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I
ANGLOGOLD ASHANTI: PROFILING PHILANTHROPY
AND SOCIAL INVESTMENT TO CREATE JOBS THROUGH ENTERPRISE
DEVELOPMENT IN THE COMMUNITY
A Research Report
presented to
in partial fulfillment
of the requirements for the
Masters of Business Administration Degree
Himesh Persotam
Modular MBA 2005/2006
Supervisors:
Dr. E J de Jager
E Donovan
II
ACKNOWLEDGMENTS
This report is confidential. It may not be freely used by the University of Cape Town’s
Graduate School of Business for a period of two years as the matter is confidential.
I would like to thank my supervisors Elspeth Donovan and Dr. Kobus de Jager for their
support and guidance during this project.
I would also like thank AngloGold Ashanti for the opportunity and support during my MBA
studies and, secondly, for the opportunity of evaluating its job creation strategy and allowing
me to participate in this strategic objective for the organisation. A special thanks to Larissa la
Grange and Butiki Loliwe from the Community and Social Development team for their
assistance in this project.
Lastly, I would like to thank my wife, Nayna, and my family for their support over the last
two years. I would not have been able to do it without them.
III
DECLARATION
I declare that this research report is my own work and all references are reported. It is being
submitted in partial fulfillment of the requirements for the degree of Masters of Business
Administration at the University of Cape Town’s Graduate School of Business.
--------------------------------------------------
Himesh Persotam
Signed this ……….. day of December 2006
IV
TABLE OF CONTENTS
ACKNOWLEDGEMENTS………………………………………………………………..II
GLOSSARY OF TERMS……………………………………………………………...…...IX
ABSTRACT………………………………………………………………………………....XI
CHAPTER 1 – INTRODUCTION AND PURPOSE
1.1 Introduction to AngloGold Ashanti...……………………………………………...1
1.2 Background to search………...……………………………………………………1
1.3 AngloGold Ashanti Approach……………………...……………………………...3
1.4 Problem Statement and Purpose of Study………………………………………....5
1.5 Limitation of research………………………………………………………..……8
1.6 Format of Report………………………………………………………..…………9
CHAPTER 2 – LITERATURE REVIEW
2.1 Mining Charter………………………………………………………………..….10
2.2 Corporate Social Responsibility and Corporate Social Investment…………..….11
2.3 Sustainable Development……………………………………………………..….12
2.4 Enterprise Development……..……………………………………….…………..13
2.5 Framework for Enterprise Development………………...……………………….17
2.6 Unlocking potential of South African Entrepreneurs…………………………….18
2.7 Partners and Linkages…………………………………………………………....19
2.8 Role of Large Business………………………………………………………......19
2.9 Case Studies of successful Enterprise Development initiatives……………...…..20
2.10 Profile of Matlosana .…………………………………………………………...23
2.11 Profile of Merafong…………………………………………………………..…24
2.12 Conclusion………………………………………………………………………24
CHAPTER 3 – RESEARCH METHODOLOGY
3.1 Introduction……………………………………………………………………....25
3.2 Research Aim…...………………………………………………………..………25
3.3 Research Objectives……………………………………………………………...25
V
3.4 Research Design………………………………………………………………….26
3.5 Sample…………………………………..………………………………………..28
3.6 Ethics…………………………………..…………………………………………28
CHAPTER 4 – RESEARCH FINDINGS
4.1 Introduction…………………………..…………………………………………..29
4.2 Profile of Entrepreneur…………………………………………...……………....29
4.3 Background of Businesses………………………………………………………..33
4.4 Resource Management……………………………………………………..…….34
4.5 Financial Management…………………………………………………………...39
4.6 Business Management……………………...………………………………..…...42
4.7 Business Partners………………………………………………………………....46
4.8 Awareness of Job Creation………………………………………………...……..47
4.9 Black-White Partnership Businesses………..…………………………………....48
4.10 Procurement…………………………………………...………………………...50
4.11 Profile summary of businesses……………………………………………….....51
CHAPTER 5 – RECOMMENDATIONS AND CONCLUSION
5.1 Introduction……………………………………………………………………....54
5.2 AngloGold Ashanti Model…………………………………………………….....54
5.3 Enterprise Development Framework for AngloGold Ashanti………………..….55
5.4 Conclusion………...……………………………………………………………..69
REFERENCES.......................................................................................................................71
APPENDICES
Appendix 1………………………………..………………………………………….77
Appendix 2………………………………………………..………………………….85
VI
LIST OF TABLES
Table 1: 2006 AGA Fund spend……………………………………..……………………….7
Table 2: SMME Definition by Industry (selected) in South Africa…………………..……..14
Table 3: GGP per sector for Klerksdorp…………………………………………………….23
Table 4: Breakdown of respondents from each area………………………………………...28
Table 5: Number of years in operation……………………………………………………....30
Table 6: Education level of entrepreneurs and number of employment created…………….31
Table 7: Net movement in employment from inception of business to present……………..35
Table 8: Use of technology by businesses……………………………………………...……37
Table 9: Training spent by businesses…………………………………………………….....37
Table 10: Employee benefits provided……………………………………………………….39
Table 11: Annual Turnover of businesses selling goods\services to AGA…………………..41
Table 12: Achievement of targets……………………………………………………………43
Table 13: Awareness of government \ private sector initiatives…………………………..…46
Table 14: Annual turnover of black-white owned businesses……………………………….49
Table 15: AGA Spend for October 2006…………………………………………………….51
VII
LIST OF FIGURES
Figure 1: AngloGold Ashanti AUR Sustainable Development Model……..………………...3
Figure 2: AGA Funding models for Community and Social Investment………………….....6
Figure 3: Finding Common Ground between Sectors………………...…………………......13
Figure 4: Framework to developing local enterprises…………………………………….....18
Figure 5: Educational Background of entrepreneurs…………………………………...……30
Figure 6: Reason for starting a business……………………………………………………..31
Figure 7: Reason for starting a business when had no choice……………………………….32
Figure 8: Number of respondents that would accept a job…………………………………..33
Figure 9: Type of business entities…………………………………………………………..34
Figure 10: Number of employees per sector at inception of business………………………..34
Figure 11: Lack of management skills……………………………………………………….36
Figure 12: Training affordability……………………………………………………………..38
Figure 13: Number of respondents that keep financial records……………………………....39
Figure 14: Annual Turnover per business…………………………………………………....40
Figure 15: AGA assistance analysis………………………………………………………….41
Figure 16: Business targets vs. achieved rate………………………………………………...42
Figure 17: Business Plan achievement……………………………………………………….43
Figure 18: Growth constraints………………………………………………………………..44
Figure 19: Number of respondents that have tried to borrow money………………………..44
Figure 20: Number of respondents that approached institutions for loans and were
successful…………………………………………………………………………45
Figure 21: Local government assistance………………………………………………..……46
Figure 22: Respondents aware of AGA’s job creations………………………………..…….47
Figure 23: Respondents view on community awareness of AGA’s job creations initiative…48
Figure 24: AGA Management process…………………………………………………...…..54
Figure 25: Enterprise Development Framework………………………………………..……55
Figure 26: Awareness Model…………………………………………………………..…….56
Figure 27: Identifying Opportunities Framework………..………………………………..…57
Figure 28: Partnership Model…………………………………………………………...……61
Figure 29: Project Decision Model……………………………………………………..……63
Figure 30: Equity stake model……………………………………………………………….64
VIII
Figure 31: Financing Model………………………………………………………………....65
Figure 32: Maximizing social and economic value models…………………………………66
IX
GLOSSARY OF TERMS
AGA - AngloGold Ashanti
BDU – Business Development Unit
BEE - Black Economic Empowerment refers to measures being taken in South Africa to
enable the participation of black people in the main stream of the economy.
Best practice is defined by decentralized and iterative process, not by a fixed set of
parameters that can be ‘read from a manual’.
Business Linkages are when large companies engaging with local small, medium and micro
enterprises in business relationships that promote the transfer of business knowledge, skills
and technology
Distributed capital strategies is when companies tap into external capital resources to which
they would not otherwise have access to.
DTI – Department of Trade and Industry
Enterprise Development are activities that built the capacity of small medium and micro-
enterprises in host communities, enabling them t o take advantage of more business
opportunities, thereby boosting local economic activity.
Entrepreneur is defined by GEM as anyone who is either starting a business that he or she
will wholly or partly own or who is managing a business that he or she partly owns that is
less than three and half years old.
Environmental stewardship is the wisest use of both finite and reusable energy resources to
produce the most work guided by a principle of causing the least known harm to the
environment and driven by a desire to aid in the restoration of a healthier environment.
X
GET – General Entrepreneurship Test
GEM - Global Entrepreneurship Monitor is an international research project, which studies
entrepreneurial activity in participating countries.
HDSA – Historically Disadvantaged South Africans
Host community is defined as the community surrounding or impacted by the location of a
large company, or a subsidiary or joint venture of a large company
Philanthropy is private resources that are put towards public good.
SMEDI – Small Medium Enterprise Development Initiative
SMME - Small, Medium and Micro enterprises are defined in South Africa as enterprises
with less than 200 employees. Small enterprises have less than 50 employees and medium
enterprises have between 50 and 199 employees. Micro enterprises have less than 5
employees.
Stakeholders are shareholders, employees, customers, suppliers, communities and anyone
that is associated with the business.
Sustainable livelihoods (SL) business is doing business with the poor in ways that
simultaneously benefit the disadvantaged communities and benefit the company
XI
ABSTRACT
This study investigates the impact that AngloGold Ashanti (AGA) has made with
enterprise development in pursuit of job creation in those communities within which the
company operates according to the objectives of the Mining Charter.
A primary objective of the Mining Charter (2004) is to “promote employment and advance
the social and economic welfare of mining communities and the major labour-sending areas”.
The sustainability of any community is dependent on a responsible enterprise culture that
reaches far beyond philanthropy. Enterprise development is intended to assist and accelerate
the development of small entrepreneurial enterprises so that they can be financially and
operationally independent (Simayi 2005: 13).
Mining companies cannot address the challenge of Sustainable Development on their own.
Their operations are too closely linked with government, communities, the financial sector
and, therefore, are subjected to much wider societal expectations. When determining a course
of action, the chances of success will be the greatest if a company adopts an open attitude,
fosters good communication with stakeholders, and takes leadership on issues it strives
towards (Walker and Howard, 2002: xiii).
The success of an enterprise development plan is dependent on ensuring that the strategy is
integrated into AGA policies and procedures, which supports the enterprise through sound
procurement, skills and financing approaches.
This study will review existing businesses ventures, partnered by AngloGold Ashanti
together with entrepreneurs, in light of success criteria with the aim to evaluate progress
made to date, as well as to make recommendations on improving the current process.
Keywords: Mining Charter, Sustainable Development, Enterprise Development, Job
Creation
- 1 -
Chapter 1
Introduction and Purpose
1.1 Introduction to AngloGold Ashanti
AngloGold Ashanti (AGA) is one of the world’s largest gold-mining companies with 21
operations in 10 countries, on four continents. The company was established in 2004,
following the merger of AngloGold Limited, a South African gold-mining company and
Ashanti Goldfields Company Limited, a Ghanaian gold-mining company.
AGA’s main product is gold. It has operations in South Africa, Argentina, Australia, Brazil,
Ghana, Guinea, Mali, Namibia, Tanzania and the United States of America. The majority of
these operations are based in developing countries with the exception of the United States of
America and Australia.
In South Africa, the company has seven operations located in two geographical regions,
namely West Wits and Vaal River, that fall within the ore-rich Witwatersrand basin. For the
2005 financial year, the South Africa operations had a workforce of 40,754 employees
(including contractors) spread among the seven operations (2005 Annual Financial
Statements).
The majority of the South African workforce comprises unskilled labour sourced from local
and surrounding communities as far as the Eastern Cape and Lesotho, as well as migrant
employees from countries such as Mozambique and Swaziland.
AGA’s South African operations are largely situated in Klerksdorp and Carltonville, which
are situated approximately 100 and 200 kilometers respectively south of Johannesburg. The
two cities are predominantly dependent on mining activities as their major source of income
and also house other mining companies such as Harmony Gold and Goldfields Mining.
1.2 Background to Research
Mining activities in South Africa is not limited to gold mining. It includes exploration for
platinum, coal, iron ore, diamonds, oil and may other commodities. In addition to Klerksdorp
and Carltonville, many of these mining activities are an integral feature of cities and towns
- 2 -
such as Brakpan, Witbank, Kimberly, Welkom, Middleburg and other smaller towns. Once
mining activities have either scaled down or ceased, these once flourishing towns face
daunting financial and economic challenges. Mine employees in general have low levels of
education and their experience is limited to mining. For this reason, many former
mineworkers find it difficult to secure alternative employment. This results in rising
unemployment and the erosion of social wellbeing within the host community.
These socio-economic factors, among many others, contributed to the new Mining Charter
being promulgated by the government of South Africa in 2004. The charter clearly stipulates
those social and labour plan requirements that all mining companies should have to meet in
order for them to renew their mining rights. In applying for the new mining licenses, mining
companies such as AGA need to demonstrate how their activities will impact on the socio-
economic and biophysical environment in which they operate (The Sustainable Business
Handbook, 2006: 24). In other words, projects undertaken should ensure that optimal and
sustainable benefit is derived for the company, its employees and the communities from
which it draws its resources.
One of the key objectives of the Mining Charter (2004) is to:
“Promote employment and advance the social and economic welfare of mining communities and the major labour-sending areas.”
In addition to the charter requirements, the concept of the triple bottom line has gained
widespread recognition as a framework to achieve sustainability for all businesses
(University of Cambridge). The triple bottom line concept encompasses the following as a
measure of its effectiveness:
Economic bottom line that incorporates financial and manufactured capital.
Social bottom line includes human and social capital.
Environmental bottom line includes natural capital.
For mining companies, this means that investments in minerals projects should be financially
profitable, technically appropriate, environmentally sound and socially responsible
(Brundtland: 1987). From an AGA perspective, the business of gold production has to be
profitable and within acceptable environmental and social standards. Figure 1 below
represents the triple bottom line objective from an AGA perspective.
