Enterprise Development Plan



1. Introduction 1

2. Approach to Enterprise Development 2

3. ANNUAL ACtivities 10

4. rectification procedure 10

1. Introduction

The objective of Enterprise Development is to:

• Involve suppliers in Entrepreneurial upliftment;

• Contribute to Tshwane regional economic development;

• Contribute to the sustainability of Small Local Enterprises in Tshwane

• Ensure that through Enterprise Development people can earn a living and rise out of poverty. In turn over time they create jobs as well as empower other individuals and the communities in which they live. Market development, commercial business services and social enterprise are part and parcel of Enterprise Development. In addition, it encompasses finance, entrepreneurship development, investment, that ranges from enabling the start-up of small businesses to providing business skills development through training, mentoring, coaching.

Enterprise Development initiatives will be introduced at the subcontracting level:

Types of Enterprises

Sourcing vendors from the Tshwane database in addition to sourcing other SMMEs within the Tshwane area that have been utilised by member firms of the Consortium previously on other projects within Tshwane. This level of subcontracting will be targeted to the suppliers that fall under the following classification:

• EME’s and QSE’s that are 51% or more black owned or 30% or more black women owned

• Whose members/shareholders are black South African citizens

• Whose registered business address is in the City of Tshwane municipality

• Who are registered for SARS

• Who employ at least 1 other person

• Who have been in business for at least 12 months

• Willing to participate in a formal ED programme

The Tsela Tshweu Consortium will develop and encourage the advancement of micro and informal enterprises based in Tshwane together with black people, women and youth owned enterprises.

The Construction and Operation Subcontractors will interrogate the database to be supplied by the City to select suitable suppliers for core and non-core goods and services. However we will endeavor to incorporate those entities that match our desired enterprise development beneficiary profile into our program. In addition the consortium will provide a list of the type of small enterprises that the Consortium will work with or subcontract at both Construction and Operations levels so there is a matching process that takes place.

Enterprise Development Programmes

• Programmes aimed at increasing operational capacity

• Programmes that provided for financial sustainability

• Programmes aimed at increasing efficiency

• Programmes aimed at increasing manufacturing capabilities

• Programmes aimed at enhancing management capabilities

• Programmes aimed at increasing technical capabilities

• Participants prioritised will be EME and QSE enterprises with 51% or more black equity whose contribution levels are between 1 – 6

• Participants prioritised will be EME and QSE enterprises with 30% or more black female equity whose contribution levels are between 1 - 6

critical success factors

• Suppliers being developed must have individualised Needs Analysis and Development plans

• The Development plans must have priority interventions

• The Development Plans must have clear objectives, and performance indicators

• The Supplier Development programmes must have concise implementation plans with clearly articulated milestones

• In order to determine the success of the interventions growth in turnover, growth in job creation, growth in economic participation must be measured and reported on

Approach to Enterprise Development

Private Party

At the RFP stage the Private Party had not committed to any enterprise development, it being a shell company with few duties and operations. This remains the position.

Construction Joint Venture

Spend on Enterprise Development:

| |Committed Obligation |

|Enterprise Development contributions |2% |

|Local Enterprise Development Contributions |1% |

Our understanding of the process of Enterprise Development is as defined in Code 500 of the Codes of Good Practice for BBBEE as published in the Government Gazette on 11 October 2013, which sets out that one qualifies for ED points as follows:

Enterprise Development Contributions consists of monetary and non-monetary, recoverable and non-recoverable contributions actually initiated in favour of a beneficiary entity by a measured entity with the specific objective of assisting or accelerating the development, sustainability and ultimate financial independence of the beneficiary. This is commonly accomplished though the expansion of a beneficiaries financial and/ or operation capacity.

