Tag Archive for: SME

Addressing Corporate Sustainability in The Corporate Sector through Payin30

The #Payin30 initiative in South Africa has been largely driven and supported by the private/corporate sector. Corporate Social Responsibility (CSR) is a management concept or a business model, that consolidates topics of social and environmental concerns into their business policies, operations and their conduct. It is a way in which the company becomes socially accountable, not only to itself and the stakeholders but also to the public. Corporate social responsibility is the approach a company undertakes to enact a balance of the Triple Bottom Approach (TPL) – “People. Planet. Profit” while holding itself accountable to stakeholders.

CSR is a conscious effort to address the capitalistic nature of the business but being cognisant of the environment in which it exists – understanding that people, profit and the planet cannot operate in isolation.

The Corporate Social Responsibility (CSR) diagram: Photo courtesy of Getty Images

THE ROLE OF GOVERNMENT IN CSR AND PAYIN30

Although the business sector lies at the centre of CSR, the government as an authoritative power can play a catalyst role – yielding their power and voice to raise awareness of what CSR truly embodies. The government can a vital role in mediating between social agents (business sector and the public).

The United Kingdom (UK) government and the South African (SA) government have been exemplary in calling for action against 90-, 60-, and 45-day payment terms. On the 19th of January, the United Kingdom government announced that it has re-examined the Prompt Payment Code (PPC) to renounce delayed invoices owed to SMEs. Under the new reconstructed terms, companies are obliged to now pay SMEs within 30 days – which is half the time defined by the current Code. The UK government is looking to strengthen the rules, by increasing Small Business Commissioner powers as a post-covid19 economic strategy.

During the South African Investment Conference in Soweto, President Cyril Ramaphosa called for the government to ensure that SMEs suppliers are paid within 30 days. The Public Service Commission (PSC) is an independent and overseeing institution, ensuring the effectiveness and efficiency of public service performance. The PSC aptly states that “The non-payment of suppliers is in contravention of the Treasury Regulations and constitutional principles such as efficient, effective and economic use of resources, accountability and transparency”. The PSC will continue monitoring compliance with 30-day payment terms, announcing that they [PSC] will view non-compliance as financial misconduct.

These two exemplary moves by the respective are indicative of how not only government institutions can set precedence on ethical practices but also yield their power for the good of the greater society. The ability of government institutions to recognise the importance of SMEs as job creators, but also as an integral part of the economic ecosystem. The government is held accountable and is responsible for its stakeholders – the people and acknowledging that SMEs are the microcosm of society and the economy. The government’s role is a prime example of the influence of corporate social responsibility.

THE ROLE OF CORPORATE AND THE PRIVATE SECTOR IN PAYIN30

As the economic and social unit of society, corporate must operate in accord with sustainable strategies endorsed by the economic system in which it operates. The highlight of this is that corporate and business do not exist in isolation and their existence is dependent on the people and planet, there is a responsibility to the planet and the people. In pursuit of a sustainable business strategy, “CSR emphasises on the maximisation of the utility of resources with minimum consumption, exploration of resources without exploitation and maintaining the surplus balance of resources for future generations.”

The #Payin30 initiative in South Africa has been largely driven and supported by the private/corporate sector. Business for South Africa (B4SA), the SA SME Fund, and Business Leadership South Africa (BLSA), and supported by, amongst others, Business Unity South Africa (BUSA), the Small Business Institute (SBI) and the Black Business Council (BBC) have all put their heads together to support SMEs. This serves as evidence that corporates are largely aware of the role and influence in the country’s economic ecosystem.

Paul Hanratty, Sanlam Group Chief Executive Officer, and member of the Risk and Compliance, and Social, Ethics and Sustainability (SES) Committees speaks on the importance of the #Payin30 campaign.

