Local banking firm Standard Bank South Africa (SBSA) believes it can, through the launch of a new unit that assists larger entities meet their black economic-empowerment (BEE) targets, meet the challenges posed by the implementation of the new BEE codes.

It noted that enterprise and supplier development (ESD) would particularly be met through the provision of bespoke financial solutions to the beneficiaries of BEE deals.

The ESD pillar of the revised broad-based BEE codes offered companies the opportunity to achieve 40 of the 100 points required by expanding their relationships with black business.

“This pillar offers businesses an opportunity to develop sound business-focused partnerships and simultaneously qualify for the necessary points that will impact on their BEE ratings,” SBSA enterprise development senior manager Diale Mokgojwa said, adding that one of the key requirements was that small- to medium-sized enterprises (SMEs) needed to be eligible for contracts with minimum terms of three years, with the aim of bringing black SMEs into the core activities of big business.

“By adopting an effective strategy and backing the strategy with a finance partner, we believe that the demands of the legislation can be achieved,” he added.

Further, Mokgojwa pointed out that, of the 40 points on offer, 25 points were allocated to procurement from black-owned businesses – entities that were more than 50% black-owned.

The opportunity thus arose for companies to ‘on-board’ selected black suppliers, or to incentivise white-owned smaller businesses operating as suppliers to offer equity in their businesses to black participants, through arms-length ownership transactions.

Corporate and commercial companies were also incentivised to execute supplier development programmes, with ten points allocated for supplier development.

This, SBSA pointed out, would result in greater local content procurement and subsequent job creation. New suppliers would be assisted to become strong suppliers, while existing suppliers would be assisted to grow.

Five points were allocated for enterprise development, which allowed corporates to invest in black-owned companies that did not necessarily have to be part of their supply chains.

“This moves the focus away from SMEs offering major customers peripheral services with low barriers to entry – such as janitorial and security services – to companies that have the financial depth to participate in core corporate services.

“It is at this point that SMEs have been caught in a traditional Catch-22 situation – not being able to access the core capital required to offer the services required by large customers on a sustainable basis. It is here that the new Standard Bank unit comes to the fore,” the bank said in a statement.

Mokgojwa added that the new unit offered bespoke, structured funding solutions to qualifying SMEs, enabling access to available resource, allowing these enterprises to confidently enter the core supply chain of corporate companies.

“Corporate entities that enter into a value-chain solution with Standard Bank can be confident that the SMEs to which they offer contracts will be able to easily access the capital they require to deliver on their contractual obligations.

“Until now, there has been no structured finance for these entities, as the base requirements making this financing viable were not easily achieved. We have now developed a solution that opens access to the capital SMEs require, with finance beginning at an entry level of just R100 000,” he added.