Enhancing enterprise and supplier development ecosystem

Abstract

It is often said that South Africa’s future depends on the ability of small, medium and micro enterprises (SMMEs) to grow. SMMEs can be instrumental in driving competitiveness, economic development, and job creation. They can also play a central role in providing the innovation necessary for communities and environments to thrive sustainably. Moreover, a flourishing SMME sector can be the catalyst for transformation. Across the world, entrepreneurial ecosystems have been demonstrated to play an important role in entrepreneurial development. An entrepreneurial ecosystem is defined as “a community of multiple coevolving stakeholders that provides a supportive environment for new venture creations within a region” (Cao and Shi, 2021, p. 75). Enterprise and supplier development (ESD) programmes have gained increasing attention as vehicles that support the growth and sustainability of small and growing enterprises or the SMME sector in South Africa. ESD is fuelled by legislation such as the Broad-Based Black Economic Empowerment Act of 2003 and the Constitution of South Africa (1996), and transformation and inclusion remain its main objectives. The B-BBEE Commission (2022) points out that effective ESD programmes can drive job creation, particularly for the youth, and economic growth by strengthening local supply chains. However, despite a variety of measures having been put in place to develop the SMME sector in South Africa and ESD programmes being valued at between R20 billion and R30 billion per annum, the impact of such programmes in terms of developing the country’s entrepreneurial capacity and capabilities remains uncertain. We would like to thank the 41 members of the ESD ecosystem for giving us their time, Edge Growth for their funding support, and Dr Lusapho Njenge for his helpful comments on earlier drafts of this White Paper.