Paul Hanratty, Sanlam Group Chief Executive Office

Hanratty says, that the #Payin30 is a supportive mechanism to SMES navigating the Covid-19 pandemic and will help them become sustainable in the long term. He follows this, highlights how the #Payin30 is also an economic strategy to the pandemic, urging all big businesses to adjust their payment terms in support of SMEs. Hanratty says,

 “Recovery will not happen exclusively through big national initiatives; it will happen bit by bit, in small but meaningful increments. The business sector in South Africa has the opportunity to play a profound role in the recovery of smaller entities.”

We cannot ignore the need for economic development and growth, but we must be cognisant that it needs to be done sustainably. We cannot grow the economy at the expense of the people or the planet. The progression of concepts like that of CSR is dependent on the partnership of the private sector and government.

CONCLUSION

In their article, ‘The Truth about CSR’, Kasturi et al note that there is an increasing pressure for corporate companies to “dress up CSR as a business discipline and demand that every initiative deliver business results.”. This takes away the essence of CSR is: “to align a company’s social and environmental activities with its business purpose and values.”. The authors of the article aptly advise that to maximise the positive impact of CSR, companies must depart from poor coordination of their CSR programs and the lack of logic connecting their various programs. Kasturi et al advise that maximising this means companies need to develop coherent CSR strategies by a) focusing on philanthropy, b) improving operational effectiveness, c) transforming the business model. Post the development of these three theatres, companies must develop a unified practice program through a four-step process. Step 1) Aligning Programs Within the Theatres, 2) Developing Metrics to Gauge Performance, 3) Coordinating Programs Across Theatres, and 4) Developing an Interdisciplinary CSR Strategy. Best-practices companies operate coordinated and interdependent programs across the CSR field.

We must understand the world from the triple bottom line: the social, environmental and financial – people, planet and profit. SMEs contribute immensely to the country’s sustainable growth and need the support of both government and corporations to ensure their survival and preservation. The global problems cannot be solved alone. The collaboration with entities like SMEs, NGOs and association can help them unleash the full potential of corporate social responsibilities. Payin30 is an important CSR initiative that serves as evidence of how government and corporate can work together to ensure the sustainability of SMEs.

 

It goes without saying that Covid-19 has had a negative impact on South Africa’s economy. Due to the pandemic and the implemented Covid-19 lockdowns, many businesses found themselves indefinitely shutting down their business or filing for bankruptcies, others retrenching their employees and others opting for holiday payment terms offered by banks. 

Recognising the denting economic impact that Covid-19 has had on small and medium businesses (SMEs) in South Africa, Business for SA (businessforsa.org) launched an initiative called #Payin30. Recognising that SMEs and entrepreneurs are vital to South Africa’s economic recovery strategy, the #Payin30 statement goes as follows,  

“Corporate South Africa recognises that by paying their SME suppliers in 30 days, they can contribute to their survival and the preservation of jobs.” 

The campaign’s key driving point is the recognition that access to working capital and cash flow is crucial for the growth and sustainability of SMEs. More so, this campaign understands that SMEs are key job creators in South Africa with a high unemployment rate. 

As an SME itself, Relocation Africa fully supports this initiative, calling on corporate companies to join and sign up for the initiative. Relocation Africa is no stranger to the impact of Covid-19 on its business. As a business dependent on open borders and the mobility of corporate employees, the lockdown restrictions and closing of borders have had a negative impact on the economic viability of the business. Having been forced to make difficult decisions such as retrenching employees and enforcing payment cuts, it understands the need for their business to pay their supply chain in or less than 30 days and in turn for corporates to pay SMEs in 30 days. 

Director of Relocation Africa, Rene Stegmann says, “Relocation Africa has consultants and a supply network that is mostly SME’s and private individuals, we have decided that for us to have a reliable supply chain we need to ensure that their cash flow is not a reason for them to go out of business”. She goes on to speak about the importance of understanding that most of Relocation Africa’s supply network are breadwinners and job creators themselves, and the #Payin30 initiative creates not only a more reliable supply chain but also an enthusiastic one that knows that they are valued and prioritised by the company.  