- 3 -
Figure 1: AngloGold Ashanti AUR Sustainable Development Model
The long-term survival of mining companies such as AGA depends on their responses to
more stringent legislation such as the Mining Charter (2004). The consequences of non-
compliance will increase competition among mining companies for access to resources and
financing that could further constrain their ability to start projects. However, in a survey
completed by Walker and Howard, it was found that shareholder value is the primary reason
for pursuing sustainability-related activities. They also found that putting forward a business
case for sustainable development projects is difficult to motivate or justify as the benefits are
primarily non-quantifiable.
1.3 AngloGold Ashanti Approach
In line with a modern-day operational approach taken by other major international
organisations, AGA adopted the principles of Sustainable Development and in mid-2005
consolidated a number of core departments under a central umbrella for its Africa
Underground Region (AUR). The Sustainable Development business unit comprises the
following core sections/disciplines:
Safety that is focused on risk management processes so as to eliminate
accidents and injuries to all employees.
Our Business Is Gold
Health &Safety
EnvironmentalStewardship
Socio-Economic
Development
- 4 -
Health (Occupational Environment) that focuses on cost effectively
engineering an occupational environment that is conducive to the continued
health and wellbeing of a productive workforce, thereby ensuring good health
when employees exit the company.
Environmental Management (Bio-physical) that is focused to ensure legal
compliance based on risk management and improved environmental
performance.
Community and Social Development that is dedicated towards community and
social investment projects.
Property Management that is responsible for a portfolio comprising
residential, commercial and mining-use properties.
Sustainable Development Operations that incorporates land management and
Ergo, a surface mining operation that was closed in early 2005. Its primary
responsibility is to ensure the integration of AGA’s surface assets into the
municipal areas in which the company operates.
Faced with the reality that operating licenses for mining companies could potentially be
hanging in the balance, AGA integrated its social and environmental strategy into everyday
practice and adopted the following core values (www.anglogoldashanti.com) as the
cornerstone for doing sustainable business:
AngloGold Ashanti's aim is to have a positive impact on the people, cultures and
communities in which it operates. Accordingly, AngloGold Ashanti will be respectful
of local and indigenous people, their values, traditions, culture and the environment.
We will strive to ensure that surrounding communities are timeously informed of and,
where possible, involved in developments that affect them, throughout the life cycle
of our operations.
We will undertake social investment initiatives in the areas of need where we can
make a practical and meaningful contribution. In particular, we will contribute to
those areas of education and healthcare that are relevant to our business activities, and
those most likely to be sustainable once our operations have come to a conclusion in
that community.
The company will encourage its employees to make themselves available for
participatory and leadership roles in community activities.
- 5 -
We will seek to acquire and use land in a way that promotes the broadest possible
consensus amongst interested people. Where involuntary resettlement is unavoidable,
we will abide by appropriate guidelines for resettlement, where they exist, and in any
event will work with the local communities to develop workable plans for any
resettlement that may be necessary.
We will strive to contribute to the sustainable economic development of host
communities through procurement activities; the contribution of redundant assets to
the community; assistance in the establishment and growth of small to medium sized
sustainable enterprises; and the outsourcing of goods and services from local vendors
where appropriate.
The values determined by AGA are underpinned by business imperatives that ensure a
continuous social license to operate. In this regard, it could be argued that the clearest drivers
for mining companies are to manage relationships with local communities and to minimise
the environmental impact of exploration and mining operations (Walker and Howard: 2002).
It is clear from the values that are central to the AGA approach that the company has
undertaken to make a lasting difference within its host communities and in the lives of it
employees.
1.4 Problem Statement and Purpose of Study
The purpose of this research report is to investigate whether current initiatives are delivering
on the strategic intent of sustainable development, primarily with reference to the value
created through establishing small- to medium-sized enterprises. Prior to 2005, when the
Sustainable Development business unit was formed, the Business Development Unit (BDU)
and the AngloGold Ashanti (AGA) Fund were the vehicles through which corporate
initiatives in enterprise development were driven. This investment process is shown in Figure
2.
- 6 -
Figure 2: AGA Funding Models for Community and Social Investment
The BDU was established in 1997 and was formerly known as the Small and Medium
Enterprise Development Initiative (SMEDI). Its primary focus is on Black Economic
Empowerment (BEE) procurement, supplier transformation, supplier development, small
business initiatives and investment opportunities. The BDU model was implemented with an
original investment of R10 million.
In addition, philanthropic and social projects are undertaken by the AGA Fund that has an
annual budget of approximately R14 to R15 million. Corporate philanthropy provides a
mechanism whereby businesses and organisations contribute to and help the communities
they serve to become successful and are therefore powerful mechanism for fostering social
change. However, often rather than being strategically driven, corporate philanthropy simply
becomes an unstructured outlet for giving money to a pet project. The reality is that the value
derived from corporate citizenship can be magnified considerably if it is done in a planned,
strategic and considered manner (www.uniqindex.co.za).
- 7 -
So far in 2006, trustees of the AGA Fund have approved grants and investments amounting to
more than R15 million. Table 1 below reflects the fund’s sectoral giving by value.
Table 1: 2006 AGA Fund Spend
As can be seen from the table, spending on education, welfare and AIDS remain the primary
investment areas of the fund. Skills training and job creation was allocated 12 per cent of the
fund’s investment spending value.
In addition to the BDU and AGA Fund initiatives, a budget to the value of R5 million per
year has been made available to the Sustainable Development team so as to progress
enterprise development within the host communities of Matlosana (Klerksdorp) and
Merafong (Carletonville). To date no investment against the budget has been made.
AGA aims to balance the depletion of natural resources brought about by its operational
activities with the enhancement of human and social capital in the areas in which it operates.
With Klerksdorp and Carletonville being predominantly mining cities, the impact of mine
closures over the next two decades will pose countless challenges resulting from higher levels
of unemployment. While current operations remain profitable, AGA has the ability to add
100%R 15,104,857.00Grand Total
1%R 175,000.00Arts and Culture
4%R 632,000.00Area Committees
15%R 2,320,000.00AIDS
17%R 2,592,860.00Welfare and Development
9%R 1,320,000.00Health
12%R 1,783,312.00Skills Training and Job Creation
42%R 6,281,685.00Education
Sectoral giving by Value
100%R 15,104,857.00Grand Total
1%R 175,000.00Arts and Culture
4%R 632,000.00Area Committees
15%R 2,320,000.00AIDS
17%R 2,592,860.00Welfare and Development
9%R 1,320,000.00Health
12%R 1,783,312.00Skills Training and Job Creation
42%R 6,281,685.00Education
Sectoral giving by Value
- 8 -
real value through innovative community and social development projects that could
potentially have a positive impact on the socio-economic wellbeing of host communities.
This report will provide an implementation framework that will enable the Sustainable
Development team to maximise benefit to be gained from a R5 million investment the
company is ready to embark on. This framework will be based on past and present AGA
initiatives that were undertaken through the BDU and AGA Fund. It will investigate progress
made by these business ventures against the core values of creating economic growth and
sustainability into the future, specifically in the Matlosana and Merafong areas.
This framework is not only limited to the South African operations as it is envisaged that it
would also be applicable for rollout to all AGA operations and, within a broader arena, would
be useful for all organisations.
The purpose of the study is:
To evaluate current business ventures, which AGA has assisted through its investment
in Masakisane Investments, with the objective of tracking their performance level.
To establish whether these businesses are managed adequately so as to ensure
sustainability.
To measure business success against the entrepreneur’s ability and skills.
To determine the growth potential of entrepreneurs to achieve increased job creation.
To ascertain whether businesses that have been given assistance in the form of finance
and business support have in actual fact increased employment opportunities.
To understand the barriers and obstacles faced by these businesses.
To provide an enhanced framework that will assist AGA to achieve its job-creation
strategy.
1.5 Limitation of Research
The research has concentrated primarily on enterprises that are operating in the Matlosana
and Merafong areas. The following constraints were experienced during the research:
Job creation for mining companies in terms of the Mining Charter (2004) is a
relatively new concept in South Africa and therefore there is limited academic
literature available.
- 9 -
With the researcher being an AGA employee, total transparency could be lacking
owing to entrepreneurs experiencing a sense that the information could be held
against them in some way, for example assisting with loans, etc.
1.6 Format of Report
This report attempts to profile the businesses that are supported by AGA in terms of success
and constraint factors. The report assumes the following structure:
1.6.1 Literature Review
In Chapter Two the relevant literature will be reviewed with particular emphasis on the
SMME sector and enterprise development. The literature review was aimed at obtaining an
understanding of the written literature surrounding the SMME sector, enterprise development
and best practices that have been based on successful case studies from different companies
within the mining industry.
1.6.2 Research Methodology
Chapter Three outlines the research methodology and provides an understanding of the
processes followed in completing surveys with the business owners as well as interviews with
relevant stakeholders. The research was of an exploratory nature; conducted through a
survey, desk research and semi-structured interviews. The results were both qualitative and
quantitative, enabling comparative analysis against trends such as the Global Entrepreneurial
Monitor (GEM) and various related projects undertaken by companies.
1.6.3 Analysis and Findings
The analysis of the study, with specific focus on the constraints that impact on these
businesses from an operational and management perspective, is presented in Chapter Four.
1.6.4 Recommendation and Conclusion
Chapter Five provides a framework for AGA to implement its strategy on enterprise
development. The framework will address financial and management issues as identified in
the analysis section and will also provide guidance on the value-creation role of AGA in this
process.
- 10 -
CHAPTER 2
Sustainable Development, Enterprise Development, Entrepreneurship,
Growth and Job Creation
2.1 Mining Charter
The Mining Charter (2004) was based on a shared vision of a globally competitive mining
industry that draws on the human and financial resources of all South Africa’s people and
offers real benefits to all South Africans. The goal of this empowerment charter is to create
an industry that will proudly reflect the promise of a non-racial South Africa (Department of
Minerals and Energy, 2004).
The objectives of the Mining Charter (2004) are:
To promote equitable access to the nation’s mineral resources for all the people of
South Africa;
To substantially and meaningfully expand opportunities for Historically
Disadvantaged South Africans (HDSA), including women, to enter the mining and
minerals industry and to benefit from the exploitation of the nation’s mineral
resources;
To utilise the existing skills base for the empowerment of HDSAs;
To expand the skills base of HDSAs in order to serve the community;
To promote employment and advance the social and economic welfare of mining
communities and the major labour-sending areas; and
To promote beneficiation of South Africa’s mineral commodities
The Mining Charter (2004) together with international mining and legal compliance
standards prescribes that the “social and moral license” to mine should only be granted to
those companies that succeed in:
Mining gold safely through the elimination of injuries and accidents;
Ensuring wellness in the workplace through improvement of occupational health
conditions; and
Protecting the environment through sound management practices and benefiting
communities through investment in sustainable social developments.
- 11 -
2.2 Corporate Social responsibility (CSR) and Corporate Social Investment (CSI)
Mining companies in South Africa have already embarked on segments of the Mining
Charter (2004) through activities that reflect Corporate Social Responsibility (CSR). CSR is
concerned with a wider range of stakeholders other than the shareholders and investors
historically associated with the corporate sector. It includes the wellbeing of employees, local
communities and society at large.
According to the Reference Compendium on Business and Sustainability, CSR incorporates
the following:
Continuous commitment by business to behave in an ethical and environmentally
responsible manner and to contribute to the economic development, while improving
the quality of life of the workforce and their families, as well as that of the local
community and society at large.
Respecting cultural differences and finding business opportunities in building the
skills of employees, the community and government.
Running a business in a manner that meets or exceeds its ethical, legal, commercial
and public expectations.
In recent years, Corporate Social Responsibility has become outdated with a greater focus
being placed on Corporate Social Investment (CSI). According to Ernest & Young (2006),
CSI encompasses projects that are external to the normal business activities of a company and
not for purposes of increasing company profit. These projects aim to uplift communities and
are not primarily driven as marketing initiatives. They have a strong developmental approach
and utilise company resources to benefit the communities. CSI differs from CSR in that it
represents a higher expectation on companies to take greater responsibility and ensure that
their investments have societal value.
The key drivers to ensure optimal value to society and those communities in which
businesses operate are through embracing the commitment to corporate and social
governance, having open dialogue with external stakeholders and having the determination to
achieve sustainability (Zairi and Peters, 2002).
- 12 -
Zairi and Peters, based on work done by Nelson (1998), argues that those companies that
have made progress in the area of societal valued added have the following characteristics in
common:
They rely on value-based transformational leadership. This is reflected in the
company’s mission and vision statement and is headed by the Chief Operating
Officer.
Cross boundary learning that involves commitment to learning, innovation,
networking and partnerships.
Relationships with stakeholders.
Performance levers that measures performance and its reporting systems.
2.3 Sustainable Development
Mining companies have been driving their initiatives on community investments through
their sustainable development strategies. Integrating economic activity with environmental
integrity and social concerns is one of the greatest challenges facing the world today. The
goal of this integration can be seen as sustainable development (Cross and Stigson, 2002:4).
Sustainable development is meeting the needs of the present without compromising the
ability of future generations to meet their own needs (Brundtland, 1987).
For mining companies, sustainable development is about responsible business practice that
provides livelihoods and creates conditions for economic growth. As per Figure 3 below,
Sustainable Development is about finding the link between a company, the public and local
enterprise in a bid to drive the objectives of job creation and social development. The model
defines the key elements as governments (local, regional and provincial) that must act as a
catalyst for development by continuously improving infrastructure and education, while
companies must act as agents of change in the process. Small, medium and micro enterprises
must have the ability to take advantage of opportunities, while the private and public sectors
must work together so as to facilitate the transfer of technology and encourage innovation.
- 13 -
Figure 3: Finding common ground between the sectors (Source: The Business of
Enterprise, 2002: 6)
Society is an important stakeholder that places expectations on organisations to generate
positive value for the community. This is executed through education, healthcare and various
other initiatives aimed at improving the wellbeing of those communities from which an
organisation draws its resources. Correct social behaviour from companies to meet these
needs is an ethical obligation (Conti, 2002: 154).
2.4 Enterprise Development
One such community beneficiation project that includes the company, local enterprises and
the public is job creation. Job creation can take place either directly through employment
with the company or through indirect methods of procurement and enterprise development.
Enterprise development entails activities that build the capacity of small, medium and micro
enterprises in host communities, enabling them to take advantage of more business
opportunities, thereby boosting local economic activity (Business of Enterprise, 2002: vii).
