Cova AdvisoryLEADERS IN JOB CREATION & SUPPLIER DEVELOPMENT
About Cova Advisory
Cova Advisory is a majority black-owned firm that was set up by Duane Newman and Tumelo Chipfupa. Its services range from assisting companies with government grant and incentives services to sustainability, carbon and energy strategy services. Cova is able to assist corporates with supply chain transformation projects by helping them to identify and access available grants and incentives to fund their supplier and enterprise development costs.
Rethinking Job Creation
It has been dubbed a new dawn and indeed it is. The events of the first half of February ushered in renewed hope and belief in the people of South Africa. Hope that the immense challenges facing the nation can and will be overcome. The belief that the country’s new leadership is up to the task of turning things around.
The challenges are immense and the conditions difficult. South Africa remains a dual economy known for its extreme income inequality, which unfortunately is one of the highest in the world. Poverty and prosperity are defined by race and gender with ten percent of the population earning around 55%–60% of all income, compared to only 20-35% in advanced economies. Unemployment remains stubbornly high at 26.7% and the most affected are the youth.
The president made it clear in his maiden State of the Nation address that the creation of jobs, especially for the youth, is at the centre of South Africa’s agenda in 2018 and that the government will implement various measures to address unemployment including the convening of a Jobs Summit. The hope is that this summit will result in the alignment of stakeholder efforts and the generation of practical and effective ideas that will result in the creation of much-needed jobs. Indeed, it is high time that job creation is rethought.
They are critical to the growth of gross domestic product, new job creation and entrepreneurship. A recent study by the International Finance Corporation (IFC), a subsidiary of the World Bank, showed that SMEs account for more than half of all formal jobs worldwide, and their share of aggregate employment is comparable to that of large firms. SMEs do not only drive economic growth and job creation but play an important role in addressing urgent development challenges, such as those related to service delivery.
It is clear from the above, that what South Africa needs to overcome the challenge of high unemployment is the proliferation and the strengthening of SMEs. This underscores the importance of supplier development. Supplier development is defined by the Chartered Institute of Procurement and Supply as “the process of working with certain suppliers on a one-to-one basis to improve their performance and expand capabilities for the benefit of the buying organization.” Through a focus on supplier development, companies are able to create many mutually beneficial opportunities, contribute to job creation and showcase their commitment to the wellbeing of South Africans.
Although the private sector is the engine of the country’s growth, sustainable and inclusive private sector-led growth that contributes to reducing unemployment will not happen of its own accord. The government has to play a central role in developing an enabling environment. An environment that will encourage businesses to engage in activities that will create jobs, activities such as supplier and enterprise development.
Towards this end, the government already has a number of incentives in place to encourage job creating activities by the private sector, however their effectiveness is hampered by ignorance, as not many companies are aware of their existence, as well as challenges related to their administration.
One of these incentives is the Strategic Partnership Programme (SPP) which is administered by the Department of Trade and Industry (DTI). The programme’s objective is to support large private sector companies in developing and nurturing SMEs within their supply chain. It also aims to support Broad-Based Black Economic Empowerment (B-BBEE) policy by encouraging businesses to strengthen the element of Enterprise Supplier Development (ESD) of the Codes of Good Practice. The incentive is a cost-sharing grant and is available for infrastructure and business development costs that are necessary in the mentorship of suppliers. It is unfortunate that such a tool is being under-utilised.
The hope is that in this new dawn, the government and the private sector would finally come together to rethink job creation and effectively implement measures, old and new, that will set the country firmly on a path of transformative and sustainable job creation.
By Fungai Makoni