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Daniel Orelowitz | 4 June 2024

In SA, businesses are required to contribute to the social and economic development by the Broad-Based Black Economic Empowerment Act of 2003.

This legislation stipulates the assessment of social and economic development performance through a scorecard covering enterprise development, skills training, job creation, socioeconomic projects and preferential procurement.

Companies have the option to fulfil social and economic development obligations through various means like investing in small enterprises, offering training, creating jobs, supporting socioeconomic projects and practising preferential procurement. Although obligations vary based on size, industry and location, all businesses are expected to contribute to social and economic development. However, they often struggle to make a meaningful and sustainable impact.

Traditional approaches to social and economic development often involve investing in physical assets like buildings or equipment. While these contributions are important, they may fall short of creating lasting change. The shift towards a more purposeful approach, centred around skills development programmes, presents a powerful strategy for businesses with the potential to reshape both social and economic landscapes.

Consider this: a business can purchase and donate the most advanced equipment, but without skilled individuals to operate and maintain the investment, its true potential remains untapped by the recipient. The analogy holds true for social and economic development contributions. The conventional practice of allocating funds to equipment and training suppliers, while beneficial, is unlikely to maximise the impact of social and economic development contributions. In this respect, businesses should consider shifting their approach toward skills development programme partnerships.

A well-designed and well-implemented skills development strategy becomes the bedrock of a meaningful approach to social and economic development. In such a model, businesses earn social and economic development points not just by monetary contributions but by actively investing in training programmes.

Skills development programmes have various purposes, including enhancing employability, improving productivity in existing employees, supporting career advancement and fostering lifelong learning. They encompass diverse types, including vocational training for practical occupations, technical training for specific technologies, business and management training, soft skills development for interpersonal skills and computer literacy training covering basic computer skills and software applications.

The benefits of such initiatives extend beyond mere box-ticking corporate social responsibility obligations. Skills development programmes play a decisive role in advancing social and economic development by equipping individuals and their communities with essential skills that enhance employability, entrepreneurial potential, and overall quality of life.

These programmes yield individual benefits such as improved employability, increased earning potential, the cultivation of entrepreneurial spirit and personal development by fostering self-confidence and overall wellbeing. Societal benefits include economic stimulation through an expanded pool of skilled workers, reduced unemployment, financial participation and poverty reduction. Skills development programmes are powerful tools for socioeconomic development, providing a pathway to empowerment, economic growth and a more inclusive and prosperous future.

But why should businesses embrace this approach? Beyond humanitarian reasons, there are practical financial incentives. Every company with a turnover exceeding R15m is mandated to contribute a percentage of its net profit after tax to social and economic development.

Investing in skills development not only fulfils this requirement while contributing to the B-BBEE scorecard, but can also lead to tax incentives, especially if the education programmes align with sustainability and income-generating goals. With skills development programmes as an alternative to physical investments or direct monetary contributions, sustainability becomes a fundamental theme, emphasising the importance of initiatives that outlast the initial investment. As such, the key to a successful skills development programme lies in sustainability and empowerment because it is not just about imparting skills; it is about providing individuals and communities with the means to become self-sufficient.

It is also essential for businesses to grasp the importance of skills development within their context of corporate social responsibility goals. It is not just about ticking boxes or generating feel-good content for the annual report, it is about making a meaningful impact on communities and contributing to societal wellbeing.

‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.


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