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SMEs are small to medium-sized enterprises – often new and fledgling businesses – with a limited number of employees and limited resources. Edge Growth works with databases of SMEs that have high-growth potential to stimulate job creation in South Africa.

Edge Growth believes the greatest method of SME empowerment is business incubation through SME Development. This means providing holistic support to SMEs for an appropriate period of time, to prepare SME entrepreneurs to take responsibility for their own growth and impact. The nature, timing, duration and phasing of this support is vital, and Edge Growth assesses all obstacles faced by the SME to model the support to be truly meaningful.

Sustainable growth revolves around several different metrics, including job creation, revenue growth, business maturity improvement and socio-economic impact in the form of livelihoods affected. Edge Growth has developed a tool called GrowthTracker^TM using live data to track this.

Enterprise Supplier Development (ESD) is a set of programs and initiatives designed to promote economic transformation and support the growth and sustainability of small and medium-sized enterprises (SMEs) in South Africa. ESD is a critical component of the Broad-Based Black Economic Empowerment (B-BBEE) policy framework, which seeks to address historical inequalities in the country’s economic landscape.

The four pillars of ESD are Preferential Procurement, Supplier Diversity, Supplier Development, and Enterprise Development. Preferential Procurement requires companies to prioritize suppliers that are at least 51% black-owned or have a high level of black female ownership. Supplier Diversity aims to increase the number of diverse suppliers in the supply chain by sourcing from companies owned by women, youth, and people with disabilities.

Supplier Development involves providing support and assistance to existing suppliers to improve their performance and competitiveness. This includes training, mentorship, and access to financing and market opportunities. The objective is to create a more sustainable supply chain by developing the capacity and capability of suppliers to meet the demands of their customers.

Enterprise Development, on the other hand, focuses on supporting the growth and development of SMEs that are not yet suppliers to the company. This involves providing financing, training, mentorship, and market access to help these businesses become sustainable and competitive.

ESD programs are designed to address the challenges faced by SMEs in South Africa, which include limited access to finance, markets, and skills development. By prioritizing diverse and black-owned suppliers, and providing support to these businesses to improve their performance and competitiveness, ESD aims to promote economic transformation, create jobs, and stimulate inclusive growth.

The benefits of ESD are significant for both businesses and the broader South African economy. For businesses, ESD can improve their supply chain resilience and competitiveness, reduce risk, and enhance their reputation as responsible corporate citizens. For the broader economy, ESD can stimulate job creation, promote entrepreneurship, and contribute to the development of a more inclusive and sustainable economy.

ESD is not only a regulatory requirement but also a strategic business imperative for companies operating in South Africa. By embracing ESD, companies can create long-term value for their stakeholders and contribute to a more prosperous and equitable society.

Preferential Procurement (PP) is a national policy that encourages government departments and agencies to buy goods and services from previously disadvantaged individuals or businesses.

Supplier Development (SD) involves working with certain suppliers on a one-to-one basis to improve their performance, and for the ultimate benefit of the buyer organisation. SD leads to improvements in the total added value from the supplier in question – not just in terms of the buyer’s B-BBEE rating, but also in terms of the supplier’s improved product or service offering, business processes and performance, and lead times and delivery.

Enterprise Development (ED) is a strategy for promoting economic growth and reducing poverty by building SMEs, membership organisations to represent them and competitive markets that are stronger and more inclusive. It consists of monetary and non-monetary, recoverable and non-recoverable, contributions initiated in favour of a beneficiary entity by a measured organisation – with the specific objective of assisting, or accelerating the development, sustainability and ultimate financial independence of, the beneficiary. 

Yes it is, although it is not the only means through which you can enhance your BEE rating. All 5 BEE pillars must be given equal importance but through SME development, we assess the gaps in your businesses performance and the best way to fill them. 

Enterprise and supplier development programmes are essential components of Broad-Based Black Economic Empowerment (B-BBEE) initiatives in South Africa, and they play a critical role in enhancing a company’s B-BBEE scorecard rating. While ESD is not the only means through which a company can improve its rating, it is an important one, and it is necessary to perform well on the scorecard.

The B-BBEE scorecard is based on five pillars, namely ownership, management control, skills development, enterprise and supplier development, and socio-economic development. To achieve a good score, companies must demonstrate their commitment to each of these pillars. However, it is important to note that the weighting of each pillar varies depending on the size of the company, and companies with an annual turnover of less than R50 million are exempt from the ownership pillar.

Through SME development, companies can identify the gaps in their business performance and determine the best way to fill them. Enterprise and supplier development programmes are specifically designed to support the growth and development of SMEs, particularly those owned by previously disadvantaged individuals. These programmes provide critical support, such as access to funding, mentorship, and skills development, which can help SMEs overcome the challenges they face and grow their businesses.

