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Tendani Nelwamondo Senior Socio-Economic Development Specialist

ENTERPRISE DEVELOPMENT THROUGH EMPLOYEE OWNERSHIP: EMPLOYEE OWNERSHIP CONFERENCE 24 – 25 JULY 2012. Tendani Nelwamondo Senior Socio-Economic Development Specialist. INTRODUCTION. What is BBBEE? What is Enterprise Development? Why Enterprise Development?

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Tendani Nelwamondo Senior Socio-Economic Development Specialist

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  1. ENTERPRISE DEVELOPMENT THROUGH EMPLOYEE OWNERSHIP: EMPLOYEE OWNERSHIP CONFERENCE 24 – 25 JULY 2012 Tendani Nelwamondo Senior Socio-Economic Development Specialist

  2. INTRODUCTION • What is BBBEE? • Whatis Enterprise Development? • Why Enterprise Development? • What is Preferential Procurement? • What can be traded with the Trust? • Why trade with the Trust? • What are the benefits of trading with the Trust? • Who manage the Trust business ventures? • How is the initiative financed? • Conclusion

  3. What is B-BBEE • Broad Based Black Economic Empowerment (B-BBEE) is the process by which government is trying to ensure economic equity amongst race groups. It is governed by Broad Based Black Economic Empowerment Act (Act No. ). • The act intends to encourage transformation by including black people in the economy. • It covers aspects such as equity ownership (shares in the business), management of the business, skills development, employment equity (staffing), PreferentialProcurement(where you purchase your supplies), Enterprise Development and socio-economic development.

  4. What is Enterprise Development? • Enterprise Development is a process whereby the main company assist the target beneficiary to start an enterprise either monetarily or non-monetarily with an objective of assisting or accelerating development, sustainability and ultimately bring financial returns and operational independencyto targeted beneficiaries. • Enterprise Development can happen internally or externally (inside the company or outside the company). • Enterprise Development (ED) is one of the 7 elements contained within the BEE scorecard. It counts 15 points towards the scorecard and has a strong link to procurement.

  5. Enterprise Development • The main objective of the strategy is to utilise ED as an innovation intervention strategy to manage expectations and ensure that beneficiaries realise early benefits than expected. • Innovatively explore the possibilities of gaining access to procurement opportunities(Workers / Employee Trusts) (Outsource certain services to the Trust). • Explore how best ED budget can be utilised to fund the initiative. • Explore how best Preferential Procurement opportunities can be unlocked for in-house Workers Trusts.

  6. Why Enterprise Development

  7. What is Preferential Procurement ? • Preferential procurement endeavours to ensure that procurement opportunities are made available to all South Africans especially SMMEs. job creation and commercial activity.

  8. CODE 500 - KEY PRINCIPLES

  9. CODE 500 : THE GENERIC PREFERENTIAL PROCUREMENT SCORECARD

  10. What can be traded with the Trust? • POSSSIBLE BUSINESS VENTURES • Catering (Canteen) • Transportation • Laundry • Gardening or Landscaping • Security (very sensitive) • Pruning • Pesticides and Insecticides • Outdoor advertising • Recycling of any products e.g. papers, scrap metals etc

  11. Why trade with the Trust? • Build new enterprises using in-house existing resources or opportunities. • Create new employment opportunities • Mitigate the waiting period for realization of tangible benefits

  12. What are the benefits of trading with the Trust? • Investor • Creation of new employment opportunities (indirectly) • Motivated staff and Less labour turn-over • Better rating and claim maximum target points in terms of BBBEE scorecard. • Take a lead in promoting ED in South Africa and add more value in creating sustainable employment opportunities • Entrepreneur (Trust) • Increased financial rewards, linked to individual and organisational performance • Early benefits to target beneficiaries • Creation of new employment opportunities • An increased sense of ‘ownership’ of the enterprise • A long-term savings plan with minimal investment

  13. Who will manage the business? • A joint team of Trustees and management will appoint a management team or Manager to run the business • Support required by Trustees and Management • Capacity Building / Mentorship • Training and Education e.g. Basic Business Principles • Involvement of Trustees in planning • Marketing plan for the service rendered

  14. Structure for Enterprise Development Operating Company Workers Trust Enterprise Development Management Team New Business New business is 100% owned by the Trust

  15. How is the initiative financed? • Loans • Investments in beneficiaries entities • Seed Capital • Guaranties /Securities • Enterprise development budget. • Corporate Social Investments (CSI) or Socio-Economic Development Budget (SED) • Vendor financing • Grants • Donations

  16. Tranter Rock Drills Canteen

  17. Tranter Rock Drills Canteen

  18. Conclusion • Companies are encouraged to be innovative by using enterprise development as model to create investment opportunities for Workers Trusts. • Employee Ownership through enterprise development and preferential procurement can only be a success if Trustees, beneficiaries, Management and Shareholders working together. • The initiative has potential to contribute significantly in improving the socio-economic livelihoods of beneficiaries.

  19. Thank you / NdoLivhuwa Industrial Development Corporation 19 Fredman Drive, Sandown PO Box 784055, Sandton, 2146 South Africa Telephone 011 269 3000 Facsimile 011 269 2116 E-mail callcentre@idc.co.za

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