Corporate South Africa’s funding of Enterprise and Supplier Development (ESD) initiatives is often based on the belief that these programmes will improve the performance of small and growing businesses alongside their socio-economic circumstances. Yet despite the optimism with which corporates have developed and implemented ESD strategies, there has been far less effort devoted to objectively analysing the impact thereof. Impact reporting is the crucial missing link.
Since the introduction of the B-BBEE Codes of Good Practice in 2007, pressure has mounted for corporates to prove that their ESD programmes are making a tangible and quantifiable difference, demonstrating increased employment opportunities within Small, Medium and Micro Enterprises (SMMEs), improved business capacity and capability, greater SMME participation in the formal economy, and enhanced and sustained operational efficiency.
Some describe impact reporting as the “so what?” element of an ESD programme, the point at which corporates and their implementation partners are held accountable for what has actually been achieved. When executed correctly, it enables corporates to showcase measurable success. Impact assessments should consistently be conducted to determine whether a programme produced its intended outcomes, for example, did the provided training enable the small business to adopt new business practices?
“Good impact reporting is not a tick-box exercise. It promotes a culture of transparency and accountability that goes far beyond loosely-defined KPIs.”
Good impact reporting encompasses robust Monitoring and Evaluation (M&E), enabling corporates to establish whether their efforts are making a quantifiable difference and to determine whether continued support is warranted.
Understanding Monitoring and Evaluation
It is important to distinguish between the two components of M&E:
- Monitoring is a continuous task that uses systematic collection of data on specified indicators to provide management and stakeholders with information on implementation status.
- Evaluation is a selective exercise that aims to systematically and objectively assess the achievement of medium-term results (outcomes) alongside long-term results (impacts).
In order to measure programme progress, clear indicators are needed to help SMMEs, ESD implementation partners, and corporates understand how the programme is performing against its objectives.
Best Practice in Impact Reporting
Developing a fit-for-purpose M&E approach requires the following steps:
- Clarify targets, goals, and the ESD programme problem statement
- Plan evaluations at the beginning of the ESD programme, not as an afterthought
- Establish baseline data and ESD programme records from day one
- Recognise that impact assessment is about demonstrating causality
- Build valid comparisons into analysis by comparing observed outcomes to the counterfactual
- Use multiple techniques to assess programme impact
- Commit the level of resources needed to design rigorous evaluations
- Accept that “good enough” measurement today is better than perfect measurement never
Setting Out the Objectives
Impact reporting must cover three dimensions of an ESD programme:
- Socio-economic objectives: How does the programme stimulate entrepreneurship and enable SMMEs to be economically active within the communities in which the corporate operates?
- Economic objectives: Does the programme contribute to the overarching goal of creating and sustaining jobs? SMMEs are the lifeline of any economy, supporting them must translate into measurable employment outcomes.
- Commercial objectives: Does the programme demonstrate that the enterprise is procuring from a supplier that offers genuine value, not just the cheapest option, but the most appropriate one?
Beyond the Numbers
Many corporates believe it is sufficient to demonstrate growth in turnover and job creation, and the number of procurement opportunities generated. While these financial KPIs are important, they have become a baseline expectation. SMMEs involved in ESD programmes should — at the very least — grow, and do so sustainably.
However, often overlooked are the non-financial KPIs that focus on empowering the small business owner with the knowledge and capability to steer their company towards sustainable growth. These qualitative indicators affect almost every sphere of the business operationally, from leadership capability and financial management to market access and governance.
ESD is not only about regulatory compliance. It is about ensuring that successful programmes are expanded and replicated, and that ineffective ones are redesigned or discontinued. For this to happen, the indicators must be agreed upfront, before the programme launches and actively tracked and monitored throughout its life.