Well within reason, the campaign has been supported by large companies such as Naspers, SASOL, ABSA, Investec to name a few. An SME such as Relocation Africa supporting and practising this initiative is a display of ethical leadership and the recognition of social responsibility within the workforce. But the hard-hitting question to Relocation Africa is: As an SME itself, does Relocation Africa fear that such a commitment [of the #Payin30] would compromise the economic viability of themselves, especially during this economic crisis brought on by Covid-19? Stegmann confidently states, “We have one big risk, that is if our clients choose to pay us in anything other than 30 days, we are effectively risking our cash-flow, but we are addressing this with our clients and those who choose to #payin30 will be accoladed through the #payin30 campaign. We have converted 75% of our clients to commit to contractually paying us in 30 days and we have a couple more clients to negotiate with.”  

“We believe that by us, as an SME, taking a firm step on #pay30, this will have a ripple effect both down and up the supply chains. #Togetherwearebetter.” 

Relocation Africa can pride itself on being a leader and approaching this initiative with a bottom-up approach. Understanding the implications of late payments and how it can affect the supply chain, in turn affecting their ability to provide a service they have seamlessly done for 28 years, much is at risk. Stegmann aptly states that the business understands they are not isolated in their existence and that every action has counteraction. Furthermore, as a Global Mobility provider of services to large multinational businesses, the business [Relocation Africa] upholds their business and reputation through ensuring their own SMEs and private individuals who rely on them can survive to deliver the services to them.  

There is much to say about how initiatives like that of #Payin30 are exemplary in the action against the capitalistic, exploitative side of the business. Not only an act of ethical behaviour and leadership put an act of compassion for SMEs who are vital in the economic ecosystem. We can only hope that large companies and businesses follow suit and support the preservation of SMEs during these unprecedented times.   

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

FNB and Fetola have partnered to launch the Mentor Hotline, a free, rapid response platform that gives entrepreneurs easy access to a variety of industry experts.

The launch of the platform is in response to the Covid-19 pandemic and national lockdown.

The Mentor Hotline pairs entrepreneurs with a network of volunteer specialists, based on the required skill set for the entrepreneur’s specific challenge. It aims to help entrepreneurs to stabilise, identify new growth opportunities and rebuild in the context of radical uncertainty and a challenging economy.

More than 600 businesses on the Mentor Hotline requesting business advice, it is clear that businesses need assistance during these uncertain times.

The hotline will give young entrepreneurs to access technical or specialist advice, draw their attention to common mistakes or pitfalls, or simply act as a sounding board for new ideas.

Mentor Hotline is a simple-to-use online platform that provides support to all business types across South Africa, from small start-ups to established concerns.

The Mentor Hotline, which is owned and fully administered by Fetola, is a complementary service to Fetola’s traditional mentorship service, which focuses on longer-term relationships between entrepreneur and mentor.

Heather Lowe, SME Development Head for FNB Business, describes the pressing need that led to the creation “During the initial Covid-19 lockdown we found that most entrepreneurs were simply overwhelmed by the circumstances they found themselves in”.

“We also found that many experienced entrepreneurs and mentors who were not able to work during the lockdown period were very willing to assist on a pro bono basis to help these other entrepreneurs navigate the direct impact the pandemic had on their businesses. Together with Fetola and other partners we found that we could work collectively to get a very relevant form of help to SMEs during a time when quick actions were of the essence,” added Lowe.

Catherine Wijnberg, Fetola’s Founder and Director, said, “The Mentor Hotline is currently in what we’re calling a ‘beta phase’. Its longevity will be dependent on crafting a model that doesn’t depend entirely on volunteers, and which addresses ongoing needs post-Covid-19. We have been blown away by the sense of wanting to contribute to help others succeed, especially in this time of crisis. Truly shows the incredibly heart-warming quality of our society”.

The current phase of the Mentor Hotline will run until the end of December 2020. For more details, and to access the Mentor Hotline, visit the Fetola website and select “Mentor Hotline” from the top navigation bar.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].