2014/15 Annual Report

Competition Commission
14
A major concern from Government (through the Economic Development
Department and the Departments of Trade & Industry and Agriculture,
Forestry and Fisheries) was that the merged. Such import-substitution would
likely compromise the sustainability and participation of SMMEs and HDIs’
manufacturing and assembly firms in productive sector activities. The knock-on
effect would be an adverse impact on domestic employment and a reduction
in output in sectors that economic policy aims to develop, both of which would
affect broader economic development goals.
These concerns led to imposition of conditions for the approval of the merger
by the CAC, which included the establishment of the R242 million Massmart
Supplier Development Fund. To date, over R124 million has been committed
to support projects in agriculture (Ezemvelo Direct Farm Programme),
manufacturing (Manufacturing SMMEs Programme) and support services
(Services to Suppliers Programme). Actual disbursements to qualifying
enterprises totalled R71 million to the benefit of 139 smallholder farming
enterprises and 24 manufacturing SMMEs. Funding assistance takes the form
of zero-interest non-recoverable grants for equipment, materials and factory
equipment, secure loans via guarantees issued to commercial lenders, as well
as technical assistance.
The Ezemvelo Direct Farm Programme helps small to medium-sized farmers
enter Massmart’s fresh produce supply chains. The programme is targeted
at historically disadvantaged farmers who would typically not have been
able to access these supply chains due to their size, location and trading
history. As at December 2014, R31 million had been disbursed for farming
projects. At the programme’s peak in 2013, 164 smallholder farmers were
linked to the supply chain. This decreased to 139 farmers during 2014
due to some projects being discontinued and fluctuating cooperative
membership. Smallholder farmers’ sales to Massmart and other retailers
totalled R13,1 million, with Massmart accounting for 62% or R8,1 million.
The Manufacturing SMMEs Programme is directed towards cluster
projects in the building materials (paint, window frames), bricks, processed
commodities (maize meal), processed foods, clothing and textiles sectors,
and general merchandise sectors. As at December 2014, R30,3 million had
been disbursed to support manufacturing suppliers, which includes R23,5
million in grants and R6,7 million in loan guarantees issued by the Fund
on behalf of SMME suppliers. A further R10,6 million has been approved
for disbursement during 2015 2 . Of the 24 projects assisted through the
Fund, 19 are black-owned, five (5) are classified as microenterprises 3 and
eight (8) are small businesses 4 . The enterprises supported have created or
sustained 1 417 full-time jobs. Since inception of the Fund, manufacturing
SMMEs’ sales have totalled R106,6 million.
The Developing Wine Brands Programme assists emerging black-owned
and empowered wine brands to gain market access. To date, 15 wine
brands have been integrated into Massmart’s supply chain, and several
wines have been introduced into Walmart stores in the United States,
China and Brazil. Local sales through Massmart totalled R1,7 million while
international sales exceeded R12 million.
The Services to Suppliers Programme procures services such as food safety
compliance, financial and business management, as well as training, on
behalf of enterprise beneficiaries. To this end, Massmart has formed
partnerships with organisations such as ABSA Enterprise Development to
provide commercial financing to SMMEs beyond traditional grants. The
Fund has partnered with intermediaries 5 to provide technical training on
crop production as well as training and in-field mentorships for smallholder
farmers.