Macsteel collects two awards in recognition of significant advances in supplier development

Macsteel has garnered two awards at the Absa Business Day Supplier Development Awards, which recognise and celebrate businesses committed to building a better South Africa via inclusive and transformed supply chains.

Macsteel won the Small Supplier and Local Manufacturing Award in acknowledgement of companies who have developed an ecosystem of small suppliers, manufacturers or value-add services and products from the local industry.

It was also recognised as a partner in South African Breweries Market Access Platform (MAP) Steering Committee, which collected the Collaboration Award in acknowledgement of companies who recognise the importance of industry relationships and cross-sector collaboration for the benefit of the wider ecosystem. Together with SAB, Total, KFC, General Electric and Coca-Cola Beverages Africa, Macsteel’s involvement in the MAP Steering Committee supports preferential procurement and localisation in the spirit of collaboration and towards building a more resilient economy.

“These awards are truly meaningful to Macsteel as they are testament to how we truly go beyond the scorecard and show true leadership, cooperation and long-term commitment in sustainably building our economy,” says Kim Allan, Macsteel’s Group CSR Manager.

In three and a half years, Macsteel has invested R27.2 million in the development of its enterprise and supplier development initiative, the Macsteel Usizo Supplier Development Programme. This initiative is designed to strengthen the capacity of SMMEs within the steel manufacturing sector to better enable them to deliver high quality, fabricated products at competitive prices.

Allan says the company’s strong belief in providing sustainable support led to the development of Usizo, offering small-business customers a sustainable solution to overcome their operational limitations. Macsteel was the first corporate to enter into a private-public partnership with SEFA (Small Enterprise Finance Agency), and the first in the steel industry to implement a supplier credit programme.

“The programme aims to increase the participation of black-owned SMMEs in the steel sector where access to credit enables them to secure input goods for their businesses and build their credit profile. Many have been declined from obtaining credit via traditional channels yet to date, shared risk on defaults represents 4,1% of total credit, an excellent result which is testimony to the success of the programme.”

She says the initiative comprises three key components: Providing less stringent access to trade credit for small businesses with favourable cash flow terms in order to bring previously excluded entrepreneurs without collateral into the credit value chain: Providing programme participants with access to non-financial support through business mentorship and industry-related transfer of skills and: Thirdly, by deliberate action to provide further access to market opportunities for SMMEs in the Usizo programme.

The project was launched in May 2015 in partnership with the Small Enterprise Finance Agency (SEFA) and within 21 months, 114 SMMEs, primarily involved in some form of steel fabrication or construction, engineering, air-conditioning, irrigation or equipment maintenance industries, had benefitted from a R10 million credit facility. In February 2017, informed by the DTI’s revised BBEEE codes, the Usizo Supplier Credit Programme qualified for enterprise development.

“For many businesses trade credit is an essential tool for financing growth. Prior to the launch of the project, there was no comparable finance product available to support SMMEs for their start-up and early-stage business development,” Allan comments.

She adds that while access to credit is a primary element, all Usizo customers are encouraged to participate in Macsteel development programmes where each SMME is assigned an internal mentor to facilitate industry-related skills transfer.

The results are clear. The impact of the programme has enabled a contribution in excess of R89.6 million to the economy and has resulted in 765 jobs (585 maintained and 180 new jobs created).

“Right from the outset, Macsteel’s desired result was to bring previously excluded SMMEs into the finance value chain. In just three years, this initiative has made a tangible and immediate difference in supporting local manufacturing suppliers via a sustainable enterprise and supplier development model and Usizo is now fully integrated throughout our business operations. We are delighted with these awards which echo our commitment to building capacity, expertise and knowledge and to create a platform which materially contributes to the economy,” Allan concluded.