• Administration

• Discounts

• Early Payment

• Overheads/Staff input

• Grants

• Equity

• Loans/interest

There are 4 basic goals in ED, which are as follows:

• Assist or accelerate development

• Sustainability

• Financial independence

• Operational independence

In assessing the correct method and requirements for achieving the Enterprise Development points, and analysing our projected procurement spend and identified QSE and EME contractors, from an overall viewpoint, as well as those we have identified from Tshwane, certain trades and activities have been identified which meet the requirements for Enterprise Development.

Our commitment is based on applying assistance in the following aspect to identified enterprises:

• Administration

• Early Payment

• Overheads/Staff input

• Loans/interest

Enterprise Contributor status levels

Enterprises with Status levels 1 to 4 have been targeted. A preference to enterprises with a level between 1 and 3 are preferred.

Due to time constraints in putting the Contract Value in place, very few procurement commitments (i.e. contracts) have been made, which allows the CJV the opportunity to call for competitive tenders from databases, networks, past experiences and public tender to meet the exacting requirements placed on the process by the City.

These inter alia relate to the development of local enterprises, which could well see new business being established in the City, by virtue of the list below being expanded to support the vision of the City, with regards up-skilling existing businesses to leave behind sustainable entities through Enterprise Development. In order to qualify for Enterprise Development, specific criteria will be required to be met, such as legal status of the entity, ownership, turnover and skills. Formal Enterprise Development Agreements will be put in place, setting out the exact nature and form that the entity will benefit from Enterprise Development.

The following list is not in any way to be considered as being exhaustive, and the CJV undertakes to identify worthy entities from all trades that can benefit through participation in the Enterprise Development Programme.

• Brickwork (Material supply and labour force)- Entity remains to be identified, refer to City Data Base or Chamber of Commerce Data base

• Supply and installation of mirrors (Local company)

• Painting (Local company)

• Cleaning (Local company)

• Rubble removal (Local company)

• Joint sealing (Local company)

• Waterproofing.(Local company)

Please note that no Enterprise Development Agreements have been entered into and that no contracts are binding until such time as that the Construction Subcontract has been signed and this is linked to the signature of the main PPP Agreement.

Extent of black people and black women shareholding

The ownership and shareholding of identified enterprises have been interrogated and BBBEE certificates acquired to identify these aspects. These are recorded in the attached table (Annexure 1)

Value to be contributed (monetary or non-monetary)

Assistance will be given to these enterprises in administration, early payment (including pre or advance payment and payment on a fortnightly basis). Advice will be given with regards the management of the enterprises including overheads as well as staffing to build a sustainable business. Where skills are identified as being short or lacking, and if possible within the time frames of the project, training programmes will be suggested and implemented under the Skills Development Programme.

Participation by Tshwane based Enterprises

Enterprises specifically from Tshwane will be targeted, however until the project goes live and a proper procurement and contractual process is put in place, these enterprises remain targets. If the identified Enterprises are unable to participate for various reasons beyond the control of the Construction Joint Venture, the Data Bases from the City and the Tshwane Business Forum will be scrutinised to identify suitable replacement vendors.

Targets and Indicators

1. Size of the enterprise, Small Enterprise definition by DTI, Act on Small Business. The development of SMME’s during the contract, to remain SMME, even if the contract granted due to the City of Tshwane project results in the enterprise exceeding the definition as a result of the apportioned work. Definitions to be concluded in final agreements.

2. Evaluation of potential suppliers prior to tender.

3. Procurement (BBBEE), and value addition

4. Measurement against commitments.

Performance Management

1. Ownership risks and profits to be commensurate. Indicators of control should be centred on the authority and power to manage assets, goodwill and daily operations of the business. The critical issue in respect of empowerment companies is whether or not they are independent, that is free of direct or indirect control of another company.

2. Management to ensure time and quality constraints are met.

Policies and Achievement Criterion

1. Use of declaration by suppliers of their status, and BBBEE Certification according to the DTI Codes of Practice.

2. Monitoring and performance management, assistance afforded to ensure success rather than failure.

3. Close working relationship with the Construction Joint Venture’s site management team, with regard to all aspects of financial management control, payments to ensure continuity and quality management to ensure all contractual obligations are achieved.

