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MODEL EXAMPLE

The innovation of big business has benefitted enterprise development

MODEL EXAMPLE

Almost three decades ago, an enterprise development programme was begun in SA – Anglo American’s Zimele. Established in 1989, long before enterprise development was fashionable or required by legislation (and before it was even defined as such), its roots date back at least another decade as a product of the group’s scenario-planning function under Clem Sunter. It’s been so successful that Anglo ‘exported’ it to Chile in 2006, to Brazil and Botswana in 2013, and Peru in 2014.

Anglo says the programme is ‘recognised internationally as a best practice model in supporting SMEs’, and it was adopted by the World Bank’s International Finance Corporation (IFC) in 2008. Other corporates in SA, including De Beers (before the 2012 takeover), Mondi and Barloworld have all been influenced by it.

Central to Zimele are nearly two dozen small business hubs across the country, a number that has doubled in the last decade. These hubs offer support and mentorship to entrepreneurs and SMEs. Beyond this critical support, Zimele offers equity finance or subsidised loans through six funds, each targeting different sectors and/or size of businesses. Some funds are run in partnership with others, generally government, to ‘deliver on specific mandates’ such as the Sebenza Fund, a R500 million equal partnership with National Treasury.

Importantly, Zimele doesn’t just focus on SMEs related to the mining sector or its supply chain. Increasingly, it is supporting non-mining-related SMEs, which squares with the reality that mines do close and those affected local economies need to be as sustainable as possible if that happens. Anglo says it now understands that ‘enterprise development programmes are crucial in unlocking the maximum developmental potential of local procurement. When we are successful in procuring from local entrepreneurs, we benefit a relatively small fraction of the local SME population. Enterprise development programmes allow us to expand benefits to the broader local economy in a way that bolsters the community and also our own business’.

Zimele supports around 46 000 jobs in local SMEs, while its Emerge programme in Chile has supported around 60 000 jobs since 2008. In SA, in excess of R1.6 billion in funding has been provided for more than 2 000 small businesses in the last decade. Anglo says these enterprises generated revenue of approximately R8 billion.

The mere fact that it has been running for nearly three decades gives it a massive cachet. This provides Anglo with rich and accurate data, enabling it to implement the model in other markets and rapidly achieve fairly aggressive targets. The IFC makes the point that Zimele ‘is an initiative that was conceptualised and promoted solely by Anglo American without any external or public support’.

In a 2008 report, it says ‘the commitment of the Zimele team to enterprise development is truly remarkable, and the investment in more than 150 supply chain-related companies since Zimele’s inception in 1989 is a testament to its success’.

This is high praise indeed, especially since it highlighted that ‘even though the IFC does not have an investment or advisory relationship with Zimele at present, we found their initiative worth disseminating. We hope that companies around the world will find in this model an innovative approach to mitigate challenges faced while integrating local businesses into their supply chains’.

Zimele is no doubt a global success story and, like so much other home-grown world-class intellectual property, one that we don’t talk about nearly enough (or loudly enough).

It’s testament not only to Anglo but also the determination of big business generally in this country to be proactive in driving SME development. We have more than our share of leading big companies – their innovation will be crucial in helping create a world-class environment for small businesses. 

By Hilton Tarrant
Image: Wilnicque Rall