In-depth research uncovers real impact of COVID-19 on preferential procurement and ESD
Creating conversations for improvement, a starting point for collaboration and the heightened need to optimise ESD budget use and learnings. These are just some of the key reasons why Edge Growth conducts their annual survey into the state of ESD and SME Development.
Edge Growth has announced the findings of their latest research to a national audience of decision makers involved in ESD, SME development, transformation, procurement and supply chain.
To date there has been a noticeable lack of data gathering and sharing within this relatively young industry. The findings of this research, now in its third year, provides vital insight into the current challenges faced, with the data collected being integral to informing real impact from ESD initiatives.
What the results showed
62.8% of respondents who participated in the survey reported having their budgets affected by the pandemic. Companies with ESD budgets of less than R 2 million experienced a slight increase in ESD spend from 35% in 2019 to 41.4% in 2021. The more worrying statistic was amongst those with an ESD budget of over R 25 million, which showed a noticeable decrease from 33% in 2019 to 19% this year.
“The challenge that exists here is striking a balance between reduced budgets and a heightened need for impact in a Covid-19 world, with a forward looking ESD lens,” says Stuart Townshend, Director at Edge Growth.
42.2% of those affected by COVID-19 reported having adapted their ESD approach, including the investment in and adoption of digitization and tech applications for more efficient delivery.
More partnership and collaborations and an increased focus on beneficiary economic survivaland supporting their short-term cash flow needs were also identified as innovative and essential ways to adapt.
On a positive note, 2021 saw a noticeable increase in senior leadership involvement in driving transformational goals and overall ESD improvements.
According to Nabeela Vally, Business Development Manager at Edge Growth, over 75% of respondents indicated that they would still contribute to ESD initiatives, even if it was voluntary.
“This shows a true belief in the ability of ESD to drive economic growth and achieve real transformation, with the level of awareness and maturity of ESD as a practice increasing positively over the last 3 years,” she says
Measuring impact
While 77,5% of respondents reporting thatthey are actively measuring impact on their programmes, impact measurement remains an important development area. In fact, nearly half of all respondents were unable to give an exact indication of the number of jobs created or revenue growth for their SMEs through their ESD initiatives.
When it comes to the use of ESD Service Providers over the last 3 years, 83.7% believe that these service providers achieve better impact.
Changes and challenges going forward
In trackingtrends and themes over this past 3-year period, access to market remains an ongoing challenge, with morecollaboration needed amongst end users and procurement.
Surviving the pandemic economically and a focus on cash flow support were two other key changes to focus areas and ESD approach noted during this research.
In summarising these research results, Townshend concluded that there is a need for more impact from ESD and SME development initiatives, specifically within the current socio-economic context.
“ESD as an industry is maturing and innovating in many ways, but in some foundational areas it is still infantile. Some of the core focus areas going forward need to include linking ESD strategy to business strategy and commercial return on investment, and measuring and communicating results,” Townshend says.
Other essential pillars for improving ESD included SME selection on the back of identified areas of opportunity, including ESD objectives in scorecards and the consideration of longer-term programmes with smaller numbers of SMEs.
Edge Growth, an established small business development specialist, partners with corporates and investors to achieve real transformation by scaling SMEs through their fund management solutions, ESD strategies and SME development programmes.
For more information, go to edgegrowth.com.