From the analysis of GEM data (Autio 2005), the GEM 2005 Report found that the primary
job creators worldwide are firms that employ 20 or more people. It also found that in both
developing and developed countries these firms are responsible for 80 per cent of new job
creation by entrepreneurs.
Large company
Local enterprise Public Sector
Transfer skills and standards
Engage in advocacy and public policy
Improve the operating environment
- 14 -
Small and medium enterprises tend to be the engines of job creation. Through providing new
entry and competition, they can boost efficiency and growth and lead to economic
development (Unleashing Entrepreneurship Report, 2004). Government, SMMEs,
multinational companies, as well as the public and private sector need to work together
through partnership and linkages to further sustainable enterprises.
As illustrated in Table 2, Balkenhol and Evans-Klock in their working paper (2004) defined
the SMME industry according to the approach used by the South African Small Business Act
of 1996.
Table 2: SMME Definition by industry (selected) in South Africa
Sector or Sub Sector Size\Class
Employees (less than)
Annual Turnover limit in R million
Gross Assets (excl. fixed property in R
millionsMedium 100 4 4Small 50 2 2Very Small 10 0.4 0.4Micro 5 0.15 0.1Medium 100 40 4Small 50 10 2Very Small 10 4 0.4Micro 5 0.15 0.1Medium 100 20 4Small 50 5 2Very Small 10 2 0.4Micro 5 0.15 0.1Medium 100 30 4Small 50 15 2Very Small 10 3 0.4Micro 5 0.15 0.1Medium 100 10 4Small 50 5 2Very Small 10 1 0.4Micro 5 0.15 0.1Medium 100 20 4Small 50 10 2Very Small 10 2 0.4Micro 5 0.15 0.1Medium 100 20 4Small 50 10 2Very Small 10 2 0.4Micro 5 0.15 0.1
Catering, accomodation and other trade
Transport, storage and communication
Finances and businesses services
Agriculture
Manufacturing
Construction
Retail and motor industry
Source: Private Equity and Capitalisation of SMMEs in South Africa: Quo Vadis
The table provides an indication of the number of employees that could potentially be
employed by each sector and the financial impact in terms of turnover and its gross asset
value. The table also estimates that the ability of micro enterprises (less than five employees)
- 15 -
to generate turnover is limited to R0.15 million. Very small businesses (less than 10
employees), such as the ‘manufacturing’ and ‘retail and motor industry’ stands out from the
other sectors at R4 million and R3 million respectively. In the small size (less than 50
employees) businesses, the ‘retail and motor industry’ has the highest potential turnover of
R15 million against the ‘manufacturing’ sector of R10 million. In the medium (less than 100
employees) category, the manufacturing sector has the highest turnover of R40 million.
The table provides an indication of the asset values needed for each sector and size of
enterprise. This will assist in determining the capital requirements for establishing a business.
All micro businesses require an investment of R100 000 in assets (excluding property) to
generate revenues of R150 000 per annum. The investment increases to approximately R400
000 in assets for very small size companies (less than 10 employees), with the exception
primarily in ‘manufacturing’ businesses that require an investment of R1.5 million.
For the small business category (less than 50 employees), the investment in gross assets
escalates to R1 million in ‘construction’ and ‘catering, accommodation and other trade’
businesses. Investment in ‘agriculture’, ‘retail and motor industry’, ‘transport, storage and
communication’ and ‘finance and business services’ require investment between R2 million
and R2.5 million. Manufacturing requires the highest investment of R3.7 million for small
size businesses.
In the medium size businesses (less than 100 employees), the ‘catering, accommodation and
other trade’ requires the lowest investment of R2 million, with ‘agriculture’, ‘construction’
and ‘finance and business services’ requiring R4 million. ‘Manufacturing’ once again
requires the highest investment of R15 million in assets.
In addition, the table provides an indication of the investment required against the potential
incomes that each sector can generate and indicates that the ‘manufacturing’ sector is the
most capital intensive of all the other sectors investigated.
- 16 -
2.4.1 Benefits of Enterprise Development
Enterprise development offers the following benefits:
Benefits to large companies
Enhanced licence to operate in host community, through demonstrated
commitment to invest in long-term health, growth and stability of the
local economy
An entrepreneurial culture is developed on which to build more
sustainable livelihoods, contribute to more equitable wealth distribution
and create more local employment opportunities.
Reduced adverse social impact of restructuring or downsizing, by
supporting alternative local employment development opportunities.
Improved and diversified local business environment attracting further
investment, thereby reducing pressure on the company as principal
employer in the community.
Greater job opportunities for marginalized groups, as a result building
local social cohesion and reducing tension.
Benefits to local community
Increased employment opportunities in thriving local businesses
Greater economic participation for previously marginalized groups
Increased community purchasing power, adding fuel to local enterprise
activity
Development of a stronger local entrepreneurial culture and a more skilled
and experienced workforce
Benefits to SMMEs
Improved business skills, standards and management processes,
transferred from large company
Access to:
Training and capacity building
Technology and e-commerce
New markets
Increased capacity to provide local employment
- 17 -
Benefits to government and public sector
A more robust and sustainable national economy
A thriving SMME sector providing long term economic stability
Increased employment, both actual and potential
Increased tax revenue potential
Improved community stability and social cohesion, with economic
participation opened to previously disadvantaged groups
Source: The Business of Enterprise (2002: 12)
As per the table above, the benefits of enterprise development to large companies, local
community, SMMEs and government are value enhancing.
2.5 Framework for Enterprise Development
The primary aim of any business is to meet the needs of its customers with a product or
service that is made to the correct quality and price. Figure 4 defines the pathway to
developing local enterprises. This suggests that enterprises need to:
Identify the correct product or service that is required by the customers in the start-up
phase.
Have the necessary skills to produce the product or service and have access to capital
and resources in the development phase.
Have the necessary skills to identify new opportunities through market development
and develop practices that will assist and differentiate the business from others. This
will assist the business to become mature and expand into new markets for growth.
- 18 -
Figure 4: Framework to developing local enterprises (Source: The Business of
Enterprise, 2002: 13)
The model identifies four key elements for successful enterprise development:
1. Entrepreneur skills and personality
2. Planning and skills
3. Access to financing options
4. Information technology and good practices
2.6 Unlocking Potential of South African Entrepreneurs
The Department of Trade and Industry strategy on unlocking the potential of South African
entrepreneurs is based on three pillars (Integrated Small-Enterprise. 2005: 4):
1. Promoting entrepreneurship through campaigns, leadership training and awards.
2. Strengthening the enabling environment through flexible regulation, better access to
finance and markets, improved infrastructure facilities and business support.
3. Enhancing competitiveness and capacity at the enterprise level through skills training,
more focused on quality, productivity and competitiveness and the facilitation of
technology transfer.
- 19 -
2.7 Partnerships and Linkages
Additional factors that play a pivotal role in the ultimate success of an enterprise are the
partnerships and linkages that a business has access to. A critical ingredient is the presence of
committed social sector organisations and leaders who are already working on change. These
include public servants and community leaders such as mayors, councillors, school principals
and civic activists (Kanter, 2003: 198).
Building networks and linkages offer the following benefits (Unleashing Entrepreneurship
Report, 2004: 30):
Enables the transfer of skills, technology and quality.
Bringing companies into the formal sector.
Opening markets and the supply of inputs to smaller firms.
Improve financing options on commercial terms.
Increase wages, employment standards and productivity of local companies.
Skill-building activities for entrepreneurs should include public authorities and unions.
2.8 Role of Large Business
Many large organisations already have the necessary skills in house that small businesses
lack. Therefore large companies can deliver support to local enterprise in the following ways
(Business of Enterprise, 2002: 16):
Alignment of policies and procedures to enterprise development.
Availing their employees to mentor, train and assist enterprises with advice and skills.
Creating partnerships with local community organisations to provide a platform for
engagement.
Encouraging co-operation with other large companies to build capacity through
combined resources.
Creating enabling environments with host governments and multilateral agencies on
issues such as capital, regulation, licensing procedures and taxation.
To affect meaningful support for enterprise development, the buy-in of an organisation’s
executive team is an essential requirement – all employees throughout the organisation need
to be part of the process.
- 20 -
2.9 Case Studies of successful Enterprise Development Initiatives
2.9.1 ChemCity
ChemCity is Sasol’s enterprise development initiative and is a wholly owned subsidiary of
Sasol Chemical Industries (www.sasol.com). It is aimed at stimulating downstream chemical
industry development and places emphasis on broad-based black economic empowerment
and job creation.
The ChemCity business development model focuses on:
Ensuring that enterprises take off.
Helping to build a better business through improving skills and competency.
Lending credibility to SMME development.
Connecting financiers and project sponsors with business opportunities.
Helping the entrepreneur by providing a wide range of services.
Its objectives are to be South Africa’s leading enterprise enabler and broad-based black
economic empowerment facilitator in the chemical industry and related sectors. In order to
achieve this objective, the initiative has a focus on the following:
Concentrating mainly on empowered SMMEs that are owned and managed by broad-
based black economic groups.
Striving to be the industry’s prime incubator; turning ideas, passion and hard work
into viable chemical companies.
Partnering with entrepreneurs and working closely together.
Focusing on the entire chemical sector from manufacturing to distribution.
Collaborating closely with government to achieve shared goals.
This is combined with a wide range of business services aimed at assisting entrepreneurs
through Sasol and its partners.
2.9.2 SAB Miller plc
Parker (2004: 371-372) refers to SAB Miller plc’s successful establishment of its SAB
Enterprise Development Center. Its core focus is to foster business development through
procurement programmes and skills training.
- 21 -
SAB Miller plc reviewed their value chain and identified opportunities for businesses to be
developed. Some of the initiatives that stemmed from this value chain analysis include:
Owner-driver project that resulted in 248 owner-drivers distributing more than 50 per
cent of SAB’s volumes to 39 depots nationwide.
Black barley farmers who support more 220 emerging farmers in the Northern Cape.
KickStart Youth Entrepreneurial Programme is a CSI project that has provided
enterprise development and youth entrepreneurship to more than 22 000 young adults,
equipping them with business skills and providing many of them with seed capital.
The entrepreneurial programme focuses on recruiting entrepreneurs whose business
has the potential to become commercial equity suppliers to SAB. It also targets
Technikon level individuals who have good entrepreneurial ideas but who lack the
expertise to explore them. To ensure the sustainability of the programme, the General
Entrepreneurship Test (GET) is given to potential candidates. There is also a high
focus on mentorship as well as post-training mentorship and assistance. SAB Miller’s
sustainable development report for 2006 prominently features the Kickstart
programme, reporting a success rate of 90 per cent on the grant winners for the past
three years who are still in business today.
2.9.3 Impala Platinum
As reported in The Sustainable Business Handbook (2006: 70-71), Impala Platinum
recognises that its operations have a limited lifespan and, therefore, the company is focusing
on leaving behind a sustainable legacy. Some of Impala Platinum’s achievements and
approaches include the following:
Starting with relationships, whereby the company started to engage and build
relationships with people who have high levels of legitimacy in their own communities.
They purposely sought relationships with community leaders who showed patience,
understanding and who were not paternalistic. This allowed them to define common
goals and a clear purpose that proved beneficial in lubricating project implementation.
Impala Platinum attributes much of its success to the early groundwork that it undertook
with high levels of commitment from the community. It fostered a sense of community
ownership that equipped the community to make relevant changes when it was deemed
necessary.
- 22 -
The Talent Project, which emerged in 1991 during political upheaval, started with the
objective of creating training opportunities for unemployed and disenchanted youth. It
started with the publication of a community newspaper and provided training in
journalism. Impala played an enabling role in terms of funding the project. The
company then changed its role from funder to that of mentor and facilitator, putting the
Talent team in contact with UNISA and encouraging them to branch into community
radio. The transition into community radio provides training and employment to local
youths who are given an advantage over more skilled candidates.
2.9.4 Anglo American
Anglo American believes that supporting small and medium-sized enterprises is an important
catalyst for wealth creation. The company has used Anglo Zimele as its vehicle to facilitate
the entry of emerging black businesses into South Africa’s economic mainstream for 15 years
(Anglo American Report to Society, 2004).
According to the Anglo American Report to Society (2005), 2 075 people are employed at 24
businesses in which the company has invested. These businesses have an annual turnover of
R278 million. All of these companies have at some time provided valuable services to Anglo
American
Some of Anglo American’s successes include:
Assisting in the establishment of a business that produces uniforms for mines and
schools in the small mining community of Altagracia in Venezuala. The mine
provided the workshop, raw material and business advice that resulted in government
funding for the project.
Assisting in the establishment of Reef Food Services, a catering and facilities
company that has seen the business grow to an annual turnover of R65 million.
Anglo Coal Isibonelo colliery invested in Sunbali Flowers that supplies around
100,000 chrysanthemum stems per month to major cities in South Africa. The dozen
workers that started the business now own 40 per cent (through an employee trust),
while Anglo Zimela owns 20 per cent and Isibonelo colliery owns remaining 40 per
cent. Isibonelo management also provides ongoing support in the form of safety,
health and financial mentorship to the business.
- 23 -
1990 1999
Agriculture R 72 90% 0.90% 1.20%
Mining R 5071 3907% 60.70% 53.80%
Manufacturing R 267 248% 3.20% 3.40%
Electricity R 91 82% 1.10% 1.10%
Construction R 248 127% 3.00% 1.80%
Trade R 710 690% 8.50% 9.50%
Transport R 193 456% 2.30% 6.30%
Finance R 651 502% 7.80% 6.90%
Community Service R 1048 1154% 12.50% 15.90%
TOTAL 8351 7256
KlerksdorpSECTOR
GROSS GEOGRAPHIC PRODUCT (GGP) AT CURRENT PRICE PER SECTORR'm
2.10 Profile of Matlosana
The cities in which mining organisations are based and the unique socio-economic
characteristics of these cities, plays a critical role in fostering understanding about those
factors that influence enterprise development. These factors could either encourage enterprise
development or present challenges that could reduce or inhibit business growth
The City of Matlosana comprises the greater Klerksdorp, Orkney, Stilfontein and
Hartebeesfontein. According to the most recent population records, the city had a population
of 359 202 people and 93 339 households in 2001. Its total workforce amounted to 159 898
people of whom 64 027 (40 per cent) were unemployed.
