For the municipalities to realise the LED ‘Pillar 2’ and sustainable growth skills in the mining industry, skills provision to local SMMEs had to be linked with research and development (R&D). Local SMMEs were exposed to global competition as they operated within a global village, hence in order to bridge the gaps in innovation, it was critical to make sure that mining training programmes were linked with R&D.
Findings of DTI (2011), re-affirm that science, technology and innovation are key to equitable economic growth because technological and scientific changes underpin economic development, improvements in health systems, education and infrastructure. The R&D process would expedite the transformation of the host communities by providing skills training to local suppliers, and placing hosting communities on a more competitive trajectory by complying with the LED Pillar 2.
4.6.1 Reviewing of procurement to accommodate prescripts of 2010 declaration of Broad-Based Black Economic Empowerment codes
The figures in Table 4.16 represent the number of participants who ticked either ‘no’
or ‘yes’, when responding to the question. According to Table 4.16 of Company A the results show that in 2010 all five participants indicated that Company A did not invest towards SMME development, with respect to R&D. However, this finding contradicted with the report of Anglo American Platinum (2017), indicating collaboration with other enabling organisations and partners such as Anglo American Zimele, DMR & DTI was established to create platforms for locally and black owned SMMEs. From 2011 to 2014, according to the five participants who participated in the research, Company A made a commitment to developing SMMEs through the usage of R&D. However, it was not clear according to Section 4.4, whether SMMEs participated in supplying capital goods, services and consumable goods as a result of the R&D programme which enabled them to do so. Participants also did not provide the budget spent on R&D.
According to the skills development prescriptions in terms of B-BBEE codes, the mines were spending or allocating funds towards skills development. The calculation of funds to be allocated for skills development was based on Net Profit After Tax (NPAT), but Company A did not provide the details of budget allocation.
TABLE 4.16: RESEARCH AND DEVELOPMENT TO SUPPORT SMALL, MEDIUM AND MICRO
-ENTERPRISE DEVELOPMENT:COMPANY A
Company A 2010 2011 2012 2013 2014
No Yes No Yes No Yes No Yes No Yes
R&D to support SMMEs 5 0 0 5 0 5 0 5 0 5
South African institutions
assisting with R&D 5 0 0 5 0 5 0 5 0 5
SMMEs supported from local
communities 5 0 0 5 0 5 0 5 0 5
Rand value spent on R&D Not provided Not provided Not provided Not provided Not provided Rand value spent on R&D in
South Africa Not provided Not provided Not provided Not provided Not provided
It should be noted that according to additional information supplied by Company A in 2014 when content analysis was done from reports provided, the company facilitated the following skills by training SMMEs and that this skills facilitation was based on the business needs of each SMME:
Technical skills enhancement.
Quality assurance.
Customer services.
Marketing and peer networking.
Business management.
Financial and general record-keeping.
Compliance to legal requirements for example South African Revenue Service.
Company B participants indicated that the company did not participate in R&D development skills although they did participate in the skills development programme, but it was based on the following areas as stipulated in Table 4.17.The findings contradicted the findings of RSA NPC (2011), which acknowledge that Science, Technology and Innovation are central to national development plan, and these are differentiators between countries that can tackle poverty effectively by growing and developing their economies and those that cannot.
TABLE 4.17: TYPES OF SKILLS PROVIDED BY COMPANY B
Module Duration of weeks
Approach towards business and entrepreneurship 1
Practical marketing 2
Practical pricing and costing skills and effective purchasing 3
Basic bookkeeping 2
South Africa Revenue Service and SMME legislation 1
Recruitment and selection and basics of personnel records 1
Customer care 1
Development of business plan: Theory 1
Effective financial management and budgeting 3
Practical tendering skills 3
Basic project management 1
Understanding income tax 1
Understanding value-added tax 1
Advertising and promotion 1
Understanding and interpretation of financial statements 2
Development of marketing plan: Theory 1
Key issues of labour law and human resource policies 2
Personal selling skills 1
Project management 2
Business ethics 1
Corporate governance 1
Marketing plan 2
Business planning 2
Leadership 2
B-BBEE 1
The number of local SMMEs supported by Company B in 2013 was 35 and in 2014 it was 32. These are numbers of SMMEs that participated in the programmes mentioned in Table 4.17. The findings in Table 4.17 affirm Tshakuma’s (2008) findings that some programmes are more focused on assisting suppliers with the tendering process, others are more focused on basic business and management skills, and yet others focus on critical technical skills to drive value. The participants also raised concerns in terms of the attendance of SMMEs in these programmes as most disappeared along the way, but those who completed were awarded a certificate of completion when such SMMEs attended at least 50% of training offered and SMMEs trained attained a 50% test score.
