A GEC+Africa 2026 panel made a case worth taking seriously: the binding constraint in enterprise and supplier development now sits on the buyer's side of the table, not the supplier's.
Enterprise and supplier development, or ESD, is the investment large companies make in helping small businesses become their suppliers. In South Africa it carries a legislated obligation and real budget. The recurring frustration is that considerable money is spent and comparatively few small businesses end up holding a contract at the end of it.
The panel Corporate ESD Reimagined: Building Inclusive and Resilient Value Chains for African MSMEs examined why. It was moderated by Cleola Kunene, Managing Partner and COO at Equate Advisory, with Lebogang Luvuno, BBBEE Executive at Microsoft South Africa; Octavius Phukubye, Executive Director of the Mr Price Foundation; and Samuel Iga Zinunula, Chairman of GEN Uganda.
Its central contribution was to move the diagnosis. The usual explanation is that small businesses are not ready. The panel's position was that readiness is only half the equation.
The procurement function is working as intended
Before joining Microsoft, Ms Luvuno spent twelve years advising corporates on this work. She described a conversation with a procurement lead who told her, after sustained pressure to open his supply chain, that everything she was asking of him ran against his professional training.
His reasoning held. Procurement is built to consolidate: fewer suppliers and larger contracts produce better terms and lower unit costs. His organisation paid suppliers at 120 days. She was asking for 14, which is what a small business needs to survive. Every change she sought worsened his measured performance, and nothing in his mandate had been adjusted to accommodate it.
That reframing matters because it relocates the intervention. If the obstacle were attitude, awareness would solve it. If the obstacle is incentive design, the durable fix is to change what the buyer is measured on.
It also produces better tactics. Her approach shifted from arguing the principle to identifying the categories where a smaller local supplier genuinely outperforms a large one, typically where market proximity matters, such as township and last-mile distribution. She added a practical caution: in multinationals, the local procurement contact may hold no decision rights over the category in question. Establishing who actually decides saves months.
Readiness is a two-sided obligation
Mr Phukubye named the asymmetry plainly. A small business is issued the same contract as a multinational, with the same obligations and penalties and no allowance for the state it is actually in. It is then assessed as not ready.
The Mr Price Foundation, which works in skills, entrepreneurship and education with an ambition to reach 500,000 young people by 2035, reversed the sequence. Before investing in a cohort, the Foundation approaches the buyer roughly twelve months ahead and establishes precisely what will be required on day one: price, quality standard, volumes, turnaround. The pipeline is then built against that specification, so that by the time the commercial conversation happens, the requirements, risk and pricing are already aligned.
The alternative is the familiar pattern: an enterprise is developed in the abstract, introduced to a buyer, declined on day one, and returns demoralised. Businesses close that way.
He also flagged two structural gaps. Standard procurement contracts make no distinction between a multinational and a small supplier, and that absence of customisation produces avoidable failure. And the financing instruments available, such as purchase order finance and supply chain finance, were themselves invented in response to a need at some point. A new generation is required, priced for supplier readiness and logistics rather than leaving small suppliers to absorb those costs invisibly.
Scale, not capability, is usually the disqualifier
Mr Zinunula illustrated the structural point through the Nile perch, introduced into Uganda's waters in the 1950s so one catch could feed many families. It grows to 100kg and eats everything smaller than itself, so the large fish is exported, the small species decline, and fewer families eat fish than before it arrived.
The arithmetic is the part worth sitting with. Seventy percent of Uganda's agricultural production comes from smallholders farming two to five acres. When a buyer requires 100 tons a month, no individual producer can accept, and the order leaves the country, not because the produce is inadequate, but because no single supplier is large enough to contract with. Aggregation into cooperatives and producer clusters is therefore not a developmental preference. It is how a small producer becomes eligible at all.
That this works is evidenced in Uganda's earlier Business Linkage Programme, run with Enterprise Uganda. Multinationals operating there were importing basic inputs, in one case paper transported from South Africa to Kampala, in the belief that local supply did not meet the standard. A structured programme brought suppliers to that standard, and much of what large companies in Uganda now consume is produced locally.
If it does not serve the buyer, it will not last
The Microsoft case is instructive because the programme sits inside the commercial model rather than beside it.
Microsoft sells software; partners deploy it. For every dollar of software sold, there are seven to eight dollars available in deployment services, which makes the partner market larger than Microsoft's own. In South Africa that market was not transformed, so the Emerging Partner Programme was built to bring 100% black-owned ICT firms into it: upskilling them, helping them navigate accreditation requirements that larger firms employ dedicated staff to manage, funding their first deployments so that Microsoft and the client share the risk of a first-time supplier, and exhibiting them alongside Microsoft at events so that institutional credibility transfers to a company that has not yet built its own.
The programme supports around 70 companies and procures from 10 to 15 annually, within a partner ecosystem of roughly 700 firms. Its durability comes from need: when a provincial government asks for black-owned deployment partners based in its own province, this is how Microsoft answers. Ms Luvuno's closing argument followed from that. ESD survives where it creates value on both sides. Treated as a donation, it becomes a line item someone eventually cuts.
Making it standard practice
Asked what would move this from initiative to norm, Mr Phukubye gave the session's most actionable answer: supply localisation belongs in the top three KPIs of the Chief Financial Officer, with the Chief Procurement Officer carrying the same measure. What is measured is what gets delivered. Until this sits inside the finance and procurement functions rather than adjacent to them, it depends on individual advocates and does not survive their departure.
Ms Kunene extended the same logic to the public sector. Government is the largest single procurer on this continent. She put the share of public procurement reaching small businesses at roughly 15% on average, and noted that where countries move closer to 30%, small enterprises grow rather than merely survive. That is not a new fund. It is existing expenditure, directed differently.
What this means for our ecosystem
Three conclusions carry directly into the work of South Africa's innovation ecosystem.
Demand specification should precede capability building. A programme that prepares enterprises without first establishing buyer requirements is preparing them for a market that may not exist in that form.
Where enterprises are excluded on scale rather than quality, aggregation is a legitimate intervention, and one ecosystem organisations are well placed to broker, because it requires a convenor that none of the individual businesses can be.
And where buyers already carry procurement obligations, the constraint is usually not the availability of capable suppliers but their visibility at the moment a requirement is specified. Closing that distance is the function the Innovation Bridge Portal performs.
We have spent years improving the supply of ready enterprises. The more productive work now sits on the demand side, in the contracts, timelines, payment terms and performance measures of the institutions doing the buying.
Part 2 of the Innovation Bridge Portal's GEC+Africa 2026 series.