As per Table 3 below, sourced from the Integrated Development Plan – Southern District
Municipality (2002), mining was the major economic contributor in 1999 with 54 per cent of
the gross geographic product. The impact of down-scaled mining operations can be seen
clearly if one compares the 1999 figures with those recorded in 1990, when mining had
contributed 61 per cent of the gross geographic product. Lower economic contribution is
attributed largely to the lower gold price, strengthening of the Rand and higher gold
production costs.
Table 3: GGP per sector for Matlosana
Source: Integrated Development Plan – Southern District Municipality, 2002.
- 24 -
2.11 Profile of Merafong City
Merafong City comprises Carltonville, Fochville, Wedela and a portion of Gatsrand.
According to its Integrated Development Plan 2005/2006, Merafong has a population of 210
481 people and 39 786 households. The mining sector is an integral part of the economy,
offering 74 per cent of the employment opportunities available. In comparison to Matlosana,
Merafong has a higher level of dependency on sustained mining activities.
2.12 Conclusion
Chapter 2 sets out the requirements of the Mining Charter’s (2004) for responsible mining
companies in South Africa to obtain mining licenses. A key requirement of the Charter is to
ensure that communities benefit through investment in sustainable social developments.
Enterprise Development is an initiative that encourages communities to grow and build
capacity. It benefits large companies, SMMEs, local and regional government as well as the
public sector. A framework was presented to develop local enterprises and the key elements
for successful enterprise development. Case studies from different companies within the
mining industry were also reviewed so as to identify best practices and strategies followed by
peer companies.
- 25 -
CHAPTER 3
Research Methodology
3.1 Introduction
This chapter on the research methodology will specify the main research aim. The rationale
for the research design will be outlined together with the sample, selection of respondents,
pilot study, data collection and survey capture will also be discussed.
3.2 Research Aim
The main aim of this study is to evaluate AngloGold Ashanti’s current social investment
initiatives in the pursuit of job creation. This will provide a framework based on best
practices that could be used to further progress on social investment initiatives so as to
maximise the beneficial impact thereof and, in the process, ensure that communities are better
off for AngloGold Ashanti’s operations have been part of the socio-economic landscape.
3.3 Research Objectives
The following objectives outline the means by which the principal aim of the study was
accomplished:
To determine whether businesses supported by AngloGold Ashanti have been
managed according to sustainable business principles.
To determine the critical factors that can be attributed to the success of the business.
To determine to extent of the entrepreneurs’ alignment to that of AngloGold Ashanti
with regard to increasing employment.
To determine the extent to which a lack of skills prohibited business growth.
To draw correlations between the entrepreneur and the success of the business
through skills, experience and age.
To determine whether most business owners are entrepreneurs and to determine the
reasons for them starting most their business.
To identify constraints and obstacles prohibiting growth and sustainability of
businesses.
To evaluate whether the number of employees has increased since inception of the
business.
- 26 -
To identify whether there is an integrated approach that involves all stakeholders in
maximising the objective of job creation.
3.4 Research Design
The research design was planned through two mediums namely:
1. Questionnaire
2. Interviews
The questionnaire was selected on the basis that it would reach a broader spectrum of
business owners through the AGA network and it deals with the technique of observation as
the principal means of collecting data (Leedy, 1980). The survey was designed to extract
relevant data from business owners that could be used to ascertain both the success and
prohibiting factors impacting on business growth and sustainability. The survey was
circulated through the Business Development Unit (BDU) seeing as its personnel are in
regular contact with the businesses owners.
The second approach included interviews with the Business Development Unit Manager and
the Community and Social Development Manager. This was undertaken to gain
understanding about the process that has been followed to date and the constraints facing the
organisation.
3.4.1 Purpose of Descriptive Survey
A descriptive survey allows for an accurate profile to be established from the sample. The
survey was circulated for completion to businesses operating in the Vaal River and West Wits
regions. Because business owners are scattered within the geographical area in which they
operate, it was decided that a questionnaire would serve as the optimal research tool for
collecting data.
3.4.2 Questionnaire Design
Informal discussions were held with various entrepreneurs to get a better feel for the
constraints facing their growth and to gain insight to how successful they have been. These
discussions were exploratory with the intention to get a practical understanding of the issues
at hand and to design an appropriate questionnaire.
- 27 -
A questionnaire with 46 questions was developed for the study. It consisted primarily of
closed questions and included eight open questions. The open questions were incorporated in
the questionnaire to allow for additional information from respondents (Annexure 1).
The open-ended questions were designed to ascertain the experience of the entrepreneurs,
reasons why they would consider other means of employment, strategic goals of the
organization, as well as how AGA and government can play a role in creating jobs in the
community.
The questionnaire was divided into the following categories:
Demographic profile: The questions were developed to determine the demographic
profile of respondents in terms of age, years of experience and the highest level of
education attained.
Business background: The questions were focused towards the location of the
business, its legal structure, age of business and the type of business.
Resources management: Skills of the entrepreneur and actual expenditure on
training was investigated. The skills gap affecting the business was determined. The
remuneration to employees was also ascertained so as to determine whether the job-
creation initiatives have had a benefit to the community through remuneration. The
extent of technology used was examined as well.
Financial information: The questions examined the management system in place –
in the form of accounting records and annual turnover – so as to determine
performance against the original business plan and to determine whether a forward
looking plan for the future is in place. It also examined feedback provided to AGA
and other organisations.
Business Management: This section identified goals that the business is striving
towards and measured how successful it has been so far. It also examined the impact
that AGA and government have made on the business, as well how these were
achieved. The knowledge of entrepreneurs was also examined by measuring their
awareness of financial institutions that provide assistance to businesses.
- 28 -
3.5 Sample
The sample population was defined as SMME businesses operating in the Vaal River and
West Wits regions that are associated and involved with AGA. A response of 49 per cent was
achieved to enable the collection of valid, reliable data that could be analysed with a high
level of confidence.
Table 4: Breakdown of respondents from each area
No. of business
associated with
AGA
No. of
respondents
% of sample
Vaal River & West
Wits
65 32 49%
3.6 Ethics
Participation in the survey was voluntary. Respondents were advised about the purpose of the
research. Confidentially was maintained through providing envelopes in which the
questionnaire could be sealed and returned.
- 29 -
CHAPTER 4
Research Findings and Analysis
4.1 Introduction
This chapter profiles the SMMEs in the Vaal River and West Wits regions whose responses
were scrutinised to determine the following:
Success rate of entrepreneurs to date.
Constraints and obstacles prohibiting business growth and, ultimately, meaningful job
creation in the community.
Impact made by AGA and government on the success of the business.
4.2 Profile of Entrepreneurs
4.2.1 Age and Experience
The age of the entrepreneurs ranged from 22 years as the youngest and 64 years as the oldest.
The average age was 45 years, with the majority of the sample being between 40 years and 60
years of age. This indicates that the entrepreneurs are older than the South African average of
between 25 years and 40 years as reported by GEM 2005 Report.
The experience of the entrepreneurs in their field averaged at 10 years, which was expected
based on the average age of the entrepreneurs. This indicates that the entrepreneurs have
strong backgrounds and experience in the field in which they are operating.
4.2.2 Age of Businesses
New startups represented 19 per cent of the businesses while 41 per cent has been in
existence for more than 5 years. The high prevalence of businesses older than 5 years is a
positive indication because it is accepted that new businesses have the highest failure rate in
the first five years (Kew, 2002).
- 30 -
Table 5: Number of years in operation
% of businessesLess than 1 year 19%1 to 2 years 9%2 to 3 years 16%3 to 4 years 9%4 to 5 years 6%More than 5 years 41%
4.2.3 Education
The GEM 2005 report found that there is a strong correlation between the level of education
of an entrepreneur and the level of success achieved. As per Figure 5, the study found that 34
per cent of the entrepreneurs did not attend or complete school, while 19 per cent had
completed matric, 22 per cent completed certificate courses after matric and 25 per cent had
obtained tertiary degrees.
6%
19%
22%
25%
28%
Did not attend school Completed matric Matric + Courses or certificates
Tertiary degree Did not complete school
Figure 5: Educational background of entrepreneurs
Entrepreneurs with higher educational levels have the ability to create more employment
opportunities and to generate higher revenues (Kew, 2002). Table 6 below substantiates the
research findings.
- 31 -
Table 6: Education level of entrepreneurs and number of employment opportunities
created
Educational level No. of businesses
No. of jobs created by educational
levelDid not attend school 2 0Completed matric 6 31Matric + Courses or certificates 7 171Tertiary degree 8 157Did not complete school 9 34TOTAL 32 393
Entrepreneurs who had completed matric and other training courses, or who had obtained
certificates and a tertiary qualification, were primarily responsible for the highest number of
jobs created. From the table above, it is evident that this sample group is responsible for 83
per cent of the employment created through the operation of 15 businesses.
Reason for Starting Business
The study found that the primary reason for starting businesses could be attributed to
opportunities available (72 per cent), while 28 per cent of entrepreneurs indicated that they
started their business because they did not have any other choice.
72%
28%
Oppurtunity No other choice
Figure 6: Reason for starting the business
Further analysis of responses obtained from those entrepreneurs who had indicated ‘no
choice’ as a reason for start up, revealed that 56 per cent started the business owing to being
- 32 -
unemployed while 44 per cent needed to earn an income after leaving school. The
unemployed portion is attributed to the Masakisane Project being aimed at providing
financial assistance to retrenched employees in a bid to mitigate the effect of labour
retrenchments (Coetzer, 2006).
0%
56%
44%
0%0%
10%
20%
30%
40%
50%
60%
Retrenched Unemployed for long Left school other
Figure 7: Reason for starting business when had no choice
As reflected in Figure 8, 31 per cent of the respondents indicated that they would accept
permanent employment if such a position should be offered to them. This is largely owing to
the fact that, at the time of responding to the questionnaire, they had no alternative avenues
for generating an income. It also indicates to the financial strength of their business.
- 33 -
31%
69%
Yes No
Figure 8: Number of respondents that would accept a job
4.3 Background of the Businesses
4.3.1 Legal Structure of Business
A sole proprietor is the easiest and lowest cost form of business entity to start as its does not
require any legal documentation to be submitted. Larger firms and government organisations
prefer to deal with businesses that are registered. This allows them to enter into contracts of
sale and allows for tax benefits from a Value Added Tax (VAT) perspective.
Figure 9 clearly shows that sole proprietors (34 per cent) and close corporations (34 per cent)
are the most popular business forms among the sample group. Close corporations are more
popular than companies as a form of legal structure, owing to less administrative legal
requirements (i.e. compulsory annual audits, etc).
- 34 -
34%
3%
34%
22%
6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Sole proprietor Partnership Close Corporation Company Non Profit Organization
Sole proprietor Partnership Close Corporation Company Non Profit Organization
Figure 9: Type of business entities
4.4 Resource Management
4.4.1 Number of employees
From the businesses survey, a total number of 301 jobs were created at the inception of the
businesses. Figure 10 below provides a breakdown per sector of the number of jobs created.
0 20 40 60 80 100 120 140 160 180 200
Manufacturing
Service
Retail
Agriculture
Wholesale
Construction
Education
Social Services
Transport
No. of employees
Figure 10: Number of employees per sector at inception of business
The construction and manufacturing sector were the primary employers.
- 35 -
Business progress made since the inception phase has increased the number of employment
offered from 301 to 393 jobs. Table 7 below provides a breakdown of the net movement.
Table 7: Net movement in employment from inception of business to present
Net change % changeManufacturing 20 33%
Service 72 232%Retail 5 36%
Agriculture 0 0%Wholesale 0 0%
Construction -4 -2%Education 0 0%
Social Services -1 -33%Transport 0 0%
TOTAL 92 31%
Businesses operating in the manufacturing, service and retail sector enjoyed growth, while
the construction and social services sector saw a decline in jobs. It is also noted that there are
none of these businesses are operating in the agriculture, wholesale, education or transport
sector.
4.4.2 Management Skills of Entrepreneurs
Entrepreneurs were requested to identify the top three issues or lack of skills that they are
experiencing from a management perspective. Marketing and financial skills were rated the
highest at 63 per cent each. General business management skills were identified as a
constraint by 50 per cent of the respondents (Figure 11).
- 36 -
50%
63%
63%
19%
31%
34%
31%
22%
0% 10% 20% 30% 40% 50% 60% 70%
Lack of business managementskills
Lack of financial skills
Lack of marketing skills
Lack of production skills
Lack of strategy
Lack of technology
Lack of employee skill
Difficulty in obtaining co-operation from employees
Figure 11: Lack of Management Skills
Lack of strategy, technology and employee skills featured low among respondents with a
rating of 31 per cent, 34 per cent and 31 per cent respectively.
4.4.3 Technology
Despite respondents rating their lack of technology low, it was significant to note that only 50
per cent of the businesses indicated that they rely on a Telkom line, while cell phones were
more commonly used among 91 per cent of the respondents. This could imply that businesses
operate on an informal basis. Email, internet and computers were minimally used at 38 per
cent, 31 per cent and 41 per cent respectively. A fax machine was only used by half the
respondents.
Table 8: Use of Technology by businesses
Technology Type Used by businessTelephone - Telkom line 50%Cellphone 91%Fax machine 50%Email 38%Internet 31%Computer 41%
- 37 -
4.4.4 Training
Despite entrepreneurs identifying the skills that are essential for enterprise development, few
businesses indicated that they have invested in training for themselves or their employees.
The study found that 21 of the businesses have not invested in training for the year to date,
while the remaining 11 businesses have undertaken to invest in a total training amount of
R175 800 among them (Table 9).
Table 9: Training spent by businesses
Training Expenditure No. of companiesR0 21R1-R999 3R1 000 - R1 999 0R2 000 - R4 999 1R5 000 - R9 999 2R10 000 - R20 000 0Above R20 000 5
TOTAL 32
A further question was posed to entrepreneurs in an attempt to evaluate whether their
businesses could afford to invest in training. The largest section of the sample (35 per cent)
indicated that they cannot afford any training, while 31 per cent can afford less than R500 per
employee and 19 per cent can afford to spend between R500 and R1 000 per person on
training. The ability or inability to respond appropriately to the lack of skills identified earlier
will continue to persist and affect the growth of businesses going forward.