By supporting the growth and development of SMEs, companies can improve their enterprise and supplier development score, which is a critical component of their overall B-BBEE scorecard rating. This is particularly important for companies that do not have a significant ownership score or have limited control over their supply chain.

In conclusion, while enterprise and supplier development programmes are not the only means through which companies can enhance their B-BBEE rating, they are an essential component of B-BBEE initiatives in South Africa. By supporting the growth and development of SMEs, companies can contribute to the economic transformation of the country, while also improving their own scorecard ratings. As such, it is important for companies to prioritise ESD as part of their broader B-BBEE strategies.

Small and Medium Enterprise Development involves established businesses and investors and government helping SMEs, especially black-owned and black-managed SMEs in South Africa, to grow their businesses. This can be achieved in a few different ways – through funding, supply chain development or growth support – to benefit all stakeholders. 

A distinguishing feature of SME development is that it benefits all stakeholders: 

• Supply chain partnerships benefit SMEs with new business, while enhancing the value chain of the established businesses with unique, more affordable, more convenient, higher quality, or sustainable resources and services.
• Funding gives SMEs financial support to realise their full potential, while providing strategic benefits and/or financial returns for a funder.
• SME Growth Support allows the interested partner to commit less and less time and resources to growing the SME as the SME entrepreneur gains the skills and knowledge necessary to lead their own growth.
• SME Development accelerates job creation, contributing to a greater spending power and a stronger economy for all to benefit from.

SME Development in South Africa evolved from the concept of ESD, and it encompasses a combination of preferential procurement, supplier development, enterprise development, supplier diversity and supplier empowerment. It also similarly promotes a more robust and inclusive economy to be shared by all. 

ESD in South Africa has traditionally been geared towards helping established organisations improve their B-BBEE scorecard, while presenting new growth opportunities to SMEs. SME Development doesn’t stop here though. It’s objective is to continually compound the benefit and value of these partnerships, even beyond or exclusive of the scorecard. It places emphasis on scalability, sustainability and impact.

Statement 600 of the Codes of Good Practice deals with the framework for the Qualifying Small Enterprise Scorecard.

In terms of the statement, a Qualifying Small Enterprise (QSE) is an Enterprise with an annual turnover between R10m -R50m.

If the turnover is up to R10m, the Enterprise will be called an Exempt Micro Enterprise (EME) and qualifies for an automatic Level 4 rating.

If the annual turnover amounts to R50m per annum or more, it is classified as a Generic Enterprise.

QSEs and Generic enterprises are scored on all five of the B-BBEE elements:

• Ownership
• Skills Development
• Management Control
• Enterprise and Supplier Development (including Procurement)
• Socio-Economic Development.

No, compliance to the B-BBEE Codes is not compulsory. However, high performance on the B-BBEE scorecard gives you access to unique business opportunities, such as government, parastatal, and large corporate procurement partnerships. At Edge Growth we also believe that the spirit of the Codes are more important than the letter, driving transformation to enhance economic growth for South Africa and socio economic upliftment for all.  

Edge Growth is passionate about building a more prosperous Africa, but we believe that championing that change starts at home, and we always prioritise business that will raise up our people and our nation first. This is why we only fund businesses within the borders of South Africa for now. Visit this link to search for funders who operate outside of South Africa. 

Edge Growth facilitates equity and debt funding in the form of venture capital. This means that we help match funders with substantial financial resources to SMEs that are willing to commit a share of equity in return for venture capital as well as fund SMEs that meet our own fund mandates. 

No, Edge Growth does not fund start-ups at this time. We only consider early-stage, post revenue businesses with high potential to scale and create jobs. If you are looking for startup funding, visit this link and search for your specific funding needs.

Edge Growth is committed to prioritising funding for SME partners in the most transformative industries of financial services, the industrial sector, education, healthcare, digital inclusion, business-to-business supply chain, and the green economy. We do not offer funding to large entities, corporates, businesses that are not at least 51% black owned, or businesses in sectors on the IFC exclusions list. 

No. Edge Growth facilitates equity and debt funding in the form of venture capital. This means that we help match funders with substantial financial resources to SMEs that are willing to commit a share of equity in return for venture capital as well as fund SMEs that meet our own fund mandates. 

To apply for funding, click here. 

SME selection is typically driven by the requirements of a corporate partner with whom Edge Growth is implementing a particular programme. Often, these organisations reach out to us to help drive development for their existing suppliers, or they provide us with a database of pre-approved SMEs from which to source programme candidates. However, occasionally they have enterprise development or preferential procurement needs that allow us to source and suggest new candidates. In these scenarios, the candidates generally still need to meet certain requirements. 

To learn more about our programmes and funding options, how to qualify, or how to partner with Edge Growth for SME Support, visit our SME Hub now.