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Supplier Best Practice Model: Mexico – Letsholo Mojanaga, Programme Manager: Inclusive Growth, UNDP

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20. Thank you for listening! UNDP Team

19. NEXT STEPS /PRIORITY ISSUES  Identify and select corporate clients – explore options

4. Background & SA context .. UNSCF supports SA government to implement its programmes within the Policy Framework guided by the NDP (vision 2030), NGP, MTSF, etc .

10. Specific Objectives.  to improve the competitiveness of suppliers to meet procurement requirements of large MNCs/local corporations/SoEs via tailored training and mentoring support in technical, business, production, management, and marketing skills, and thereby increasing their capacity to access business opportunities in the selected sectors .  to increase the availability, capacity and affordability of business development services for SMMEs in the targeted sectors .  to contribute towards raising the level of local content in manufacturing processes and services and support MNCs to adopt sustainable & inclusive business models including cross - cutting issues (Gender, HIV/AIDS, youth, disabled).

1. THE 2ND ANNUAL CONVENTION OF THE SOUTH AFRICAN SMALL AND MEDIUM ENTERPRISES FEDERATION SUPPLIERS DEVELOPMENT PROGRAMME (SDP) OVERVIEW 17 MARCH 2015 LETSHOLO MOJANAGA: ECONOMICS SPECIALIST Email:letsholo.mojanaga@undp.org

9. Overall Objective of the SDP ...... . To support the Government of the Republic of South Africa attain its corresponding objectives as described in its National Development Plan, notably to reduce the official unemployment rate from around 25 % ( 2013 ) to 14 % ( 2020 ) ... . ?

8. Programme Description  Not Another SME Development Programme, goes beyond matchmaking  The SDP is a 9 - 10 month technical assistance in - depth intervention that provides mentorship to selected existing and potential SMEs suppliers or of larger companies .  The model aims to create a win - win situation for both cooperatives/SMME suppliers and the large company by improving/increasing the volume, quality and punctuality of products/services to the large company .  Also results in the SME diversifying its sales to other companies

17. Lessons from other global and country SDPs  High - level commitment of MNCs to SDP – CSR Vs. Business S trategy  Managing expectations of local SMMEs/suppliers and consultants  A ccess to Finance for local SMMEs/suppliers a necessary component of SDPs  Involvement of Corporates’ End User Depts. in Training and mentorship program (business Vs. Technical skills)  P rogram handover and Sustainability to be agreed at design stage

14. Benefits for Suppliers  Taking advantage of Local Empowerment opportunities  Forging stronger commercial ties with big businesses and taking full advantage of the opportunities offered by servicing the procurement requirements of the mines  Gaining new capacity to deliver timely, appropriately priced, high - quality goods and services  Gain new strengths that become a springboard to a broader, more diversified client base in future

7. SDP Rationale ...  SA a highly resourced country, relatively favourable policy environment but 63 % of SMMEs fail in the first 18 months (ABSA)  AND most SMMEs fail to capitalise on procurement opportunities presented by big companies because they lack the requisite competitiveness.  Opportunity to support corporates to meet their ED targets in a mutually beneficial and sustainable manner SDP aims to build the capacity and competiveness of existing and potential suppliers (including cooperatives) to meet industry/big business requirements hence integrate them in the supply chains of corporations and OEMs

3. Background & SA context. The South Africa - United Nations Strategic Cooperation Framework (UNSCF 2013 - 2017) – overall framework of the work of the UN system in SA Inclusive Growth And Decent Work Sustainable Development Human Capabilities Governance And Participation 4 Thematic Areas Cross cutting priority areas – HIV & TB; gender e quality and rights; focus on youth

13. Benefits for corporations  Increased capacity for value added vertical supply chain on locally procurable goods and services to meet demand  Reduced operating costs by sourcing locally,  Contributing to economic and social development, healthy environment and stable society  Results reflects developmental commitments as specified in respective agreements signed by corporates with the government  SDP helps corporates meet BBBEE targets and commitments e.g. 3% spend on ED

11. Specific Objectives..  to promote the establishment of a win - win sustainable & long - term relationship between suppliers and large buyers .  to improve access to finance (A2F) for especially SMMEs with limited/no access to finance as a component of the SDP methodology. ( via linkages to FIs, DFIs, etc .)  to build the capacity of relevant government departments/Agencies (e . g . DSBD, SEFA/SEDA ) using UN system’s global resources, presence, and expertise  Support other employment creation initiatives where UNDP can make the most impact – e . g . DSBD/SEDA’s National Gazelles project

6. SDP Rationale..  High unemployment levels – about 25% overall; approx. 52% for youth (15 - 24yrs)  High inequality (Gini Coefficient of 0.59 in 2015 as per WBG report)  Govt.’s commitment to support small businesses and cooperatives – policy framework, National/provincial institutions ( DSBD, SEDA, SEFA, GEP), SONA, etc .  Engines of growth; employ approx. 22% of adults in dev. countries including SA  Approx. 91% of formal business in South Africa, contribute 52 - 57% of GDP and about 61% to employment (UNIDO ). Why SA and SMMEs?

