Job creation with impact

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Uconomy provides business management and development support, access to opportunities and funding, labour at subsidised rates and advisory services to leverage the potential of SMMEs to create jobs.

To do something about South Africa’s huge youth unemployment problem, Scha van Niekerk and Ben Naude, directors at Uconomy, in 2015 decided to employ jobless school-leavers in their auditing firm’s back office.

“We decided to target unskilled labour, reasoning that people with no experience were more eager and desperate to learn than graduates,” Van Niekerk says.

Other major companies, of which Investec was the first, soon saw the success of the initiative and asked Uconomy to also source, train and employ jobless young people for them.

Since then, the number of people going through Uconomy’s employment programme grew from its initial four to more than 4 500 people, while the types of jobs on offer expanded from basic clerical and customer services to include more than 120 other fields.

The key to job creation

Van Niekerk soon realised that more was needed to achieve meaningful job creation. “The futurologist, Clem Sunter, says that to create decent jobs, you need decent businesses. So instead of trying to create millions of jobs, the aim should rather be to create a million decent businesses that are able to grow the job market.”

He adds that big corporates are expected to be the main job creators in the country. However, when times get tough, they are also the first to downsize.

“Instead, we need more small enterprises. They take fewer employees, but these jobs are generally more sustainable. The impact of Covid-19 would have probably been far less disastrous if we sourced more resources locally and had more SMMEs, instead of relying on large corporates and imports.”

To this end, Uconomy in 2018 expanded its services to also target small business development. The process starts with an interview of the client, with the acquired information being used to develop a needs analysis as well as a business and development plan.

New business owners, like new job entrants, must often learn on the go, according to Van Niekerk. For most, their biggest priority is just to survive, and they do not have all the necessary skills, time or resources to, for example, train new staff, develop markets, apply for tenders, pitch for funding, become tax compliant and so forth.

Uconomy aims to solve this by training business owners to be good employers and managers and linking businesses up with service providers in their extensive network to address obstacles and gaps that are preventing them from thriving.

For example, wage subsidies are available to incentivise companies to employ young people, but most companies find it too much of a bother to source and develop suitable candidates, never mind applying for the subsidies. Uconomy therefore started using their network to take care of that for them.

For 12 months, each SMME in the programme is also supplied with one or two interns from Uconomy’s youth employment programme, at a minimum cost. The SMME, thereafter, has the option to hire the entry-level employee, who has since familiarised themselves with the specific business processes of the business owner.

With their holistic approach, Uconomy also unlocks business growth opportunities for SMME clients. By helping them improve their B-BBEE scores or quantifying and improving their social impact, these businesses may gain access to new markets, qualify for certain grants, social impact investment or become more attractive to seed and angel funders.

More recently, Uconomy has added another layer to their services by looking at innovative ways to enhance the business environment through working with communities and other networks.

By working with community leaders, for example, they have been able to appoint and train certain community members as sales agents for some of the products of their SMME clients.In one project, community members have been trained to refurbish printers, which are then supplied to schools. The printers are paid for via donations from social investors, at roughly 30% of the normal market value.

Bang for buck

Uconomy has also developed an IT system through which they collect the data of each project. The system helps them to keep record of and monitor project progress and identify areas that can be improved on and contribute to success.“When approaching new clients, we talk about what we have achieved with other companies to give them an idea of possibilities,” Van Niekerk says.

Uconomy has so far raised and used more than R250m in funding for business development and helped over 100 small businesses.

Accessing long-term government and corporate funding is one of their biggest challenges.

“It is difficult to plan and drive meaningful change when most of the funding commitments are scheduled for only a year. We need commitments of at least three years and preferably longer for meaningful change and to pass on market growth to corporates and other funds.”

He adds that many investors and other business development agencies are chasing numbers instead of meaningful impact. “Others may only be looking at the number of people they

can employ or the SMMEs they can assist per year, whereas we evaluate the success of our projects against various other paradigms, such as the cost per unit and its overall impact on a community. We can truly say that we are one of the companies that can give you of the best results for every R1 invested in development.”

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This article originally appeared in the 4 February edition of finweek. You can buy and download the magazine here.

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