Corporations purchasing from Small and medium sized enterprises (SMEs) can be a powerful engine to drive Africa’s development, says Sisa Ntshona, Head of Enterprise Development at Absa.
His comments were made at the Chartered Institute of Purchasing and Supply (CIPS) conference, in Accra, Ghana where he said this could be done by engaging with local communities in the areas where big companies do business. This would be through sharing knowledge, deepen workers’ skills and professionalise suppliers.
“In the long term, these collaborations can promote employment and raise living standards in a sustainable way. Yet they do not happen automatically,” said Ntshona.
Speaking on ‘business linkages as a strategy for developing SMEs in Africa,’ he said it was evident there was a need to bridge the gap between SMEs and big corporates.
“Absa’s model of providing SME assistance and developing small businesses in South Africa has been very successful. This indicates that our solutions are not only locally oriented, but are intentionally scalable for the emerging African market.
“Our Pan-Africa focus includes unlocking potential within the value chains of Multinational Corporations, building an International Trade Programme and boosting our ED impact through key landmark deals” said Ntshona.
e pointed out that while Africa’s population was booming, this increase was expected to create 2 billion consumers by 2050. With poverty levels having dropped in Africa from a high of 40% in 1980 to almost 30% in 2008 due to significant economic growth, this is a continent that cannot be ignored.
He said rapid African urbanisation was taking root and urban consumers were becoming increasingly sophisticated. With the continent’s improved business environments leading to opening trade and allowing goods, services, labour and capital to flow more freely among market participants, its evident that while companies seek to grow and expand their business opportunities in Africa, this cannot happen in isolation from the development of the African continent itself.
The ability to penetrate existing markets or create new markets is not an easy feat when there are established businesses with many years of operation.
“We have to create conditions to enable more African citizens to play a part in the economy. There will not be a consolidated society in Africa if its citizens can’t take part in it. Until now been leaning towards foreign domination,” said Ntshona.
While funding and skills development are key to helping SMEs succeed in running their small enterprises, Ntshona argues that creating connections and bringing small and big business closer together is a barrier that needs to be overcome.
“Through Absa’s Procurement Portal, a virtual market place allowing suppliers of all shapes, sizes and profiles to be visible to the Corporate and Government buying community, suppliers and SMEs are instantly visible to Blue Chip companies and government bodies that they previously could not access.
‘To date there are over 11,500 SMMEs and 1,000 Buyers registered and using the network and this continues to grow with end 2013 growth objective of 50,000 registered SMMEs.
“Conversely Corporate Buyers and Government now also have access to a portal that have validated and verified suppliers and can search for specific suppliers in a particular, region, of a certain profile and with a particular capacity”, concludes Ntshona.