Rising to the challenge

Articles

Friday, 04 February 2011 09:07

SA needs to face the many obstacles preventing the country from harnessing the economic power that its entrepreneurs possess

Although South African business has a perennial landscape of worthy causes, choosing development-based corporate social investment (CSI) projects that yield positive results for the community as well as for the companies involved can prove confusing.

The drive toward encouraging entrepreneurs as well as small and medium enterprises (SMEs) is of increasing importance due to growing dissatisfaction with unemployment.

Impatience from those worst affected by slow service delivery spills over into violent protests; these reactions further hamper foreign investment and in turn delay the process of empowerment.

Studies have indicated, “Business entrepreneurs steer and form innovation, they speed up structural changes in the economy, and they introduce new competition, thereby contributing to productivity.”

A report by the Policy Board for Financial Services and Regulation at the South African Reserve Bank points to the economic output of SMEs as approximately 50% of our gross domestic product. The sector employs more than 60% of the total labour force.

Creating the climate for enterprise development

Though there are probably more entrepreneurs in South Africa than anywhere else in Africa, there are still many challenges that prevent the likelihood of new business ventures.

Experts cite social injustices as a major barrier to successful enterprise development (ED).

Without water, sanitation, healthcare, electricity and education, it is impossible for communities to find their way out of poverty and even less chance for them to be focused on creating sustainable business enterprises. For this reason, it is important that CSI projects include strengthening social and economic frameworks for social justice and political and economic stability.

Economist and Nobel laureate Amartya Sen stated that: “Development requires the removal of major sources of unfreedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance…

“Despite unprecedented increases in overall opulence, the contemporary world denies elementary freedoms to vast numbers, perhaps even the majority of people.”

Choosing ED programmes

Tracey Henry, chief executive officer of Tshikululu Social Investments, warns that a worthy cause or simply a need does not necessarily translate into a viable opportunity for social investment.

“At the heart of enterprise development is the desire to address the high levels of unemployment, poverty, inequality and skills shortage in our country. This is no easy task and there are no silver bullets when it comes to ED or other forms of development, for that matter,” she says.

“The critical thing to bear in mind is that successful enterprise development doesn’t come from nowhere. It is an integral part of the overall development continuum.

“Our own experience at Tshikululu Social Investments is that success in the continuum is not only about the application of money. Rather, it is about identifying, and working with, things that are themselves real, and that result in long-lasting and positive empowerment of people. It’s about being in for the long haul, and knowing that liberation is a process, not an event,” adds Henry.

In her article on ED, she highlights the success of programmes that focus on street children who are offered a safe living environment in conjunction with skills training focusing on basic skills such as baking or bead-making.

“A major part of working with such beneficiaries must also be in the proper provision of lifeskills training, often using innovative means. These interventions not only address a social need for security, hope and acceptance, but in some instances lead to future employment in the formal economic sector,” Henry says.

Principles for establishing development programmes

•Select focus areas – Programmes are more effective if they focus on a few flagship projects within one or two development sectors, allowing the CSI function to build relationships and consolidate expertise.

•Understand the development context – It is critical to understand the specific challenges and the dynamics of the development sector and geographic locality. This enables the programme to forge linkages with other key players, strengthen local institutions and, where best practice models exist, ensure optimal approaches are adopted.

• Consolidate the CSI function – Companies should concentrate CSI expertise in a dedicated “centre of excellence” with a ring-fenced CSI budget. Whatever the structure, there should be a dedicated team that considers the method of engagement and the best way to apply resources.

• Integrate CSI into the business – CSI thinking should be integrated within company structures and ethos, creating an environment where synergies between different elements of the transformation agenda are forged and internal expertise leveraged between divisions and programmes.

• Encourage employee volunteerism– Employees can add substantial value to CSI programmes, particularly if their time and core skills are leveraged in support of flagship projects. Employee awareness of, and involvement with, the CSI programme is an aspect of deeper integration and serves to boost employee morale.

• Engage stakeholders – It is critical to engage stakeholders in order to understand beneficiary needs and allow for participation, feedback and, in some instances, ownership of community programmes.

• Forge working partnerships – CSI practitioners should draw on the expertise and knowledge of existing service providers, building synergies to ensure a total development solution is in place. It is important to clarify roles and responsibilities at each stage of the partnership. While many companies have strong partnerships with non-governmental organisation service providers, collaboration between companies within industry or development sectors needs to be improved.

• Monitor and evaluate projects – CSI departments must develop relevant indicators to measure specific results, evaluate project impacts over time and develop feedback mechanisms to ensure they can continually adapt and improve inefficient processes.

• Replicate and scale up successful models – Corporates should actively seek to replicate and scale up those models that have been successfully piloted and refined, and should draw on policy-makers and developmental experts in this process.

• Build knowledge-sharing mechanisms – In order to enhance developmental impact, companies need to find appropriate knowledge-sharing mechanisms such as forums that include fellow corporates and other social sector participants to share CSI lessons.

• Report on CSI practice – Regular reporting on CSI projects allows for ongoing assessment, and is a platform for formal communication with key stakeholder groups. Reporting on CSI should include hard data, which, ideally, should be externally verified.

The ideals for CSI and ED require ongoing collaboration in the spirit of creating an economy that seeks a more ethical form of capitalism with the prospect of equality for all.

Today’s consumers are voting for these changes – not only with their ballots, but also with their wallets.

Guidelines for good CSI practice, published by Trialogue, are available at www.csimatters.co.za/ProductOrder.aspx (latest version, The CSI Handbook 2010).

Simone Tredoux

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