Tackling Youth Unemployment and Building a Stronger Economy: How Procurement Can Help

"The big organisations we assist typically have around 3,000 vendors on their books - but 80% of their spend goes to just 100 suppliers."

The future of the global and local economy depends on the youth, but this is something many of us appear to have forgotten in the last 20 years. As business leaders, we have a responsibility to look after the economies we inherited from previous generations and prepare the way for the youth to step into our shoes. But with 63% of young people in South Africa aged 15 to 24 currently unemployed (Stats SA), it's clear that we've missed the mark.

Fortunately, we can take steps to address our shortcomings. Solutions rely on big companies stepping up to make a difference, small companies sprucing up to do better business, and government letting them get on with it. Here's how I think we could work together to help the youth of today become prudent leaders and powerful consumers of tomorrow.

Addressing the Experience Gap

Both government and private entities have, for the last few years, focused on skills development - training programmes, technical skills institutes, support structures, and government-run agencies like the SETAs. So, ostensibly, the knowledge and skills are there. However, the third element in workforce capability - experience - is what's lacking.

Knowledge and skills can be taught fairly quickly, but experience takes time. To solve this problem, big and small companies need to commit to running meaningful, beneficial internships for the 'green shoots' in our workforce - not tea-making internships, but ones where the trainee gains valuable experience and insight into their chosen industry.

Sending Your Procurement Spend in the Right Direction

In my 20 years in the procurement industry, I've noticed that the big organisations we assist have around 3,000 vendors on their books, but 80% of their spend goes to 100 suppliers. Why is that? In some cases, it's in the interest of speed and efficiency. But how will we grow our economy if the same few names continue to dominate the market?

At Dante Deo, we've been doing things a bit differently. When we work with big-name vendors, we award contracts - worth millions of rands - on condition that they agree to employ and develop smaller players in the market. This doesn't just mean outsourcing 20% of the job to small businesses, as government tenders stipulate, but leveraging that established and renowned company to make a real difference: assisting with practical skills training, and helping take a small business from good to great.

Why Rural Sourcing Deserves the Spotlight

Initially, those of us in procurement were excited about outsourcing. Then, when international fees became too high, the trend towards near-sourcing emerged. Now, with the pandemic proving that we don't need to be in offices or even city centres to be productive, rural sourcing or onshoring has become an appealing option. With a laptop and an internet connection, people far from the major metros can service projects anywhere - and because the cost of living is substantially lower in outlying towns, there are cost-saving advantages too.

If there's a project in a particular region, let's ask the big-name vendor not only to help develop smaller players as part of the job, but to make sure those small players are within a reasonable radius of where the project is based. That way, we're building small sustainable businesses, increasing job opportunities, and developing skills in previously neglected communities.

In Helping the Youth, You're Helping Yourself

Solutions like internships, innovative procurement, and active rural sourcing have the potential to change the lives of South Africa's youth and significantly increase your bottom line. The youth of today will be the consumers of tomorrow, and if they're going to buy your product one day, they need your help now.

We don't need to rely on government to incentivise strategies like this; we should be pursuing them because they are right for the economy, and right for business. As business leaders, we should focus on productivity, output, and growth - three key ingredients to economic activity - and hopefully pass the recipe down to future leaders so they can confidently take South Africa's economy into the future.

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