Special Reports

Support for small companies

Johann Barnard

Anglo American established an enterprise development arm called Zimele in 1989.

Kagiso Montoeli sells sweets and snacks from Jelly Corner, his shop in Sharpeville, which was funded by Zimele, the enterprise development arm of Anglo American. (Elaine Banister)

Winner: Business Award

Zimele, Anglo American

Johann Barnard

Recognising the huge potential in the often complex and multifaceted supply chains that feed into its operations, Anglo American established an enterprise development arm called Zimele in 1989.

"Zimele provides a strategic blend of financial support and incubator-style mentorship which allows the companies we invest in to stand on their own feet and to grow," says programme manager Lia Vangelatos.

"Much of our success can be credited to the transformation of our own supply chain through the outsourcing of certain services to small and medium enterprises. Engineering repairs, manufacturing of mining products, waste reclamation and recycling, conveyor belt maintenance, catering and consulting are all among the services that we have embraced."

The initiative set up four different funds tailored to meet the varying needs of the enterprises it supports, and they provide commercial loans ranging from R1-million up to R40-million.

The four funds — the Anglo American Khula mining fund, the supply chain fund, the community fund and the green fund — provided loans valued at R567-million between 2008 and December 2011, supporting 1 085 companies and helping to support the employment of more than 19 575 people who contribute to a collective annual turnover of R2.37-billion.

"Zimele has had a real and major affect in stimulating enterprise development, creating widespread employment and furthering the livelihoods of many communities in need," says Vangelatos.

"It has had numerous successes in moulding black entrepreneurs and small and medium enterprises, as well as generating sustainable job creation and socioeconomic development in predominantly peri-urban mining communities." At least 35% of funding is directed to female entrepreneurs, and 48% towards the youth.

"Unemployment has particularly affected these two groups, with 2.8-million unemployed youths between the ages of 18 and 35, and 73% unemployment among African women aged between 22 and 30," she says.

"Zimele helps them to break into a constrained business market and forge sustainable careers."

The International Finance Corporation prescribed the Zimele model as the best approach globally for companies seeking to integrate local small and medium enterprises into their supply chains. It was also the first initiative by a mining company to be recognised by Business Call to Action, an international partnership focused on creating and sustaining jobs.

Vangelatos says its success is also due to the establishment of strategic partnerships, such as one with the state, via Khula Enterprises (now called the Small Enterprise Finance Agency), that helps to grow emerging mining companies into commercially bankable enterprises.

As anyone involved in enterprise development knows, funding and market access need to be supported by "soft skills" related to building and managing a business strategy. Developing these skills is an essential part of the support provided to entrepreneurs in the programme.

Besides training in corporate governance, management, legal issues and accounting, entrepreneurs are schooled in skills such as public relations and safety, health and environmental management.

"Zimele's innovative and hands-on business model has helped to ensure that thousands of people are provided with the resources and tools to overcome barriers. This support not only benefits the funded entrepreneurs, it also ensures that their families and, in some cases, other community members, benefit from increased business knowledge," says Vangelatos.

She hopes the success of Zimele will be a demonstration to other companies — as well as government and non-governmental organisations — that there is a definitive way to further enterprise development to help ease poverty and unemployment.

Anglo American believes the model can act as proof of a highly effective way to mentor, fund and support small and medium enterprises and entrepreneurs, and that it will inspire others to replicate the model as a driver of positive and real change in South Africa, she says.

"Anglo American aims to persevere with the Zimele model, moving towards 2030, and has a comprehensive strategy in place to increase both its reach and effect," says Vangelatos.

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