Peter Theledi is a South African entrepreneur. He started as a petrol attendant, and moved on to become a crate collector and welder at Pioneer Foods. Putting his hand up to take on extra responsibilities when a crisis hit saw him get promoted to depot manager.
And now, with a gift for spotting the gaps and the right support, funding and mentorship, he owns a small- to medium-size enterprise (SME) and is an independent distribution contractor that provides services to his previous employer.
Peter is one of millions of business owners creating jobs and alleviating poverty in communities around South Africa – and ultimately acting as a catalyst of broader socio-economic growth and development. His is one of around 98 percent of businesses in the country, employing between 50 and 60 percent of the workforce across all sectors. Across Africa, SMEs employ an estimated 80 percent of the continent’s workforce in both the formal and informal sectors.
“When a small or medium business owner works, they are not working for themselves, they are working for the people that surround them,” he says. The role they play in creating opportunities and growth for communities and national as well as regional economies is undeniable.
Many of these businesses, however, face significant challenges that prevent them from reaching their full potential. A combination of lack of access to finance and markets, and regulatory and legislative red tape, mean SMMEs struggle to grow at the best of times.
The pandemic also exacerbated these pressures, and a survey of South African SMMEs has indicated that as many as 60 percent of these businesses will be forced to close their doors before the end of the crisis is in sight.
There is a silver lining, though. “This is where bigger corporates and multi-nationals have the power to make a difference. Partnerships and supplier development programmes, especially with a focus on diversity, localisation and sustainability, have the potential to unlock opportunities for inclusive growth at scale because of the critical mentorship, training, business development support and capacity building they provide,” says Tertius Carstens, CEO of PepsiCo Sub-Saharan Africa.
Empowering local communities
“These efforts have the ability to empower local communities and SMMEs to overcome barriers to entry, expansion and sustainability through support, training and greater access to financing, partners, buyers and markets.”
Peter is a testimony to this. He is a beneficiary of Pioneer Foods’ Enterprise Supplier Development Funding and many others like him will soon benefit from similar support and funding through PepsiCo’s Development Fund, a five-year, R600 million commitment to build a sustainable food system in South Africa by creating local employment opportunities and increasing local procurement and supplier diversity. The investment into the Development Fund, includes R100 million for SMMEs within the company’s supply chain, R200 million for education and R300 million for agricultural activities. For a leading food and beverage company like PepsiCo, which procures more than 1.5 million tonnes of local maize, wheat, potatoes, oats and raisins every year and employs 13 000 people in 70 warehouses and 45 production facilities on the continent, it is critical to maximise local production and invest in local companies and SMMEs as part of the supply and value chain.
This lies at the heart of the organisation’s public interest commitments and PepsiCo Positive – the company’s newly launched approach to transforming the food system, called PepsiCo Positive. Sustainability is the driving force of how the company will create growth and value by inspiring positive change for the planet and people.
An investment in enterprise and supplier development, and supplier diversity in particular, is a key ingredient in how the company will achieve this – by creating shared value and building the SMMEs and communities that serve as the foundation of the business.
“We have committed R100 million to enterprise and supplier development to make a difference and drive transformation through supplier diversity,” says Carstens. “This investment looks to leverage unique innovation, increase competitiveness and drive economic inclusion by building an inclusive pipeline of suppliers and entrepreneur networks and providing them access to markets, business development support, funding and mentoring.”
Ongoing investments in support, training and capacity building are key to building the momentum that SMEs need to grow and drive impact – which is also why PepsiCo has randomly selected 10 suppliers in their value chain as beneficiaries of a Business Development Package offerered by the company’s training partner, Letsema Consulting. They will receive support including business coaching, facilitated access to finance and markets, as well as training around identifying opportunities, business model innovation and strategy, and impact measurement and evaluation.
“Unlocking the potential of South Africa’s small and medium businesses, who are engines of much-needed job creation and economic growth, remains a priority and we are committed to walking this journey to develop and support these organisations as our partners,” says Carstens.