Q&A: TSHIKULULU - JSE MAGAZINE

Q&A: TSHIKULULU

Tshikululu’s CEO Tracey Henry on facilitating entrepreneurial activity and the significance of social investment to help advance SA’s economy

Q&A: TSHIKULULU

Q: Why is skills development such an important topic in SA?
A:
Skills development focused on employability is one of the greatest levers to strengthen SA’s economic growth and address the unemployment rate. Such a burden cannot be for the state alone. Business and civil society also have a duty to play an active role in addressing the skills shortage, effectively and meaningfully.

Skills development goes beyond the topic of employment. It is about empowering the workforce with skills that can open up more opportunities and jobs that were previously inaccessible. It is about transforming the labour market and creating space for new entrants, thereby growing a stronger workforce that can contribute meaningfully to the country’s economy.

Q: What are the main challenges potential entrepreneurs face?
A:
FinScope’s SMME survey highlights several challenges and constraints that are currently faced by SMEs. These include accessing finance during the start-up and expansion phases of the business. This is a huge challenge – not just in SA but also in the developing world.

Small businesses are seen to be too risky for banks to finance, which is why our government has created a number of development finance institutions to address the problem. The new BEE codes also go some of the way to help, and SARS has introduced a tax deduction, small business funding entity (Section 30) and Section 12 J (venture capital) to encourage individuals and organisations to contribute to SME development. Another challenge mentioned in the survey is skills development and training needs. An individual may have a viable business idea but a lack of entrepreneurial development will see that business fizzle out very quickly – thus the importance of enterprise development within the BEE codes. The failure rate of businesses because of such lack of skills in SA is currently very high.

An onerous regulatory environment is the third obstacle highlighted in Finscope’s report. SMEs can be affected by regulations that include employment, tax and investment; trade regulations; permits and licences for businesses; visa regulations; the predictability of regulatory application; and the costs of regulation. Labour market regulations are the most often mentioned regulatory constraint to business – as often, in fact, as obstacles such as the availability of skilled workers, crime and theft, and macroeconomic instability.

Q: How does Tshikululu assist small businesses to address these challenges, with particular reference to skills development?
A: We work closely with our clients and help them to identify key challenges. We are then able to design solutions that encompass meaningful skills development so that investment in that area will benefit the business’ requirements while ensuring compliance to the BEE codes. This creates an impact on the lives of the beneficiaries of that training, which often in turn creates a ripple-effect that will benefit those around them.

Q: What is an example of a critical skills development issue that Tshikululu resolved for a client?
A:
The revised BBBEE Codes of Good Practice came into operation on 24 October 2014. Skills development is one of the five elements and has faced the biggest changes – apart from the priority element weighting having gone up to 20 points (out of 105), a 40% threshold was introduced as a minimum requirement, and recognition would only be provided for targeted training.

Most importantly, training initiatives have now been extended to include not only employees of a company but the unemployed (outward focused) too, with a further target around the number of black people absorbed by the company after their learnership, apprenticeship or internship. This has provided a huge amount of opportunity and incentive for companies to assist in not only uplifting their employees but to contribute to solving SA’s unemployment challenge.

Q: In what way did this initiative contribute towards developing the youth?
A:
Tshikululu’s aim, first and foremost, was to see how this money could be best used for social good. A strategy was devised whereby monetary support – towards tuition only – was provided for students at any higher educational institution. Uniquely, Tshikululu targeted just two types of students, namely those already in their final year and those who had already completed their qualification. Thousands of students in the latter category, due to not being able to pay off their outstanding tuition fees, are unable to obtain their results. This targeted social investment solution would ensure that students received assistance while also clearing the bottlenecks in the post-schooling educational system. Moreover, assisting towards the throughput rate meant that the higher education institution would receive an incentive from the Department of Higher Education and Training.

Each company will have a different compliance target based on their local or national economically active population, and their specific BEE verification agency. Many of the companies had fulfilled some (but not all) of the requirements of the skills development element. Tshikululu’s first task was to ‘fill the gaps’ and work with the company to define which demographic of beneficiary needed to be assisted in order for the company to fulfil its BEE compliance.

Following this, Tshikululu obtained contacts from the financial aid office of the higher education institutions, devised criteria for eligible students (for instance, identifying the need, ensuring they were SA citizens, selecting appropriate study streams) and, in some cases, visited the universities for interviews. This solution is a real ‘win-win-win’ – companies get their BEE points, universities get debts paid off and students are able to graduate.

Q: Where are the opportunities for businesses seeking to spend their skills development funding in a meaningful way?
A: We advise our clients to look at the list of critical and scarce skills, because this is where the need is the highest. This list largely includes professions in the STEM (science, technology, engineering and maths) fields but covers many other sectors, including vocational skills. We match these skills with the industry and geographical location in which our clients operate to ensure they can contribute positively to the communities that surround them, or are affected by their presence.

Q: Are social entrepreneurs well positioned to experience success?
A:
Social enterprises have a wide scope and evolving definition, but yes, they are certainly viewed as addressing some of the challenges experienced by civic organisations, without the constraints experienced by non-profit organisations. They exist to do good, for profit.

Such entrepreneurs also often operate in the spaces that address socio-economic challenges, such as renewable energy, business incubation, manufacturing, employment creation and so on. This means they are very attractive to businesses that require implementation partners for skills development programmes. They’re fast becoming an effective catalyst in changing the way both business and civic organisations implement programmes. They also demonstrate that businesses with a social responsibility cause at the core of their existence can be profitable.

Q: What is the relationship between skills development and corporate social investment?
A:
‘Social investment’, as we prefer to call it, is broader than ‘corporate social investment’, and the connection to skills development is not difficult to see. For a large percentage of our social investment clients we design programmes that include education, training and bursary management, and these aim to address historical inequalities in our education system, as well as setting South Africans up for a better future.

Although these may be seen to be social investment strategies that are systemic in effecting change, they can also be categorised under skills development spend. They are directly answering the problem that the Skills Development Act seeks to address, and with the right guidance from organisations such as ours, companies will be able to fulfil their skills development obligations under the BEE codes.

Q: Is skills development spending only about giving bursaries to students?
A:
Certainly not. Our value add goes beyond the payment of fees. We have a vast network in the academic sector that supports the identification of students and then ensures the ongoing monitoring of their progress. It is about creating access to opportunities by providing people with skills.

Another programme we designed for a client is focused on the skills shortage within the healthcare professions in rural KwaZulu-Natal and in the Eastern Cape. We partnered with two of our clients to fund a programme that sees matriculants from rural areas in these two provinces being funded to pursue qualifications in healthcare, and then placed back in their home communities to action their learnings and provide much needed healthcare services.

In 16 years this programme has produced 254 graduates including doctors, nurses, radiographers, psychologists, dentists, dental therapists, nutritionists, dietitians, pharmacists, optometrists, social workers, physiotherapists, occupational therapists, speech therapists, clinical associates, environmental health workers and biomedical technologists.

Q: What would you describe as Tshikululu’s differentiator?
A:
We design strategic social investment solutions for the greater good. Tshikululu has some 20 years’ experience in not only advising on skills development but implementing numerous skills development programmes too. Recognising Tshikululu’s expertise, several companies approached us to help them in obtaining optimal points on their skills development element of the BEE scorecard.

Our experience spans across the sectors of mining, renewable energy, health, education, finance, logistics, property, insurance, engineering, agriculture, the arts, and science and technology. 

By Kerry Dimmer
Image: Wilnicque Rall