Operations Joint Venture

The OJV will engage with the City to understand the initiatives that at are important to the City that can utilized as enterprise development initiatives.

The OJV in accordance with enterprise development policy will contract with EME’s and QSE’s in order to deliver the services, where the OJV will assist these enterprises by providing the following:

• Mentorship and training

• Early Payment of invoices

• Grants/Loans/interest, if applicable,

• Funding applications to access capital

• Access to equipment and technology where applicable

• Access to business opportunities

• Investment into Enterprise Development initiatives for Qualifying Beneficiaries of 3% of annual FM operating costs

• Investment into Enterprise Development initiatives for local Qualifying Beneficiaries of 1% of annual FM operating costs

• Development of sustainable enterprises that are black and black women owned, local, and whose participation into the supply chain will substantially contribute to local direct and in direct job creation

• Members of the OJV have an established record of creating employment opportunities at their project sites. The most recent example has been at Medupi where the Joint Venture has created over 300 new employment opportunities and even more indirect jobs through its supplier development commitments

Supplier Development Initiatives

To achieve the objectives of B-BBEE generally and City of Tshwane’s enterprise development specifically, a number of processes intended to support and develop emerging suppliers within the Tshwane District Municipality will be undertaken.

The process followed has numerous phases and is initiated through interviews with beneficiary enterprises with the intention of better understanding their enterprises as well as the challenges they face. These discussions also assist in identifying key enterprise development needs within the region. The outcome of this is the discussion is usually an enterprise development programme designed to address the enterprise challenges and needs.

The interventions typically try to address challenges associated with;

• The business itself;

• The sustainability of the entity in the future. This typically looks at accessing markets and generating multiple income streams or clients;

• The opportunities for the individuals involved to support their on-going development

Supplier Development Programme

The Tsebo Supplier Development interventions are delivered by a service provider with expertise in the area of Enterprise Development and a strong track record of implementing successful Enterprise Development programmes. Tsebo’s preferred partner in delivering supplier development programmes has been and continues to be Siyakha Consulting, a company with over 12 years of working experience in the area of Transformation and Enterprise Development.

Following initial engagements with prospective suppliers, Siyakha typically formulates a detailed supplier development strategy which talks to the most pressing challenges faced by the suppliers. The strategy is then formulated into a policy for the site.

As no two enterprises or sites are the same, each Supplier Development Programme is tailored to accommodate and address each enterprise’s and site’s needs. The Programme is designed in such a manner that it captures current needs, desired outcomes, Programme timelines and the intended beneficiaries.

Phase One: Research

a. Determining the scale of the opportunities that exist

City of Tshwane has multiple requirements within its supply chain that fall outside of the OJV contract. Based on our understanding of these projects, the project team will define the need for/opportunities for small to medium sized contractors for the delivery of work.

Specific attention will be paid to those contracts where the SMME market is not able to service the requirements, and the opportunity to engage with large enterprises to partner with the SMME market in the delivery of work.

In this way we will determine the value and scope of work that can be outsourced directly or through joint ventures to prioritise local appointments.

b. Determining the size of the SMME market and its competence

Several organisations exist within South Africa in every region that are focused on development of small businesses. These organisations are engaged to identify the existing small enterprises who meet the criteria of

• Local (Within the boundaries of Tshwane).

• Black-owned (51% or more owned by Black SA citizens as per the definitions of the B-BBEE Codes of Good Practise)

• Black Women-owned (30% or more owned by Black female SA citizens as per the definitions of the B-BBEE Codes of Good Practise)

Where information exists, we will also identify those businesses that are owned by individuals from rural areas and those businesses that are owned by Youth (to prioritise currently disadvantaged communities).

