Is indiginisation the answer to unemployment in South Africa?

By on October 13, 2014

Since the 1960s, indigenisation strategies have been on the agenda for many countries including Australia, India, Mexico, Brazil, Indonesia, and the Philippines. Thanks to B-BBEE legislation, a number of small businesses have benefited from the vital support of various enterprise development programmes in South Africa.

However, South Africa has a number of challenges hindering socio-economic growth, and indiginisation of production can become a great contributor towards up-skilling and moving more people into employment. Industries such as transport, manufacturing, construction, energy, and mining can benefit significantly from having access to more diversified levels of skills locally.

Yet it is essential that companies in these sectors take it upon themselves to stimulate growth indirectly. One company that has taken a stance to positively contribute to the country’s transformation agenda is WorleyParsons. Three years ago the company set up an incubation centre focusing on entrepreneurs in the construction, mining, and energy sector.

The companies chosen for the programme have been provided with professional office space, personal assistants, bookkeepers, driver services, and even mentorship and coaching. Each company was required to go through a very stringent selection process and effectively demonstrate their entrepreneurial skills.

LEAP, a subsidiary of the PLP Group, focuses on design and execution of enterprise and supplier development for corporates like WorleyParsons. Petra Rees, Head of Business at LEAP, says it’s not only about having a good business model, “The person driving the business is absolutely critical to ensure success in the long run. Until a company turns over R50 million a year, the business owner is the cornerstone of that business. Afterwards the company should be sustainable without that individual.”

Some of the companies on the enterprise development programme have been executing projects outside of South Africa, demonstrating their high level of service delivery. Other companies are proud to have received local Quality Service Awards from companies like Eskom and Gridbow Engineering.

Rees believes that far more needs to be done, “Our country desperately needs more of these programmes in order to breed up-skilling which can be channeled through different socio-economic layers to combat the high levels of unemployment we face. With the new changes that the revised B-BBEE Codes bring, companies need to start pro-actively integrating new black-owned businesses into their value-chain. It is therefore essential to have sound and meaningful Enterprise and Supplier Development programmes in place not only for the sake of the point system but also for the sake of growing our local economy. The thinking needs to change.”

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