- 38 -
35%
19%
6%0%
3%3% 3%
31%
0 R0 - R500 R500 - R1000 R1000 - R2000R2000 - R3000 R3000 - R4000 R4000 - R6000 More than R8 000
Figure 12: Training affordability
4.4.5 Remuneration to Employees
Respondents were requested to indicate the remuneration packages offered to employees.
Table 10 below indicates that 75 per cent of the respondents believe that they are offering
their employees competitive salaries, while other benefits scored poorly. Medical and pension
benefits scored the lowest with 9 per cent and 13 per cent respectively. The businesses that
are offering medical and pension fund benefits have an annual turnover of more the than
R500 000. This indicates that larger businesses have a greater scope for providing employees
with attractive remuneration benefits than smaller companies.
Table 10: Employee Benefits provided
Benefits provided %Competitive salaries 75%Bonuses 34%Personal Development 19%Medical aid 9%Pension 13%UIF 38%Shareholding in the business 19%
- 39 -
4.5 Financial Management
4.5.1 Records of Financial Information
In the study, 31 per cent of respondents claimed not to keep financial records. This is to be
expected against the background of many businesses being small in size and lower on the
rung of revenue generated.
Yes69%
No31%
Figure 13: Number of respondents that keep financial records
4.5.2 Turnover
Not all businesses keep detailed records of their annual turnover. Many respondents simply
worked on their monthly turnover and calculated the annual turnover from these figures. It
was also observed that many entrepreneurs were reluctant to disclose their annual turnover,
owing to fear of taxation and disclosure to an AngloGold Ashanti employee.
- 40 -
0 2 4 6 8 10 12 14 16
Less than R50,000
Between R50,000 and R100,000
Between R100,000 and R200,000
Between R200,000 and R300,000
Between R500,000 and R 750,000
Between R750,000 and R 1,000,000
Between R1,000,000 and R1,500,000
Above R1,500,000
No. of businesses
Figure 14: Annual Turnover per business
The study found that the majority of the businesses (63 per cent) have an annual turnover of
less than R100 000, with the remaining 37 per cent earning above R200 000 per annum. As
the amount refers to turnover, the take-home earnings of entrepreneurs earning less than R50
000 per annum would be substantially lower.
This indicates that many entrepreneurs are bordering on survival and that their ability to re-
invest further capital in the business is limited.
The study also found that 53 per cent or 17 businesses were assisted by AGA (Figure 15) in
the following ways:
Financially (22 per cent)
Management skills \ advice (22 per cent)
Purchased goods (27 per cent)
Facilitated growth through reference (22 per cent)
Other (7 per cent)
- 41 -
AGA assisted
53%
47%
Yes No
Skills\Resources Provided by AGA
22%
22%
27%
22%7%
Financially
Management skills\advice
Purchased goods from the business
Facilitated growth through reference to other businesses
Other
Figure 15: AGA assistance
The study found that seven businesses were associated with AGA through the selling of
goods or services. Their turnover was substantially higher than the balance of the businesses
surveyed, indicating that corporate linkages are beneficial and result in a higher probability of
survival.
Table 11: Annual Turnover of businesses selling goods/services to AGA
Annual turnoverTotal no. of businesses
No. of busineses sellings
goods\services to AGA
Less than R50,000 14 0Between R50,000 and R100,000 6 1Between R100,000 and R200,000 0 0Between R200,000 and R300,000 1 0Between R500,000 and R 750,000 4 2Between R750,000 and R 1,000,000 1 0Between R1,000,000 and R1,500,000 1 1Above R1,500,000 5 3TOTAL 32 7
- 42 -
4.6 Business Management
Owning a business requires that entrepreneurs should have a variety of skills and extensive
knowledge about managing efficient, profitable businesses. Planning for success is
instrumental for ensuring a prosperous future and is often done through a strategy plan.
The survey included a question to determine what the strategic objectives were for the
businesses. This question was followed by an additional question that allowed the
respondents to indicate what they have achieved to date.
The top three targets for businesses were to:
1. Increase employment
2. Increase sales
3. Improve business \ expansion opportunities
41%
34%
25%
34% 34%38%
25% 25% 25%
47%44%
0
5
10
15
20
25
Incr
ease
em
ploym
ent
Incr
eased
sales
Impr
oved
busines
s/ ex
pans
ion
Bette
r gro
wth p
rosp
ects
Incr
ease
pro
fits
Perso
nal a
nd e
mplo
yee
dev.
Social &
com
mun
ity u
pliftm
ent
Self re
lianc
e \in
depe
nden
t
Good
lega
l soc
ial com
plian
ce
Mee
ting
budg
ets\T
arge
ts
Good
finan
cial s
yste
ms a
nd re
ports
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Target Achieved
Figure 16: Business targets vs. achieved
The least prioritised targets for the business were:
1. Good legal and social compliance
2. Meeting budgets and targets
3. Good financial and reporting systems
The higher focus on sales and lower priority on compliance issues clearly indicates that the
businesses are in survival mode. Many are targeting higher sales because they need to build
- 43 -
up their revenue streams in order to grow. Respondents were also allowed the opportunity to
rate their achievement on the various targets. This is represented in Figure 16 against the
targets, which had the following results:
Table 12: Achievement of Targets
AchievedIncrease employment 47%Increased sales 44%Improved business/ expansion 41%Better growth prospects 34%Increase profits 25%Personal and employee dev. 34%Social & community upliftment 34%Self reliance \independent 38%Good legal social compliance 25%Meeting budgets\Targets 25%Good financial systems and reports 25%
It is clear from the table above that the businesses are not performing to the entrepreneur’s
targets. The result was validated with a question on whether the entrepreneurs believed that
their business plans were ‘met’, ‘beaten’ or ‘not achieved’. Figure 17 below shows that 50
per cent of respondents have not achieved their targets, while 16 per cent are satisfied with
achieving targets and 34 per cent with beating their targets.
Target met16%
Target Beaten34%
Target not achieved50%
Figure 17: Business Plan achievement
- 44 -
Entrepreneurs were also asked to share the three biggest factors prohibiting growth for their
business. Their responses are shown in Figure 18.
91%
84%
78%
59%
31%
19%
69%
0%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lack
of f
unds
/cap
ital
Lack
of e
ntre
pren
euria
l skil
ls
Lack
of s
kills/
reso
urce
s
High
com
petition
High
costs
No ne
w dev
elop
men
ts/e
xpan
sions
Lack
of t
echn
olog
y
Lack
of init
iativ
e
Figure 18: Growth Constraints
The largest number of entrepreneurs (91 per cent) is of the opinion that access to capital and
funds is the major constraint for the growth. This was followed closely by a lack of
entrepreneurial skills (84 per cent) and a lack of skills and resources (78 per cent).
Despite respondents indicating that they find it difficult to access funds, only 41 per cent have
tried to borrow money to grow their business (Figure 19).
Figure 19: Number of respondents who have tried to borrow money
Yes41%
No59%
- 45 -
This clearly questions the entrepreneur’s ability in terms of their knowledge about alternative
methods to raise funds. This was explored further through the question: “Whom have you
approached for a loan and who have actually lent you?” From the 41 per cent that have
applied for funding, 31 per cent approached a bank for a loan and 69 per cent approached
family and friends. It was noted that none of the applicants had approached micro-lenders for
a loan. This is probably attributable to the high interest rates that micro-lenders are known to
charge for their loans.
0
2
4
6
8
10
12
Bank Micro-lender Family or friends
Approached Succesful
Figure 20: Number of respondents that approached institutions for loans and were
successful
Figure 20 also illustrates that 40 per cent of applications made to the banks were successful,
while 64 per cent of appeals to family and friends resulted in funding being made available.
The higher rate of appeals to friends and family is owing to the favourable payback period
that can be negotiated – an extension that banks would either not grant or would charge a
high interest rate for granting.
Table 13 below shows that entrepreneurs are poorly informed about the various funding
initiatives that government and the private sector are offering. Khula had the highest level of
awareness (47 per cent), while Ntsika and DTI attracted 28 per cent respectively, Business
Partners 13 per cent and LBSC 9 per cent. The number of entrepreneurs who are aware of the
- 46 -
various initiatives and who have approached the various institutes was even lower.
Respondents generally have a negative perception about the various institutes; citing lack of
information, lack of capacity, lack of commitment and lack of understanding about the
constraints facing the small business sector (Kew, 2002).
Table 13: Awareness and use of government\private sector initiatives
InitiativeBusiness that are
aware of% Business aware of that has approached
Khula 47% 7%Ntsika 28% 11%LBSC 9% 0%DTI 28% 22%Business Partners 13% 50%
4.7 “Partners” in Business
Responding to the question “has local government assisted you”, 94 per cent of the
entrepreneurs answered that local government has not assisted them through financial
assistance or procuring goods and services.
Yes6%
No94%
Figure 21: Local government assistance
4.8 Awareness of Job Creation
Communication relating to corporate strategies is crucial for organisations to achieve their
goals. The more informed an employee, community and other stakeholders are about a
company’s strategy, the more willing they are to support this strategy and the more effective
a company can be in assisting its stakeholders.
- 47 -
To understand the level of awareness relating to AGA’s job-creation initiatives, two
questions were directed towards entrepreneurs:
1. “I am aware of AngloGold Ashanti’s job-creation initiatives?”
2. “In your opinion does the community understand AGA’s approach towards job
creation?”
With reference to their knowledge about AGA’s job-creation initiatives, 57 per cent of
entrepreneurs agreed and indicated that they are aware of these initiatives, 34 per cent
disagreed and indicated they are not aware of the initiatives, while 9 per cent indicated that
they are uncertain.
Disagree34%
Neutral9%
Agree57%
Figure 22: Respondents aware of AGA’s job creation initiatives
With regard to the community’s level of awareness about AGA’s job-creation initiatives,
respondents are of the opinion that only 6 per cent of the community is aware. The largest
section (56 per cent) believes the community is not aware and the remaining 38 per cent is
unsure.
- 48 -
Disagree56%
Neutral38%
Agree6%
Figure 23: Respondents view on Community Awareness of AGA’s job creation
initiatives
4.9 Black/White Partnership Businesses
The sample surveyed included five cases where there is a black/white partnership in the
business. In most of these cases, the white partner is the primary manager of the operation.
From the five businesses surveyed, the average age of the white entrepreneur is 49 years,
with an average of 19 years’ experience in the chosen business sector. The educational
background of these entrepreneurs revealed that 40 per cent had completed matric and other
courses, while 60 per cent had obtained tertiary qualifications. These businesses have a
higher annual turnover as shown in Table 14.
Table 14: Annual turnover of black-/white owned businesses
Annual turnoverNo. of
BusinessesBetween R750,000 and R 1,000,000 1Between R1,000,000 and R1,500,000 1Above R1,500,000 3
These businesses are spread between the manufacturing (20 per cent), service (20 per cent),
retail (20 per cent) and construction (40 per cent) sectors. None of the businesses indicated
that they have business plans for the future. All of the respondents obtained their business
- 49 -
management skills from previous work experience. Most of these entrepreneurs (40 per cent)
expressed the opinion that previous business experience and tertiary education are enabling
factors in running their business.
The skills prohibiting these businesses from growing are primarily:
1. Lack of skills \ resources
2. Lack of funding \ capital
3. High level of competition
From a management perspective, the lack of business management skills, marketing skills
and lower employee skills levels were identified as the major prohibiting factors. The three
businesses that identified employee skills as lacking, however, were responsible for incurring
R75 000 on training expenses for the year. This is equivalent to spending R1 786 per person
for the year.
From the businesses initiation phase, 40 per cent received financial assistance to establish the
business and had access to management skills and advice. In the operational phase, 60 per
cent of the businesses are supplying AGA with goods and services, while 20 per cent has
been linked with other businesses through reference from AGA.
All of the businesses are making extensive use of technology.
4.10 Procurement
The procurement process of AGA was investigated to determine whether the value chain is
being fully exploited so as to ensure that enterprise development can be integrated.
It was established that, in a bid to mitigate increasing cost constraints, AGA had changed its
procurement approach in the following ways (Coetzer, 2006):
AGA has intentionally undertaken to reduce the number of vendors supplying goods
and services from approximately 12 000 businesses to 2 000. This strategy was
undertaken to reduce the downstream costs associated with purchasing from various
vendors that included:
o Additional staff for processing orders.
- 50 -
o Higher computer charges for increased systems usage.
o Increase administrative staff to ensure that controls are in place when ordering
goods\services.
o Additional financial staff to process payments of various suppliers.
Goods and services were placed in ‘baskets’ that included a range of products.
Preference was given to suppliers who could provide the variety of goods and
services. Contracts were awarded based on the competitive pricing of the ‘basket’.
Many of the businesses surveyed provided a limited range of services and, therefore, are not
in a position to provide a comprehensive supply of goods. An example would be Rainbow
Paper, a small business that manufactures a decorative range of paper from re-cycled paper
and produces cards that are supplied to Shoprite and Pick n Pay. Because AGA already has a
stationery contract with Walton’s, which includes the supply of cards, the Procurement
Department does not allow for purchases from Rainbow Paper. This is despite the fact that
Rainbow Paper provides an environmental solution to waste paper and provides contract
employment for three AGA employees who are paraplegics.
Information on product purchasing was gathered through the Commercial Services
Department. This information, however, was limited to purchases made in October 2006.
From the information supplied, the study focused only on consumable products: chicken
portions; fresh vegetables; overalls for miners and artisans; as well as gloves. As per table 15
below, the monthly spend on these products are high. Analysis revealed that these four
products are being supplied to AGA from as far as Port Shepstone in KwaZulu Natal.
Table 15: AGA Spend for October 2006
Product R Supplier City/Town
Fresh Vegetables 295,269 Dimpho Fresh Foods (Pty) Ltd Vereenging
Overalls for Miners & Artisans 175,633 Marburg Manufacturers (Pty) Ltd Port Shepstone
Chicken Portions 81,024 Protech Foods (Pty) Ltd Edenvale
Gloves 232,268 Evrigard (Pty) Ltd Oberholzer
Source: AGA Commercial Services
- 51 -
4.11 Profile Summary of Businesses
Characteristics Profile of entrepreneurs
Age and
experience
Average age was 45 years, with the majority of entrepreneurs
between 40 years and 64 years of age. The average experience
was 10 years.
Education 34 % did not attend or finish school.