As part of this process, the information will be captured into a centralised database to hold all of the relevant data and to classify the SMME information. SMME’s will be contacted to work with us to define their current status which includes

• Start-up enterprise (SU)

• Small Enterprise (SE)

• Medium Enterprise (ME)

The competence of each business currently will be determined and captured into the database in order to understand the current scenario. This is then matched against the required skills and competence in order to define a development programme to meet the contract needs. Key factors of competence would include

• SABS or HACCP rating (where applicable)

• Technical competence (rating and references)

• Management competence

• Financial strength

• Pricing

• BBBEE rating

• Statutory compliance (e.g. tax clearance, etc.)

c. Determining the size of the market within the region to support on-going development

Once steps ‘a’ and ‘b’ are completed we will have a detailed framework of what skills we require and what skills currently exist. This creates a development map for the project team to focus on building skill and capacity in the short term. However key to development is to ensure that ultimately the market can support the businesses that it creates. To understand and support this phase, we will conduct geographic research which considers

• Other than OJV, what other companies, SOE’s, PE’s, Municipalities, Private sector or NGO’s exist within the geographic region

• To what extent would they support sourcing goods and services from the beneficiaries of the programme

• Based on their current assessment, what value of work may exist in the short to medium term

• What are their supplier registration criteria and what technical skills do they require

Agreement in principle will be reached, at this stage, for other companies to support the programme and to use the database created in step b above as a source of suppliers for future contracts. Furthermore, we will seek commitment from these organisations to distribute their tenders, contracts or opportunities through the database so that we can track response times, and rates, and quantify the value(s) of contracts awarded to businesses within the database.

Phase Two: Implementation

As the project moves into the development phase there will be varying requirements for beneficiaries based on their needs and their current status.

Already completed in Phase One, we will have

• Identified sizeable contracts to be allocated to beneficiaries

• Identified candidate companies within the targeted products or produce

• Set meaningful outcome goals based on research of current status

• Developed options within legal framework to achieve set targets

• Selected best strategies per SMME to achieve growth, compliance and development

• Get City of Tshwane approval for strategies inclusive of timing of actions & budgetary requirements to achieve goals.

With the understanding of the number of SMME’s and their physical location, we will have defined the need for physical premises to deliver training and development support. In this next phase, we will commence the delivery of development plans. This is achieved through a combination of

• Formal training

o Commercial skills

o Technical skills

o Quality standards

o Professional accreditation or registration

• Business coach provides on-the-job coaching

o Commercial skills

o Practical technical skills

o Operational support

o HR, finance, sales and marketing support

• Supplementary Services

o Banking, taxation, funding applications where required

Monitoring and Evaluation

All development activity is captured into the database system to monitor the participation, the value and the progress of these businesses and specifically the outcome of training and development.

As the allocation of work to SMME’s commences, the project team will monitor the value of work allocated to companies within the database, the quality assessment, their compliance, performance, growth in turnover, growth in jobs and access to opportunities.

As work is delivered, the Tsebo procurement team will rate the performance of suppliers. This rating system allows us to see where further development or support is needed.

Project Management

From the beginning, all SMME’s captured into the database will receive

• Tender information from all participating companies sourced during the geographic analysis

• Newsletter with information, tips, advice and news relevant to their development

• A rating report which shows them where their development needs exist and how to prioritise these

• Access to training, knowledge, information, and guidance

Training

The training process will include both technical and commercial skills. This is offered in a formal learning intervention and is provided by qualified individuals who will work through the theoretical concepts and outcomes-based learning approach on the subject matter. Assignments will be set throughout the training process and will need to be completed and submitted for assessment.

Coaching

Once the formal learning process is completed, a business coach works with the developing organisation daily, weekly and monthly for the project duration to practically manage the actual function with the business, which allows the coach to impart the practical skill and simultaneously implement the business processes and systems to maintain the momentum moving forward.

This is qualified individual(s) who works with the developing organisation every week for the full programme duration to develop the habits, competence, processes and operational systems for business delivery.

Supplementary Services

The Business Coach will also manage engagement with other relevant Chambers of Business (including industry organisations and forums), access services from Service Partners, relevant Community projects, the national or provincial Government Departments, the Department of Trade and Industry, NGO’s etc. to provide a channel to these products and services for the beneficiary, and ultimately into their customer market and supply chain.