In the previous discussions in Chapter 3, the models of Tshakuma (2008) and Du Preez and Louw (2009) indicated how a generation of new ideas through innovation could push for establishment of new SMMEs at the marketplace. While Tshakuma’s model (2008) further indicated that it is only through innovation that the new ideas generation can be possible as the government, mining sectors and institutions of higher learning join hands for localisation of BSR in SMME development.
According to Blakely and Leigh (2010), most of the future opportunities for rural and small towns lie in capitalising on mining operations in the area. This would happen once training programmes were facilitated or implemented to transfer technical know-how on the development of local SMMEs to be able to provide services needed by mines through incubation platforms, as municipalities will be able access incubation funds from DTI. This assessment of Blakely and Leigh (2010) reveals how supplier development programme can lead to significant cost reductions in the long term, if executed properly. Cost reductions can be realised through the suppliers’
proximity to the operation, improved lead times, service delivery, reduction in transport costs and reduction in risk.
The findings concur with the findings of DMR (2015:39) which showed that most of mining right holders have not met their target of spending 5% of their annual payroll on skills development. R&D is critical in building capacities for SMMEs. This could help SMMEs in local communities in determining the feasibility to help in transforming actual procurement opportunities provided by mines into real local economic development. For mining companies to invest in this aspect of R&D, there is need for local SMMEs around mining communities to access innovative solutions through the process of discovery.
Blakely and Leigh (2010) agreed with Tshakuma (2008) that technology traditionally can be major to the development of local economies, and detrimental to the development of local SMMEs when it is not implemented as per the models mentioned in Chapter 2 (Section 2.4.6).
4.6.2 Reviewing of enterprise development to accommodate prescripts of 2010 declaration Broad-Based Black Economic Empowerment codes Five of the participants who participated from Company A indicated that the types of business skills which were offered to local businesses were:
Financial and bookkeeping, human resources, unemployment insurance, employee contracts, including completing of logbooks.
A challenge experienced in developing local SMMEs was that of adhering to meeting schedules with mentors allocated to each SMME under the mentoring programme offered by Company A.
Figure 4.3 of Company A shows that the number of SMMEs who graduated from enterprise development to supplier status in 2010 was two. In the period 2011 to 2013 it was three, and four in 2014. The research indicated that those who continued to be suppliers three years after obtaining supplier status were three in 2010 until 2013, while in 2014 there were four.
Figure 4.3: Small, medium and micro-enterprises graduated to supplier status: Company A
Company B indicated that only four and eight of the SMMEs graduated to supplier status in 2013 and 2014, respectively, as shown in Figure 4.4. It was noted that from 2010 to 2012, training was undertaken by Company B.
Figure 4.4: Small, medium and micro-enterprises graduated to supplier status: Company B
4.6.3 Summary of Broad-Based Black Economic Empowerment codes
The DTI (2005) acknowledged that a major challenge to SMMEs development is shortage of skills and limitation of entrepreneurship capacity. This was confirmed in the National Development Plan (NPC, 2011) which stated that SMMEs in the services sector were negatively affected by shortage of skills. This corroborated with Figure 4.2 where a small number of SMMEs participated in the mining services in Company A. Most of these shortages were found in business services such as accounting and sales capabilities (NPC, 2011).
According to Company A, as indicated in Table 4.16, a small number of SMMEs turning into supplier status was as result of technology diffusion amongst local SMMEs in the mining communities. The research conducted by Booysens (2011) revealed that innovation in South Africa is stifled by the failure of SMMEs to be able to form upward linkages with mining companies. According to the findings of this research, mines lacked knowledge on government, thus DTI incentives were aiming to foster innovation, as well as to attract and strengthen lasting procurement linkages among SMMEs where mining companies operate.