The Minerals Council South Africa (MCSA) has joined 50 other companies in supporting the the #Payin30 initiative.
Spearheaded by Business for South Africa (B4SA), the SA SME Fund, and Business Leadership South Africa (BLSA), the initiative advocates for small and medium enterprise (SME) suppliers to be paid within 30 days. The Council has committed to doing so and urged members to follow suit.
Minerals Council CEO Rodger Baxter highlighted that South Africa’s economic crisis was worsened by the COVID-19 pandemic, which took a major toll on SMEs. The recession and pandemic have had a devastating impact on the approximately 2.5 million SMMEs accounting for 10.8 million jobs. Transunion data points to 6.4% of formal SMEs going into bankruptcy (up 50% from last year), with 260 000 jobs lost and another 240 000 at risk.
COVID-19 has made this problem worse. Some companies have used the crisis to extend payment terms and have asked SME suppliers to reduce fees. This is simply not sustainable for smaller businesses.
“While we recognise that all sectors of the economy have been affected, the fact is that SMEs are likely to be less resilient in the face of cashflow constraints. Just as our industry has worked so hard to develop a thriving network of SME suppliers around its businesses, so too we are sure that they will do all they can to support and grow this network during these trying times,” commented Baxter. He added that growth in SMEs is a fundamental cornerstone of a thriving economy and can be a significant driver of inclusive economic activity and job creation.
Corporate South Africa recognises that paying their SME suppliers in 30 days is one of the key levers for an SME’s sustainability. “A number of Minerals Council members have already committed to this initiative, and I am certain that more will follow in the coming days,” Baxter said.
Jomo Khomo, CEO of Kele Mining said that the initiative would a major impact on small businesses – such as his own – who service large corporates. “We don’t have the luxury of a ready supply of working capital or extended credit facilities, so cash flow management sits at the heart of our ability to succeed. Without this, we can’t retain a healthy credit rating, or pay our own creditors and employees on time,” he added. He added that it was great to see so many CEOs standing up for smaller businesses. “This is the type of ethical leadership we need in a crisis,” Khomo.
AngloGold Ashanti interim CEO Christine Ramon said that the mine company supported B4SA’s drive to ensure that corporates in South Africa pay SMEs within 30 days of receipt of invoice. “Paying timeously is even more important in these difficult economic times when companies are struggling to maintain revenue. AngloGold Ashanti hopes that by being part of this nationwide campaign, we can help raise awareness about how something as straightforward as paying invoices within 30 days can have a positive impact on SMEs,” Ramon said.
“At our South Deep mine on the West Rand we support almost 80 suppliers from surrounding communities. Most of them are SMEs heavily reliant on work from us. It is therefore critical that we pay them within days after they have completed their job,” commented Gold Fields CEO, Nick Holland.
Sibanye-Stillwater CEO Neal Froneman, explained that the PGMs and gold producer appreciated the immense challenges that the COVID-19 pandemic caused for SMEs. “SME’s are important partners in our supply chain, contributing substantially to localisation of procurement into the mining communities that host our mining operations. This is a major contribution to developing the economies of the local communities in the areas where we mine. Sibanye-Stillwater is pleased to support the B4SA call to honour SME invoices within 30 days of the payment falling due as a contribution to improving their cashflows and liquidity,” he said.