19 % completed matric.
22 % completed matric and had completed a course\
certificates.
25 % had tertiary qualification.
Business ambition 72% of the entrepreneurs started the business owing to having
identified an opportunity.
Legal structure Sole proprietors and close corporations were the most popular
structures selected (34% each). Companies comprised 22% of
the sample.
Employees Construction (184), services (103) and manufacturing (81)
businesses created the highest employment.
Lack of
management skills
Marketing, financial and business management skills were
identified as the top three skills lacking by entrepreneurs
Technology Most businesses relied on cell phones as the primary means of
communication. Only 50% had a Telkom line and a fax
machine. E-mail and the internet were only used by 38% and
31% of the businesses respectively.
Training
expenditure
21 of the businesses did not invest in training for the year.
35% of the businesses claimed that they could not afford to
invest in training. 50% of the businesses could afford to spend
between R1 to R1 000 on training per individual.
Remuneration 75% of respondents paid competitive salaries. Only an
approximate third of the companies provide other
remuneration benefits in the form of bonuses, personal
development, medical aid, pension and UIF benefits. These
benefits were largely provided by the larger businesses.
- 52 -
Financial records 69% claimed to keep financial records.
Turnover 63% of the businesses had a turnover of less than R100 000
per annum. Businesses providing services\goods to AGA
benefited with higher turnovers.
Business targets The top three targets for businesses were:
1. Increase employment
2. Increase sales
3. Improve business \ expansion opportunities
Achievement of
targets
Less than half the respondents are achieving their targets. 50%
admitted to not achieving their business plan targets, while
34% have beaten targets and 16% are meeting targets.
Growth constraints The following three was identified as the major constraints to
growth:
1. Lack of capital
2. Lack of entrepreneurial skills
3. Lack of skills\resources
Financing leverage Only 41% of the respondents have tried to raise loans. The
majority approached family and friends for loans, followed by
banks. Awareness of government financing initiatives rated
low.
Local government Only 6% claimed to have been assisted by local government
in the form of finances and procurement.
Awareness Only 6% agreed that the community is aware of AGA’s job-
creation initiatives.
BEE &
Procurement
Only 7 businesses are suppliers to AGA and have higher
turnovers than others. The Procurement strategy of AGA is
not integrated to include enterprise development and BEE
targets.
- 53 -
CHAPTER 5
Recommendations, Framework and Conclusion
5.1 Introduction
This chapter will outline the key priorities that AGA needs to consider when developing its
job-creation strategy through enterprise development. Frameworks pertaining to related
issues will be proposed.
5.2 AngloGold Ashanti Model
The continual improvement model below is consistent with AGA’s risk management
approach in dealing with strategies. It defines a structured process aimed at ensuring that
projects are implemented according to policy and creating an environment that enables
continual improvement. The proposed enterprise development framework is in alignment
with this approach.
Figure 24: Management Process (Source: AngloGold Ashanti)
- 54 -
5.3 Enterprise Development Framework for AngloGold Ashanti
From the findings and analysis, it is clear that the factors prohibiting enterprise development
are:
1. Lack of capital.
2. Lack of entrepreneurial skills.
3. Lack of skills\resources to manage businesses to best practices.
4. Weak integration of procurement strategy and business units to encourage enterprise
development.
5. Lack of communication channels to encourage enterprise development internally and
externally to AGA
In order to accelerate the progress and effectiveness of enterprise development activities
within AGA, the following framework was developed. It comprises five primary steps as
defined in Figure 25.
Figure 25: Enterprise Development Framework
- 55 -
5.3.1 Awareness
As a starting point, the framework requires that awareness about AGA’s enterprise
development strategy among entrepreneurs and the community needs to be elevated through
stakeholder engagement and structured communication approaches. Communication needs to
be directed towards both internal and external stakeholders. Internal stakeholders are all the
operations and its employees within AGA.
External stakeholders are suppliers, communities, unions and local government. All
stakeholders should form part of the awareness process that incorporates the following three
steps (Human Resources and Sustainable Development Report, 2005:19):
1. Raising awareness and interest in job creation through enterprise development. This
first step should include community road shows focusing on providing a medium for
entrepreneurs to channel their comments and suggestions to AGA. This step is
focused primarily on AGA from an internal perspective, aimed at ensuring that all
employees will gain understanding about the importance of job creation through
enterprise development.
2. Deepening the knowledge and understanding of enterprise development. This
involves “walking the talk” and learning through information sharing with all
stakeholders. This process involves all partners in the process who are willing to work
together and share the unique skills that they are able to bring to the initiative.
3. Embedding enterprise development in host communities as an integrated part of
business management through implementing management systems and initiating job-
creation projects in the communities. This involves all the role players.
- 56 -
Figure 26: Awareness Model (Source: Human Resources and Sustainable Development,
University Cambridge, 2005)
Awareness programmes – which should include ‘best business idea’ and ‘best business plan’
competitions – must be initiated and promoted at the different schools, universities and
community organisations in the target areas. This will expand communication channels and
provide the community with a platform for exploring their ideas and, in turn, to receive
constructive feedback from company representatives.
5.3.2 Identifying Businesses Opportunities
The key to successful enterprise development is the identification of business opportunities.
The process of identifying opportunities for enterprise development can be targeted through
four vehicles as per Figure 27.
- 57 -
Figure 27: Identifying opportunities framework
This approach includes the following:
5.3.2.1 Procurement Strategy
To date, AGA has mainly been implementing its job creation strategy through Masakisane
Investments. It is largely a bottom-up process whereby entrepreneurs have identified
opportunities and started their businesses, in some cases with AGA assistance (financial,
advice or both). The bottom-up approach allows for community empowerment through
capacity building and improving competence levels.
The time is ripe for AGA to explore the top-down approach, whereby business opportunities
could arise owing to redundancy of infrastructure, shortages of material and increased
competition through the establishment of additional suppliers. The top-down approach places
responsibility on individuals and is usually targeted against a weakness or to solve a problem
(Laverack and Labonte, 2000: 255-262). This will require custodians to actively drive the
process and for each operation to take responsibility for specific projects.
The AGA procurement strategy is dependent on identifying non-core services or products
that can be produced through harnessing skills of the local community together with the
appropriate technology. This process involves scrutinising of goods and services provided to
the company, as well as ensuring that localisation of supply does not result in additional costs
to AGA. Services that could be possibly be provided by the local community include:
Production of safety gloves and overalls.
- 58 -
Supply of vegetables such as potatoes and sweet potatoes.
Supply of chickens and other meats
The products mentioned above represent a few examples that can be produced with limited
skills. Business development, however, will require investments in equipment and technology
that are needed to produce these goods, to grow healthy crops and to run profitable farming
operations.
Major products and services that are supplied in large quantities and values can be relocated
partially to the West Wits or Vaal River regions. Examples of these services include the
suppliers of support (timber) products, which are purchased to the value of R79 million per
annum to supply mines in the West Wits and Vaal River regions.
The procurement strategy should also encompass partnerships with BEE suppliers. The costs
associated with non-compliance to the BEE and Mining Charter out weighs the costs
associated with compliance and hence should be targeted. The costs associated with these
projects should always be measured against the costs of non-compliance.
5.3.2.2 Linking to other Corporate Social Partners
As discussed earlier, many companies have undertaken to create enterprises in host
communities as part of their social investment strategy. In a bid to optimise the potential
benefit to be gained from job-creation and empowerment initiatives, AGA can explore
linkages with other corporate social partners and credible projects that are already well
established.
An example is the Vodacom ‘Phone Shops’ for which a franchisee has to pay around R19
000 to purchase a branded ship container with five cellular lines. Based on the project’s
proven success rate and number of stakeholders who stand to benefit, AGA could provide
financial assistance to entrepreneurs and assist them to start up their business in a suitable
location.
Earlier in the study reference was made to Anglo Zimela that has achieved success with
various business establishment initiatives. One such project is Sunbali Flowers that supplies
- 59 -
100 000 chrysanthemum stems to major cities in South Africa. This model could be recreated
in Klerksdorp seeing as the North West Province has the necessary agriculture skills and a
suitable environment that would be beneficial in the growth of chrysanthemum plants.
Both the Vodacom and Anglo Zimela examples serve as models of job-creation projects that
have already established the necessary skills and refined the operational processes that make
them successful. These models provide a blueprint for sustainable job-creation projects and,
as such, could be easily and cost-effectively duplicated in AGA’s operational regions.
5.3.2.3 Necessity Projects
Necessity projects are defined as those that are required owing to environmental legislation.
For example where AGA can reduce its environmental liabilities through the successful
incorporation of surface mining infrastructure into the local municipality. The financial
benefits include that incorporation projects reduce the liability to demolish old or redundant
infrastructure.
By providing entrepreneurs with access to this infrastructure, which can be leased at reduced
rentals with the option to purchase, AGA can further enable business development and job
creation in its host communities. This will stimulate economic activity in the mining area and
will impact positively on further enterprises developing.
Providing access to infrastructure entails a review of all redundant assets that could assist
local entrepreneurs to secure business premises at lower lease rates. These include workshops
offices, tools and buildings, as well as equipment (such as vehicles, etc). Necessity projects
are primarily social agents in the process of creating enterprises.
Projects that promote the core business of any organisation should also be explored for
beneficiation value. In the case of AGA it is gold. Gold is used primarily in the jewellery
manufacturing industry. Therefore it makes sound business sense for AGA to explore
opportunities for creating business incubators that would bring jewellery manufacturing
closer to the source from which gold ore was mined. The establishment of “shadow of the
headgear” projects will allow for local people to be trained in jewellery manufacturing and, in
turn, increase the demand for gold jewellery through sales.
- 60 -
5.3.2.4 Facilitating Partnerships and assisting with financing through referrals to
Institutions
A further integrated response towards addressing skill shortages and financing issues is
through partnerships. The framework for the facilitation of financing partnerships requires
engagement with and support from:
1. Local government
2. Financial and government institutions
3. Experienced entrepreneurs who have strong technical knowledge and business skills
The cornerstones for community and social development are defined in the Integrated
Development Plans of local government and municipal councils. The salient feature is that
job creation through enterprise development is a central objective of these plans. Delivery on
developmental objectives is facilitated through the various government initiatives such as
Khula and DTI that were discussed earlier in this study. Banks and other financial
institutions, on the other hand, have the profit motive in mind when assisting to finance a
business.
The one area where AGA can play a facilitating role is in referring entrepreneurs to these
facilities, assisting with business plan development and initiating contact with financial
services providers. As reported earlier, few entrepreneurs are aware of these facilities or have
knowledge about what is required when submitting a loan application. Simply by playing the
role of referral agent, AGA can make a significant contribution toward initiating the start up
of a business enterprise. This will simultaneously increase the skills base of entrepreneurs and
allow them to venture down the same road in the future on their own.
The following model can be used to establish ‘partnerships’ with local government and
financing institutions:
- 61 -
Figure 28: Partnership Model (Source: Doing Business with the Poor: A Field Guide,
2004)
The first step in the process is to create partnership networks that offset potential risks. This
requires that AGA should identify suitable partners with high levels of specialised skills and
market understanding. These partners could include government officials, financing
institutions and experienced entrepreneurs.
The three pillars of success include:
1. Involving partners from the beginning. Allow them to be part of the process of
selecting possible products that can be manufactured or businesses that can be
established.
2. Working together, aligning goals through the planning process and ensuring that there
is a common agenda between government, institutions, entrepreneurs and AGA. This
will include support for these businesses through procurement and financing.
3. Managing expectations by ensuring that there is a shared understanding of the
objectives and that they are managed over time.
The next step in the process is to develop a holistic strategy that plays to the particular
strengths of the different partners. By building trusts among the partners over time, AGA will
ensure that the goal of job creation through enterprise development is progressed with all the
- 62 -
parties playing an active role, creating lasting value and benefiting from the process. The
process is supported by enhancing communication channels and transferring skills across to
entrepreneurs.
5.3.3 Financing
Access to financing for entrepreneurs was identified as a major obstacle to enterprise
development. AGA and other organisations also face similar constraints when limited
funding is available. In addition to funding made available through Masakisane Investment,
AGA has made a fund amounting to R5 million available for the purpose of progressing job-
creation projects in the host communities of Matlosana and Merafong, as well as all the
labour-sending areas such as Lesotho, Mozambique and the Eastern Cape. This means that
projects being established in the West Wits and Vaal River regions will only be entitled to a
portion of the investment, thus limiting the impact it could potentially have.
With these limitations is mind, it is recommended that the following framework be
considered with the objective of maximising the number of enterprises to be initiated:
- 63 -
Figure 29: Project Decision Model (Adapted from Sample Process: Finding Capital for
Sustainable Livelihoods Businesses, 2004:29)
The decision on selecting a financial solution should be based on an extensive review of the
proposed project’s business plan. The review should consider the feasibility of the project
together with a detailed strength, weaknesses, opportunities and threats (SWOT) analysis.
- 64 -
This model will apply to both the bottom-up scenario where the business idea is generated by
entrepreneurs and the top-down scenario where the idea is borne from AGA or its partners.
5.3.3.1 AGA as Partner
The first step in the model entails determining whether the product or service is being used by
AGA. This includes the future possible use of an existing product or service, as well as
products and services that could substitute for existing products or services in future. For
example the establishment of a demolition business that would be able to provide a service
when mining operations close down. If it should be determined that there is a quantifiable
benefit to AGA, the project should be launched with AGA as an active partner.
Similar to the philosophy that drives venture capitalist, AGA should not invest more than 50
per cent in the establishment of any business. The entrepreneur needs to invest a minimum of
50 per cent of the capital required as per the model below:
AGA50%
Entrepreneur50%
Figure 30: Equity stake model
In line with the objective of empowering entrepreneurs and passing ownership forward, the
equity stake held by AGA should be purchased back over a period of five years through a
loan repayment schedule. Similar to the financing model applied by the ICICI Bank in India,
- 65 -
AGA should transfer the funds to an investment company such Masakisane Investments. This
will enable the funding of approved AGA partnered projects through Masakisane Investments
in the form of a micro-financing loan (Figure 31).