2. OUTLINE  Background & Context  SDP – Rationale, description & objectives,  Methodology  Governance/Management structure  Partnerships – A Strategic Response/Approach  Achievements VS milestones  Way forward

15. Strategic response and approach Guided by clearly defined focal areas, objectives and principles for private sector engagement Principle Objective, results One UN; Delivering as one (DaO); Coordination, leverage experience/strengths of the UN system, efficient, image building, maximise development impact Ownership & roles of stakeholders Respect ownership role of government and stakeholder groups e.g. private sector associations, align programmes to government priorities Selectivity – to ‘leverage UN system comparative advantage’ Also define ‘ No Go ’ areas Acknowledge roles of many commercial entities and development partners operating in PSD; build strategic partnerships; coordination; leverage resources; mutual accountability for results; reduce time - burden for government; fill development gaps Sector focus guided by e . g . job creation potential, availability & willingness of clients (SMMEs, big business), location, potential of gender inclusivity, etc . Additionality Clearly define the UN’s value - add, global experience/convening power; Play catalytic role; ensure sustainability of programmes? Define appropriate Funding model Ideally private sector funding (fully or partially), cost - sharing, sustainability Internal Capacity/Resources (Human, financial, etc.) at country level Recruit right skills mix (subject matter experts); form Focal Area teams from various UN country agencies

18. ACHIEVEMENTS Vs. MILESTONES ACHIEVEMENTS  Unique UNDP SDP model – functional (to be adapted)  About 20 SDP consultants accredited and available  SDP model tested and proven to be successful in Mexico and replicated to other countries  SDP website developed and functional MILESTONES – must do’s  Finalise institutional Arrangements/Governance structure  Identify, select and sign Agreements with corporate partners/buyers  Identify/Select SMME suppliers  Train SDP consultants and implement programme

16. Engagement Strategy The private sector engagement strategy in MICs (SA) may not be any different from that of Developing countries but it’s important to consider capacity and willingness aspects first... Capacity (not always financial) Entity’s willingness/ “Determination” to improve/engage Strong Weak Strong May not need UN support Decide on effective strategy if needed ... Weak Ideal for TA support our priority Can hardly achieve results  Engagement strategy for private sector in Middle Income Countries/MICs (a case for SA)  Where to start? R eadiness and willingness to engage

5. SDP Rationale. Supports SA government’s job/employment creation efforts; sector focus and prioritisation guided by the Industrial Policy Action Plan (IPAP) – with a focus on private sector Private sector Sole Traders Partner - ships Co - operatives Other forms e.g. Franchises Companies Private sector accounts for approx. 90% of employment in SSA, esp. in MICs including SA – AfDB 2013 SSA expected to grow by av. 5.5% over 2013 - 2017, private sector as key drivers via FDI & local investors, SA g behind (1.9%) – IMF 2015 P rivate sector as catalysts for inclusive, green & sustainable growth in MICs: SA private sector developed & sophisticated Diminishing pool of development funds in MICs entails looking beyond traditional donors to the private sector, esp. in MICs Private Limited PLC e.g. TNCs Business Associations

12. Phase 1 – Promotion Suppliers selection, corporate goals, Approach, program goals Phase 5 - Implementation Execution of improvement plans Phase 2 – Diagnostics Financial, technical and operative assessment, ID opportunities and gaps Phase 3 – Interaction/Consu ltations Interactive meetings with Buyers/suppliers to review practices and define agreements Phase 4 – Action Plan Improvement framework with activities, timelines and responsibilities Phase 6 - Documentation Results Evaluation Strategy for replicability Data mining, new batch with lessons learned Technological road maps, Training Requirements, market drivers Investment planning, Access to finance, Access to new technologies MONITORING AND EVALUATION Increased procurement from local suppliers, Increased sustainability and competitiveness of local SMMEs , Improved profitability and income distribution in the economy through new/better jobs benefits for Anchor companies over time AVERAGE SUPPLIERS DEVELOPMENT PROCESS/PATHWAY IN MONTHS M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 GOAL SDP METHODOLOGY & FRAMEWORK

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