of the same programmes where training doesn’t convert into practical next steps and create market advantage. Entrepreneurs on programmes must leave training and meeting rooms (virtual or in-person) better off than when each session started. If not, the opportunity cost for all parties becomes far too high.

As experts and solutions providers in this space, this is something we need to lead from our side. It should – and must – involve our own deep introspection about how we are innovating and driving our own continuous improvement, to do the very same thing we keep encouraging the SMEs on our programmes to do: notably remain relevant and future-facing. In most instances, this process should result in active change.

For example, given that most ESD interventions typically include three levers (i.e. training and mentorship; funding and access to market), focusing on one or two of these alone, without addressing supply chain realities means that SMEs will continue to find themselves in the same situation without an expected market opportunity at the mine at the end of the programme. This is unless the training/ mentorship and funding combination are used directly to assist the SME to access a ringfenced contract. As such, far more practical work must be done to ensure that the broader concept of “access to market” builds marketing and sales capabilities and the overall ability of all programme SMEs so to better compete in the region as opposed to at the mine alone. Where this isn’t done, we can expect single-focused interventions to continue creating unrealistic expectations, demands, dependence and even more SME risk in communities that cannot afford this.

To this end, we must encourage beneficiaries to keep challenging the marketing and sales, and access to market aspects of programmes in particular.

We have to do the same. “Me too” survivalist enterprises can only grow SMMEs to a point. Alternative strategies and business models must be shared. The virtues of “hustling” versus building a professional business must be robustly debated. These far more rigorous internal and external discussions must be welcomed. As solutions providers, we have to keep stretching ourselves to take a more inclusive stakeholder approach upfront during the design process to ensure that anticipated “real impact” is defined and qualified. Only then can it be delivered as a measurable outcome. 

Too often we forget that the bright future of mining in this country has been pioneered by entrepreneurs – the original forefathers of this space; visionary individuals who built this massive sector mine-by-mine on their dreams. Today, new generations of individuals with this same passion, courage and intrepid dreams of their own are lying in-wait in these surrounding communities; wanting to be discovered. ESD remains the means of ensuring it is truly their time.