Figure 31: Philanthropy Financing (Adapted from ICICI Bank (India): Creating a
layered capital structure using philanthropic capital. Finding Capital for
Sustainable Livelihoods Businesses, 2004)
The loan should be available at a preferential interest rate that will encourage entrepreneurs to
borrow funds so as to initiate the business and motivate them to repay AGA in good time. All
proceeds incurred through the loan-financing scheme should be re-invested in the future
financing of new business ventures. This layered capital structure will ensure sustained value
creation and that a more optimal impact can be achieved.
5.3.3.2 Exploring Partnerships and Linkages
Partnerships and linkages should be explored it the case of projects that might not offer a
tangible benefit to AGA but that could potentially add value to the community and other
businesses within the surrounding community. Partnerships with experts in a specific
business field should be considered so as to ensure that skills can be transferred and that
- 66 -
appropriate funding can be raised. Should a successful partner indicate the willingness to
invest, the project should be launched between the entrepreneur and the ‘expert’ partner.
Should no partners be willing to invest in the business, financial assistance should be
explored through linkages with both government initiatives and financial institutions. This
will be dependent on whether the business model is judged as being capable to meet the
repayment schedule of the loan. Should AGA be successful in linking the entrepreneur and a
financing institution, the primary partners should launch the project with AGA playing a
monitoring role.
However, should the financial institutions option not be successful, AGA needs to evaluate
the impact of the business on the community and the financial consequences thereof. Should
the project have a high impact on the community through social upliftment and job creation,
the project should be considered on a basis of affordability and its ability to maximise
economic value in the future. Should the project have the capability to move from a high
social benefit to include a high economic benefit (as illustrated in Figure 32), AGA should
reconsider its involvement and explore alternative funding options.
Figure 32: Maximizing social and economic value model (Source: Doing Business with
the Poor: A Field Guide, 2004)
Should the business not have the ability to be financially and economically viable in the
future, the business idea should be cancelled.
- 67 -
5.3.4 The entrepreneur
Research has proven that the there is a direct correlation between the characteristic skills of
an entrepreneur and the eventual success of a business. In a bid to maximize the impact of
enterprise development, AGA could use the following profile of an entrepreneur as selection
criteria in selecting appropriate business partners.
Characteristics of successful entrepreneur and business model
Characteristics Minimum Criteria
Age and
experience
Experience in field of business is essential.
Education Matric and related courses or certificates as a minimum.
Individuals with tertiary qualifications should be given an
advantage.
Skills Should have marketing, financial and business management
skills.
Technology Should be capable of using a computer, e-mail and internet. All
businesses should have telephone and fax line.
Test General Entrepreneurship Test (GET)
Legal structure Close corporation (c.c.) or company status. Allows for limited
liability to AGA and encourages doing business with other
organisations. Potential size of business will determine whether
to pursue close corporation or company status depending on
affordability of legislative requirements (i.e. auditing, etc).
Resources AGA has ability to provide resources or purchase goods and
services.
BEE Transfer of ownership among previously disadvantaged
individuals to be a priority.
Ownership To target a broad spectrum of ownership that includes
employees.
Number of
employees
Businesses that have the capacity to employ 20 or more people
have a higher tendency to create more employment. Preference
should be given to these businesses.
- 68 -
5.3.5 Supporting and Facilitating Growth
Embarking on the above path in establishing businesses through direct investment or
facilitating the process through partnership involvement, it remains imperative for AGA to be
an active partner when it comes to incubating support and facilitating the business growth
process. As was identified in the survey, entrepreneurs lack skills in:
Financial
Marketing
Business management
Labour relationships and human resource practices
Business Planning (including accessing financing sources)
The Community and Social Development (CSD) Department will need to be adequately
staffed with skilled personnel for it to operate as a real value creator. Personnel need to take
ownership of projects and be committed to assist these businesses. They also need the
capability to link entrepreneurs to appropriate financing institutions and other contacts that
could be of assistance in growing the business. These individuals will need to play an active
role in the management of businesses through weekly interactions aimed at ensuring that the
entrepreneurs continue to operate within governance parameters. This monitoring or
mentoring role will apply more specifically to businesses in which AGA has taken an equity
stake.
A business center should be established using redundant infrastructure where entrepreneurs
can have easy access to CSD personnel for advice and where they can access technology such
as the internet and computers.
Mentoring will be a crucial part of the partnership as it will provide a structure for enabling
entrepreneurs to obtain the maximum training. Regular entrepreneurial workshops should be
held where business owners can network with others in their field, share experiences and
transfer skills, as well as expand their knowledge their through learning from experts and
motivational speakers. The management teams of the various operations in the West Wits and
Vaal River regions need to be involved in this training process and should also be visibly
associated with the business. These business units should “adopt a business” and play a
mentoring role going into the future.
- 69 -
5.3.6 Reviewing and Reporting
In an article published in 2002, Walker and Howard found that among some of the problems
that mining companies were experiencing was the fact that while many companies have
invested significantly in improved environmental and social performance, they could not
demonstrate the significant added value. This has resulted in their license to operate being
constantly challenged.
Key stakeholders want businesses to be responsible, accountable and transparent. This is
done through sustainable development reporting that evaluates the corporate performance in
environmental, social and economic terms. Sustainable development reporting assists in
mitigating risk, protecting the corporate brand and securing a competitive position
(Heemskerk and Pistoria, 2002). In this regard, the CSD department should actively track the
progress of businesses and classify them into the following categories.
1. Equity stake
2. Facilitated
3. Partnered
These businesses should be monitored for growth purposes and should be evaluated for
progress by a senior team within AGA. Essential information will include the number of jobs
created and the financial position of the business. This information should be declared
through the Report to Society as an AGA impact on enterprise development initiatives.
5.4 Conclusion
“There are many positive ways for business to make a difference in the lives of the poor – not
through philanthropy, though that is also very important, but through initiatives that, over
time, will help to build a new market”
Kofi Annan, United Nations, Secretary General
There can be no doubt that the mining industry cannot address the challenge of sustainable
development on its own seeing as its operations are closely interlinked with the expectations
of government, communities, financial sector and society as a whole.
- 70 -
This framework provides a clearly defined course of action and implementation strategy for
AGA to maximise its impact on job creation through enterprise development. The process is
comprehensive in its inclusion of all stakeholders, use of various financing options available
to entrepreneurs and in that grown will be supported through skills transfer.
The process recommended wholly supports the AGA value of leaving communities better off
for the company having been there. The impact of more employment opportunities in
Klerksdorp and Carletonville through job creation will ensure that future generations will be
left with a legacy of sustainable livelihoods.
- 71 -
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INTERVIEWS
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Interviewed on 3 November 2006
- 77 -
Appendix 1
Name:
Age:
1 Name of Business:
2 How many years of experience do you have in this field/business
3 What are your educational qualifications: (Please tick)Did not attend school
Completed matric
Matric + Courses or certificates
Tertiary degree
Highest standard completed at school i.e. standard 6, etc
4 Are you involved in your present business to advantage of a business opportunity or because you had no better choice for work? (Please tick)
Opportunity
No other choice
5 If you had no other choice did you start the business because you were (Pleased tick):Retrenched
Unemployed for a long period of time
Left school and was not able to find a job
Other, specify: ________________________________________________________
6 Have you owned a business previously?Yes
No
7 If you were offered a job by someone else, would you take it?Yes
No
Explain Why?
10 Legal structure of business: (Please tick)
Sole Proprietor
Partnership
Close Corporation
Company
Other (specify)
AngloGold Ashanti \ UCT Graduate School of Business
Questionnaire on AngloGold Ashanti's Job creation initiatives
- 78 -
11 When did you start your business? i.e. Year 2002
12. What is your annual turnover:Less than R50,000
Between R50,000 and R100,000
Between R100,000 and R200,000
Between R200,000 and R300,000
Between R500,000 and R 750,000
Between R750,000 and R 1,000,000
Between R1,000,000 and R1,500,000
Above R1,500,000
13 How much was invested by the business and by whom? RandsAngloGold Ashanti
Owners contribution
Loan: Bank
Family Loans
Other (specify):
1.
2.
3.
Total Funding
14 No. of owners (Please tick)
1
2
3
4
5
More than 5
15 Location of businessKlerksdorp
Orkney
Carltonville
Brakpan
Other (specify)
16 What type of business do you have? (Tick appropriate)
Manufacturing
Service
Retail
Agriculture
Wholesale
Construction
Education
Social Services
Transport
Other, specify
- 79 -
17 No. of employees employed at inception of business:
18 Current no. of employees:
19 Are accounting records kept?Yes
No
20 Has the following people\organizations played a role in your business?AngloGold Ashanti
Banks
Local government
Others (specify)
21 Do you have a business plan for the next 5 years? Yes
No
22 Please attach the business plan that provides detail on income and expenses and detail on the number of employees being planned
23 What was the original business plan and how does it compare to the actual?Target met
Target beaten
Target not achieved
24 Where did you learn the skills needed to run your business? (you may tick more than one)
Family and friends
School
Business advice
Tertiary
Previous business
Work experience
25
Increase sales
Better growth prospects
Increase employment opportunities
Increase profits
Improved business\expansion opportunities
Good legal/social compliance
Meeting budgets\targets
Good financial systems and reports in place
Self reliance\independent
Personal and employee development
Social and community upliftment
What are the business factors that you wish to achieve for your business? (number from 1 to 5, with being the most important)
- 80 -
26 What success factors has your business achieved? (tick appropriate boxes)
Increase sales
Better growth prospects
Increase employment opportunities
Increase profits
Improved business\expansion opportunities
Good legal\social compliance
Meeting budgets\targets
Good financial systems and reports in place
Self reliance\independence
Personal and employee development
Social and community upliftment
27 What are your top 5 success factors that you are targeting for 2007?1.
2.
3.
4.
5.
28 What are the top 5 factors prohibiting growth of your organization?Lack of funds\capital
Lack of entrepreneurial skills
Lack of skills\resources
High competition
High costs
No new developments\expansions in area of business
Lack of technology
Lack of initiative
Other (specify)
29 What are the strategic goals of the organization?
- 81 -
30 From a management perspective, what are the top 3 difficult issues\lack of skills that you have experienced (tick appropriate boxes and number importance)
Lack of business management skills
Lack of financial skills (ability to draw up and interpret financial statements)
Lack of marketing skills
Lack of production skills
Lack of strategy (forward thinking skills)
Lack of technology
Lack of employee skills
Difficulty in obtaining co-operation from employees
31 Who initiated the starting of this business?Own initiative
AngloGold Ashanti
Other (specify)
32 What benefits are provided to employees from a remuneration perspective?Competitive salaries
Bonuses
Personal Development (i.e. study grants, etc)
