Over the last four years our company has been the driving force behind more than ten small enterprises
Afrox’s is totally committed to kick-starting, supporting and building small black-owned businesses capable of meeting the needs of the company’s strategy in terms of procurement, transport and penetrating new markets.
What started out as a Black Economic Empowerment drive to achieve a Level 3 rating four years ago is now fast becoming part of the business fabric of managing costs and supporting the rise of small enterprises, essential to South Africa’s economic growth, said head of Procurement, Makhula Magaoga.
“For some time now, Procurement and HR have been identifying opportunities in Afrox that can be outsourced and turned into small / medium black-owned enterprises,” said Makhula. “This trend is now gathering pace and we have a number of SMEs supporting our operations across the country.”
Distribution is a large part of Afrox’s operations and this has been identified as an area ripe for the setting up of SMEs. As part of Phase One to support the new State Healthcare Tender, previous one-Bakkie black businesses delivering LPG have been expanded into mini-transport businesses with one, two and three trucks.
Currently, these start-up black businesses are supporting distribution at Afrox sites in Pretoria, Pietermaritzburg, Durban, Bloemfontein, Cape Town and at some of the smaller Gas & Gears in Gauteng.
“Phase One of identifying the right sort of people to run these businesses and equipping them with the right type of vehicles and back-office support, was concentrated on the new provinces won under the State Healthcare Tender,” said Makhula. “Phase two will be rolled out to the rest of South Africa – the biggest opportunities being in bulk and cylinder distribution.
“Initially, we are working with existing suppliers, as they know our procedures and our SHEQ requirements, and we assist in restructuring their businesses to enable them to successfully provide the services we need and for them to grow sustainably.”
Growing SMEs is also broadening our penetration of previously ‘off-limits’ markets. Afrox’s LPG partners in the Western Cape, KwaZuluNatal and Gauteng are driving volume growth in townships, leveraging our support in marketing, the 6kg Handipack with cooker top and recently launched 5kg Afrox safety gas cylinders. Two other SMEs operate in Cape Town and Durban, inspecting and testing cylinders onsite to our standards.
“We recognise small businesses face the challenge of financing,” said Makhula. “So, we have a loan structure in place to assist. We have also made available 13 trucks to our small contractors to ensure they can grow and deliver in the volumes we need them to deliver.
“We have teamed up with LEAP’s lean enterprise programme, which provides back office support, , tax and other financial knowledge needed to run a business.” LEAP provides a variety of services that support entrepreneurs looking to ensure their businesses become feasible working solutions.
Afrox’s preferential procurement spend has risen in recent years from a healthy R100million to an impressive R900m; not many companies the size of ours can demonstrate such support for supplier development and of the South African Government’s call for a corporate investment in small and start-up businesses.
“What started out as a Broad-Based Black Economic Empowerment initiative is growing into something larger; our enterprise development is starting to bring small business into being and helping small to grow into medium enterprises, all in turn providing much-needed jobs for our economy,” said Makhula.