Page 14 - SA Chamber UK - September Newsletter- eBook

SMES HOLD THE KEY TO

SOUTH AFRICA’S ECONOMIC

RECOVERY

That SMEs hold the key to South Africa’s economic recovery is widely agreed, and for

good reason. SMEs contribute significantly to the country’s gross domestic product (GDP)
and their ongoing success and sustainability create meaningful employment across all
functional disciplines, and at all skills levels. They are helping to reduce some of the
extreme economic inequality we experience in South Africa. Larger organisations providing
support through skills transfer and engagement are catalysts in creating opportunity for

SMEs to succeed.

The procurement and socio-economic development elements within the South African

Broad-Based Black Economic Empowerment Act (B-BBEE) are focused specifically on
supporting skills transfer and creating opportunity for SMEs and individuals within two
broad categories.

§ The procurement element encourages larger organisations to procure at least 30% of
their goods and services from SMEs whose enterprise revenue is less than R 50 million
per year. This is broken down as follows: 15% from SMEs with a total annual revenue of

up to R10 million; and 15% from SMEs with an annual revenue of between R10 million
and R 50 million.
§ The socio-economic development element encourages larger organisations to support
initiatives where the outcome of their contributions results in the beneficiaries developing

skills that ultimately give them access to the economy through direct employment or
from within their own businesses.

Although B-BBEE is purely voluntary, there is significant engagement from larger

organisations to align as closely as possible in meeting the Act’s economic transformation
commitments.

The procurement element encourages larger organisations to contribute 3% of their
net profit after tax (NPAT) towards enterprise and supplier development initiatives. The
socioeconomic element encourages larger organisations to contribute 1% of their NPAT to
social upliftment initiatives, where an outcome of creating opportunity for individuals and

small entities to access to the economy is achieved.

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SA CHAMBER UK NEWSLETTER SEPTEMBER 2023