Key to this process is to assist with access to new markets, tenders, opportunities, products, services and funding to support the business and co-ordination of the implementation plan with managed reporting to client. The business coach will focus on entrenching the skills learned through the Training programme to ensure that the day-to-day activities of the beneficiary translate into business results.

OJV would utilise a solution which provides for the design and build of a suitable database of contracted SMME’s or sub contracted onto the project. This solution allows OJV to assist SMME’s to register online, create company profiles, monitor their progress, provide service delivery ratings, stimulate economic activity, facilitate job creation and produce accurate relevant reports including EXCO, Board and Council Committee reports.

Key growth reports include:

o Skills gaps

o SMME business activity and ownership representation

o Total job and business opportunities shared

o Total job and business opportunities linked

o SMME focus area progress linked to development plans

o Skills focus area progress linked to development plans

o Total monetary value of investment in SMME development and incubation

Key SMME reports include:

o SMME Ownership data i.e. average number of owners, ownership breakdown

o BEE status

o Employee data

o Turnover, monthly and annually

o Funding applications submitted and approved

o Goods and services

o Contracts/tenders won with contract value and contract type

Performance management;

The OJV will continuously measure the contributions and programmes that are implemented to ensure compliance with the targets and where appropriate will implement corrective measures to ensure the targets are achieved.

The ability to monitor progress allows the OJV to ensure the successful delivery of the Enterprise Development programme, reported on and measured effectively. The ultimate objective of this process is to breakdown the deliverables into smaller components. These components will be then assigned targeted deliverable dates and a responsible person to fulfil the target.

Essentially this phase aims to put in motion the roll out of the SMME development programme through effective planning.

Continuous monitoring and evaluation is critical to every phase of the project. Regular reports are vital as are on-going meetings and discussions with all stakeholders.

In this project on-going monitoring and evaluation will include but will not be limited to:

o Manage, track and monitor performance in terms of cost, scheduling, resourcing, risk and impact;

o Monitor, track and analyse the effectiveness and quality of service;

o Continuous engagement with the Stakeholders in order to effect project success and ensure applicability, sustainability and satisfaction;

o Financial Management, reporting and Monitoring

o Report to the Municipality on a monthly based on a format agreed up with the client

o Monitor growth and development of each trained supplier by following up on development and achievements on an on-going basis

o The growth of SMME’s is vital and therefore our reports include the turnover of each SMME, the number of jobs created and the profit margins. This is tracked monthly to evidence growth and strength in the business within the programme.

The OJV will interrogate the database to be supplied by the City to select suitable suppliers for core and non-core goods and services. However we will endeavor to incorporate those entities that match our desired enterprise development beneficiary profile into our program.

The OJV will further engage with the City to identify the initiatives that the City is busy with and that are important to the City and may include such initiatives.

ANNUAL ACtivities

The annual activities that will be undertaken by the Construction and Operations Subcontractors are:

o Ongoing monitoring and evaluation of supplier performance

o Annual Audit

rectification procedure

Construction and Operations Joint Venture

In the event that the Construction Joint Venture is not able to meet the commitment in relation to this Element, the Construction Joint Venture will:

• Issue a formal letter to the Private Party (and copy the CoT) stating the element, the current achievement and why the relevant period has been a challenge;

• Propose a rectification action plan and reassess the commitment;

• Propose dates for the rectification;

• Agree rectification procedure with the Private Party (and copy same to the CoT)

In the event that the Private Party and/or Material Subcontractors are not able to meet the commitment in relation to this Element, the Private will:

• Issue a formal letter to the CoT stating the element, the current achievement and why the relevant period has been a challenge;

• Propose a rectification action plant and reassess the commitment;

• Propose dates for the rectification;

• Agree rectification procedure with CoT

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BBBEE ENTERPRISE DEVELOPMENT PLAN

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