Economic performance

Since its formation, AngloGold Ashanti has been involved in stimulating economic growth by developing small business enterprises. The Small and Medium Enterprise Development Initiative (SMEDI) identifies people, mainly from an historically disadvantaged South African (HDSA) background, who have ability and potential, and enters into a partnership with them to provide education, capacity-building and funding with the long-term aim of creating self-sustaining businesses. The raising of venture capital is managed through Masakhisane (meaning 'Come Let's Build Each Other Together' in Zulu), which was established with an initial R10 million ($1.6 million) capital in 1998. Since then, SMEDI has been involved in setting up 172 small businesses. These have a current average annual turnover of R696 million ($109 million) and have created jobs for more than 3,289 people.

There is a close link between SMEDI and AngloGold Ashanti's Black Economic Empowerment (BEE) procurement strategy, which serves as a guide in obtaining goods and services from suppliers in compliance with the Mining Charter's Procurement Scorecard. "We have made good progress in this area," says commercial services manager, Johan Coetzer. (See case study: Meeting the Mining Charter's Procurement targets.) "In 2003, BEE procurement amounted to R367 million ($57 million), or 11% of the total: in 2004, this amounted to R711 million ($111 million), or 21% of the total. We are confident that we will be able to meet our scorecard target, which is 63.5% by 2012.

"In many instances institutions will not grant finance unless the applicant can provide a certain percentage, usually around 30%. We first insist applicants establish their good faith by raising a small proportion of the required sum themselves. We lend the balance required at favourable rates, and then jointly approach the institutions to finance the full amount," says Coetzer.

While the growth of small business is an important factor in BEE procurement, the greatest impact is achieved through substantial suppliers who play a major part in the local economy. "We talked to our strategic suppliers, and sensitised them to the importance we attach to fulfilling the BEE requirements of the Mining Charter." comments Coetzer.

Most of the projects supported by Masakhisane are located in the areas surrounding AngloGold Ashanti's operations. The new Stone and Allied JV project is one of the exceptions, as it is situated in one of the company's major labour sending areas (see box below). This also applies to the Ngezandla Zethu project ('with our hands' in Zulu), which is based in the KwaZulu Natal village of Kwa-Ngwanase. Using hard wood from fallen trees in the surrounding indigenous forests, the project team produces items ranging from tables to lamps to bedsteads. The Department of Nature Conservation supports the project, and the Council for Scientific and Industrial Research (CSIR) assisted with strategic planning, technical training and marketing.

Demand for Ngezandla Zethu's products increased substantially through these inputs but the project lacked the infrastructure to meet this. Masakhisane provided woodturning machinery and a delivery vehicle. "Their turnover for 2003 was about R60,000 for the year," says Coetzer, "while for 2004 it has averaged R68,000 per month."

Clean Shop, the brainchild of Trevor Mulaudzi, is an example of a successful project based in the mining operations. What began as a small operation employing two people who cleaned the hostel ablution blocks, has expanded to providing cleaning services to companies across Gauteng and the Limpopo Province. "We assisted by lending funds to Trevor Mulaudzi before he completed a job, thus eliminating cash flow problems," says Coetzer. "We also provided him with the training to cost his tenders more accurately. The project now employs some 320 people."

Looking ahead, the Masakhisane Board (which comprises representatives from AngloGold Ashanti and the Mineworkers' Development Agency (MDA), established by the National Union of Mineworkers to retrain retrenched mineworkers) has agreed that, where procurement suppliers embark on a transformation process to increase black employee ownership, Masakhisane will assist through education of employees in understanding the principles of share ownership.