Medical Aid
Pension
UIF
Shareholding in the business
Other (specify)123
33 How much money have you spent on training for yourself and your employees in this year?R.
34 How much can you afford to spend on training per person in a year taking into account the no. ofemployees?R0
R0 - R500
R500 - R1000
R1000 - R2000
R2000 - R3000
R3000 - R4000
R4000 - R6000
More than R8000
- 82 -
35 How often is feedback given to AngloGold Ashanti and other organization/s that provided the funding?Monthly reports
Quarterly reports
Annual reports
Visits
Other (specify)1
2
36 Has AngloGold Ashanti encourage growth to your business?Yes
No
Not Sure
37 If 36 was "Yes", how has AngloGold Ashanti contributed to your successFinancially
Management skills through advice\sitting on management committee's
Purchased goods from the business
Facilitated growth through reference to other businesses
Other (Specify)1
2
38 How could AngloGold Ashanti play a greater role in growing your business and create jobs in the community1
2
3
4
5
39 Have you tried to or borrowed money to grow your business?Yes
No
40 Who did you approach for money and who actually lent you?
- 83 -
41 Have you heard of any of the following groups that offer help to small businesses? (tick appropriate)
42 Has local government assisted you in establishing your business?
Yes
No
43 If 42 is "Yes", how has local government assisted your business? (tick appropriate box)
Financially
Management skills through advice\sitting on management committee's
Purchased goods from the business
Facilitated growth through reference to other businesses
Other (Specify)1
2
44 How could local government play a greater role in growing your business and create jobs in the community1
2
3
4
5
45 What access and use do you make of the following tools to manage your business? (tick tools used)Telephone - Telkom lineCell phoneFax machineEmailInternetComputer
84
46
Based on your experience, indicate whether you agree with the following statements (tick appropriate box - only 1 per question):
Stro
ngly
dis
agre
e
Dis
agre
e
Neu
tral
Agr
ee
Stro
ngly
Agr
ee
Not
App
licab
le
a I am aware of AngloGold Ashanti's job creation initiatives
b I support AGA's job creations initiatives
cIn your opinion does the community understand AGA's approach towards job creations
d Do you think that AGA's job creations approach is making progress
e AGA has been successful with its job creations initiatives to date
f AGA has been supporting my business to further their strategy on job creations
g AGA has shown interest in my business
h AGA has shown interest with constant communication with myself
i AGA encourages involvement with government and business
j AGA contributes only financially to my business
k The community values job creation more than investment in communication
l My business is managed on good business principles
m I have the necessary skills to run my business
n I have the skills to market my business
o I have the necessary technology to grow my business
p I am able to read and understand financial statements
q I believe in my business model
THANK YOU VERY MUCH FOR TAKING THE TIME TO COMPLETE THIS QUESTIONNAIRE
85
Appendix 2Anglogold Ashanti/UCT Graduate School of BusinessNo. questionnaires 32
No. Analysis Outcome 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 321. Age Average 45 38 27 22 45 55 54 42 48 56 52 50 43 30 62 54 49 24 36 25 64 49 47 50 47 61 41 33 34 52 51 62 38
2. Yrs Experience Average 9.75 1 2 1 1 33 4 11 2 36 10 10 4 5 4 13 3 9 10 1 14 20 1 3 20 26 16 7 12 14 7 2 10
3. Educational Qualification PercentageDid not attend school 2 6% 1 1Completed matric 6 19% 1 1 1 1 1 1Matric + Courses or certificates 7 22% 1 1 1 1 1 1 1Tertiary degree 8 25% 1 1 1 1 1 1 1 1Did not complete school 9 28% 1 1 1 1 1 1 1 1 1
32 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
4. Business choice GraphOpportunity 23 72% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1No other choice 9 28% 1 1 1 1 1 1 1 1 1
32 100%
5. If no other choice GraphRetrenched 0 0%Unemployed for long 5 56% 1 1 1 1 1Left school 4 44% 1 1 1 1other 0 0%TOTAL 9 100%
6. Owned Business PercentageYes 14 44% 1 1 1 1 1 1 1 1 1 1 1 1 1 1No 18 56% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1TOTAL 32 1
7. Job some where else PercentageYes 10 31% 1 1 1 1 1 1 1 1 1 1No 22 69% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1TOTAL 32 1
10. Legal structure PercentageSole proprietor 11 34% 1 1 1 1 1 1 1 1 1 1 1Partnership 1 3% 1Close Corporation 11 34% 1 1 1 1 1 1 1 1 1 1 1Company 7 22% 1 1 1 1 1 1 1Non Profit Organization 2 6% 1 1
32 1
86
11. When did you start your business 2000.625 2006 2004 2006 2006 2006 2002 1994 2004 1989 1996 1996 2002 2004 2003 1993 2003 1997 1996 2006 1992 2006 2005 2003 1997 2005 2005 1999 1996 1992 1999 2004 2004
12. Annual turnover PercentageLess than R50,000 14 44% 1 1 1 1 1 1 1 1 1 1 1 1 1 1Between R50,000 and R100,000 6 19% 1 1 1 1 1 1Between R100,000 and R200,000 0 0%Between R200,000 and R300,000 1 3% 1Between R500,000 and R 750,000 4 13% 1 1 1 1Between R750,000 and R 1,000,000 1 3% 1Between R1,000,000 and R1,500,000 1 3% 1Above R1,500,000 5 16% 1 1 1 1 1TOTAL 32 1
13. Amount invested PercentageAngloGold Ashanti 140007 14% 30000 30000 40000 40000 1 1 1 1 1 1 1Owners contribution 444010 43% 50000 200000 15500 130000 40000 3000 4000 1500 1 1 1 1 1 1 1 1 1 1Loan; Bank 100002 10% 40000 60000 1 1Family Loans 311002 30% 500 500 300000 10000 1 1other 30500 3% 2500 28000Total 1025521
14. No. of owners Average1 23 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 12 3 1 1 13 1 14 1 15 3 1 1 1
More 5 1 132
15. Location of business AverageKlerksdorp 6 1 1 1 1 1 1
Orkney 11 1 1 1 1 1 1 1 1 1 1 1Carltonville 15 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Brakpan 0Other 0
3216. What type of business do you have
Manufacturing 9 28% 1 1 1 1 1 1 1 1 1Service 9 28% 1 1 1 1 1 1 1 1 1Retail 7 22% 1 1 1 1 1 1 1
Agriculture 0 0%Wholesale 0 0%
Construction 4 13% 1 1 1 1Education 1 3% 1
Social Services 1 3% 1Transport 1 3% 1
TOTAL 32 1
87
17. No. of employees Average 9.40625 0 1 4 0 9 1 20 0 145 35 4 2 3 0 0 0 0 0 4 0 4 3 2 18 8 4 4 6 12 2 7 3
18. Current no. of employees Average 12.28125 0 1 4 0 9 7 6 0 145 30 30 4 2 2 0 0 0 0 4 0 4 2 7 15 7 5 36 28 15 13 15 2
19. Are accounting records kept PercentageYes 22 69% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1No 10 31% 1 1 1 1 1 1 1 1 1 1TOTAL 32
20. Has the following organisations/people played a role in your businessAngloGold Ashanti 18 60% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Banks 4 13% 1 1 1 1Local government 0 0%others 8 27% 1 1 1 1 1 1 1 1TOTAL 30 100%
21. Do you have a business plan for the next 5 yearsPercentageY 13 41% 1 1 1 1 1 1 1 1 1 1 1 1 1N 19 59% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1TOTAL 32 1
23. What was the original business plan & how does it compare to the actualTarget met 5 16% 1 1 1 1 1Target Beaten 11 34% 1 1 1 1 1 1 1 1 1 1 1Target not achieved 16 50% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1TOTAL 32 1
24. Where did you learn the skills to run your businesspercentageFamily & Friends 9 19% 1 1 1 1 1 1 1 1 1School 2 4% 1 1Business advice 8 17% 1 1 1 1 1 1 1 1Tertiary 6 13% 1 1 1 1 1 1Previous business 7 15% 1 1 1 1 1 1 1Work Experience 16 33% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1TOTAL 48 1
88
25. Business factors wish to achieveIncreased sales 1 14 1 1 1 1 1 1 1 1 1 1 1 1 1 1
2 2 1 13 04 2 1 15 2 1 1
Better growth prospects 1 3 1 1 12 10 1 1 1 1 1 1 1 1 1 13 2 1 14 2 1 15 0
Increase employment opportunities 1 2 1 12 9 1 1 1 1 1 1 1 1 13 9 1 1 1 1 1 1 1 1 14 1 15 2 1 1
Increase profits 1 5 1 1 1 1 12 3 1 1 13 5 1 1 1 1 14 4 1 1 1 15 0
Improved business/ expansion opportunities 1 2 1 12 4 1 1 1 13 6 1 1 1 1 1 14 5 1 1 1 1 15 2 1 1
Good legal social compliance 1 2 1 12 03 1 14 1 15 2 1 1
Meeting budgets\Targets 1 02 1 13 2 1 14 1 15 2 1 1
Good financial systems and reports in place 1 02 03 1 14 3 1 1 15 1 1
self reliant\independent 1 1 12 03 1 14 3 1 1 15 2 1 1
personal and employment development 1 2 1 12 2 1 13 04 7 1 1 1 1 1 1 15 6 1 1 1 1 1 1
social and community upliftment 1 02 1 13 3 1 1 14 1 15 10 1 1 1 1 1 1 1 1 1 1
TOTALS
89
26. What success actors has yours business achievedIncreased sales 14 44% 1 1 1 1 1 1 1 1 1 1 1 1 1 1Better growth prospects 11 34% 1 1 1 1 1 1 1 1 1 1 1Increase employment opportunities 15 47% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1increase profits 8 25% 1 1 1 1 1 1 1 1Improved business/ expansion opportunities 13 41% 1 1 1 1 1 1 1 1 1 1 1 1 1Good legal social compliance 8 25% 1 1 1 1 1 1 1 1Meeting budgets\Targets 8 25% 1 1 1 1 1 1 1 1Good financial systems and reports in place 8 25% 1 1 1 1 1 1 1 1Self reliance\independent 12 38% 1 1 1 1 1 1 1 1 1 1 1 1Personal and employment development 11 34% 1 1 1 1 1 1 1 1 1 1 1Social and community upliftment 11 34% 1 1 1 1 1 1 1 1 1 1 1TOTAL 119 34%
27. What are your top 5 successes factors that you are targeting for 2007
28. What are the top 5 factors prohibiting growth of your organisationLack of funds/capital 29 91% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Lack of entrepreneurial skills 27 84% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Lack of skills/resources 25 78% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1High competition 19 59% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1High costs 10 31% 1 1 1 1 1 1 1 1 1 1No new developments/expansions 6 19% 1 1 1 1 1 1Lack of technology 22 69% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Lack of initiative 0 0%
138
29. What are the strategic goals of the organization
30. From management perspective, what are the top 3 difficult issues/lack of skills that you have experiencedLack of business management skills 16 50% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Lack of financial skills 20 63% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Lack of marketing skills 20 63% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Lack of production skills 6 19% 1 1 1 1 1 1Lack of strategy 10 31% 1 1 1 1 1 1 1 1 1 1Lack of technology 11 34% 1 1 1 1 1 1 1 1 1 1 1Lack of employee skill 10 31% 1 1 1 1 1 1 1 1 1 1Difficulty in obtaining co-operation from employees 7 22% 1 1 1 1 1 1 1TOTAL 100 3.125
31. Who initiated the starting of the businessOwn initiative 29 91% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1AngloGold Asdhanti 3 9% 1 1 1Other 0 0%Total 32 1
32. What benefits are provided to employees from a remuneration perspectiveCompetitive salaries 24 75% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Bonuses 11 34% 1 1 1 1 1 1 1 1 1 1 1Personal Development 6 19% 1 1 1 1 1 1Medical aid 3 9% 1 1 1Pension 4 13% 1 1 1 1UIF 12 38% 1 1 1 1 1 1 1 1 1 1 1 1Shareholding in the business 6 19% 1 1 1 1 1 1
TOTAL 66 2.0625
33. How much money have you spent on training for yourselfand your employees Sum 175,800 200 100 - - - - - - 30,000 40,000 50,000 - - - - - - - - - - - - 20,000 5,000 20,000 6,000 - - - 500 4,000
rate per employee
34. How much can you afford to spend on training per person per year taking into account the number of employees
0 11 34% 1 1 1 1 1 1 1 1 1 1 1R0 - R500 10 31% 1 1 1 1 1 1 1 1 1 1
R500 - R1000 6 19% 1 1 1 1 1 1R1000 - R2000 2 6% 1 1R2000 - R3000 0 0%R3000 - R4000 1 3% 1R4000 - R6000 1 3% 1
More than R8 000 1 3% 1TOTAL 32 1
90
35. How often is feedback given to AngloGold Ashanti and other organizations that provide the funding Monthly reports 5 12% 1 1 1 1 1Quarterly reports 11 26% 1 1 1 1 1 1 1 1 1 1 1Annual reports 6 14% 1 1 1 1 1 1Visits 7 17% 1 1 1 1 1 1 1None 13 31% 1 1 1 1 1 1 1 1 1 1 1 1 1TOTAL 42 1
36. Has AngloGold Ashanti encourage growth to your businessPercentageYes 17 53% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1No 15 47% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Not sure 0 0%Total 32 1
37. If 36 was "Yes", how has AngloGold contributed to your successFinancially 6 22% 1 1 1 1 1 1Management skills\advice 6 22% 1 1 1 1 1 1Purchased goods from the business 7 26% 1 1 1 1 1 1 1Facilitated growth through reference to other businesses6 22% 1 1 1 1 1 1Other 2 7% 1 1TOTAL 27 1
39. Have you tried to borrow money to grow your businessPercentageYes 13 41% 1 1 1 1 1 1 1 1 1 1 1 1 1No 19 59% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
32 1
40. Who did you approach for money and who actually lent youBank 5 0.31 1 1 1 1 1Micro-lender 0 0Family or friends 11 0.6875 1 1 1 1 1 1 1 1 1 1 1other 0 0
16 1
Were you successful 0Bank 2 40% 1 1Micro-lender 0Family or friends 7 64% 1 1 1 1 1 1 1Other 0
9 56%
41. Have you heard of any of the following groups that offers help to small businessesKhula 15 47% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Ntsika 9 28% 1 1 1 1 1 1 1 1 1LBSC 3 9% 1 1 1DTI 9 28% 1 1 1 1 1 1 1 1 1Business Partners 4 13% 1 1 1 1TOTAL 40 25%
91
Have you approached of any of the following groups that offers help to small businesses
% approached that aware of
Khula 1 7% 1Ntsika 1 11% 1LBSC 0 0%DTI 2 22% 1 1Business Partners 2 50% 1 1TOTAL 6 15%
42. Has local government assisted you PercentageYes 2 6% 1 1No 30 94% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
32 1
43. If 42 is "Yes", how has local government assisted your businessFinancially 1 50% 1Management skills through advice/sitting on management committee's0 0%Purchased goods from the business 1 50% 1Facilitated growth through reference to other businesses0 0%other 0 0%TOTAL 2 1
45. What access & use do you make of the following tools to manage your businessTelephone - Telkom line 16 50% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Cellphone 29 91% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Fax machine 16 50% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1Email 12 38% 1 1 1 1 1 1 1 1 1 1 1 1Internet 10 31% 1 1 1 1 1 1 1 1 1 1Computer 13 41% 1 1 1 1 1 1 1 1 1 1 1 1 1TOTAL 96 50%
92
46. TABLEaD 11 34% 1 1 1 1 1 1 1 1 1 1 1N 3 9% 1 1 1A 18 56% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1bD 3 9% 1 1 1N 8 25% 1 1 1 1 1 1 1 1A 21 66% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1cD 18 56% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1N 12 38% 1 1 1 1 1 1 1 1 1 1 1 1A 2 6% 1 1dD 6 19% 1 1 1 1 1 1N 19 59% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1A 7 22% 1 1 1 1 1 1 1eD 8 25% 1 1 1 1 1 1 1 1N 21 66% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1A 3 9% 1 1 1fD 17 53% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1N 5 16% 1 1 1 1 1A 10 31% 1 1 1 1 1 1 1 1 1 1gD 9 28% 1 1 1 1 1 1 1 1 1N 6 19% 1 1 1 1 1 1A 17 53% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1hD 5 16% 1 1 1 1 1N 11 34% 1 1 1 1 1 1 1 1 1 1 1A 16 50% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1iD 9 28% 1 1 1 1 1 1 1 1 1N 14 44% 1 1 1 1 1 1 1 1 1 1 1 1 1 1A 9 28% 1 1 1 1 1 1 1 1 1jD 20 63% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1N 3 9% 1 1 1A 9 28% 1 1 1 1 1 1 1 1 1kD 5 16% 1 1 1 1 1N 11 34% 1 1 1 1 1 1 1 1 1 1 1A 16 50% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1lD 4 13% 1 1 1 1N 5 16% 1 1 1 1 1A 23 72% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1mD 6 19% 1 1 1 1 1 1N 5 16% 1 1 1 1 1A 21 66% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1nD 9 28% 1 1 1 1 1 1 1 1 1N 5 16% 1 1 1 1 1A 18 56% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1oD 15 47% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1N 8 25% 1 1 1 1 1 1 1 1A 9 28% 1 1 1 1 1 1 1 1 1pD 13 41% 1 1 1 1 1 1 1 1 1 1 1 1 1N 6 19% 1 1 1 1 1 1A 13 41% 1 1 1 1 1 1 1 1 1 1 1 1 1qD 1 3% 1N 2 6% 1 1A 29 91% 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
![AGA Hire Agreement - AngloGold Ashanti€¦ · aga hire agreement 1 legal august 2013 anglogold ashanti australia limited abn 42 008 737 424 and [**name and abn of contractor**]](https://img.pdfslide.us/doc/110x75/5ea84f30b483df77d5371e78/aga-hire-agreement-anglogold-ashanti-aga-hire-agreement-1-legal-august-2013-anglogold.jpg)
