MTN earmarks R50m for new supplier development initiative

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 08 Sept 2023
MTN South Africa CEO Charles Molapisi.
MTN South Africa CEO Charles Molapisi.

MTN South Africa has introduced the MTN Xlerator programme, to scale and improve procurement processes and the development of the mobile network’s local small and medium enterprise (SME) suppliers.

According to the telco, the enterprise and supplier development (ESD) initiative, which was launched today in Johannesburg, aims to accelerate local supply chains and drive economic growth within MTN’s supplier ecosystem.

It will also provide training and skills development based on the needs of the individual participating entrepreneurs.

Through the Xlerator programme, MTN has set a target to spend R50 million in procurement, at 50 black-owned suppliers (up from 13 in 2021), with more investments planned for the future.

The telco says it plans to have 140 active qualifying small enterprises within MTN SA’s supply chain, from 70 now, and 120 active exempted micro enterprises (EMEs) from 66 currently.

EMEs are businesses that are exempt from measurement in terms of the Department of Trade and Industry’s codes of good practice for black economic empowerment.

The introduction of Xlerator marks a significant step forward in MTN’s journey to support black-owned enterprises, as part of the environmental, social and governance pillar of its Ambition 2025 strategy, says the company.

“At MTN, we’re significantly ramping up procurement and development spending into key areas, where outcomes can be accelerated and maximised,” says MTN SA CEO Charles Molapisi.

“Supply chain resilience will be enhanced by increasing supplier diversity and strength, collaboration, and the ability to adapt to the ever-changing operating environment and challenging economic conditions. We’re improving value chain efficiency by fostering responsiveness, flexibility, innovation and cost-effectiveness.”

MTN’s total measured procurement spend increased from approximately R26 billion in 2018, to more than R44 billion in five years; R17 billion of that spend went to entities that are at least 30% black women-owned in the 2022 financial year, says the company.

MTN SA says it also seeks to lower the barriers to entry to the telecommunication and technology sectors, which have been notoriously difficultfor SMEs to break into, due to the often-high cost of capital investment required.

“As an example, this programme is already helping us facilitate more black-owned network operators in SA, which is an important milestone for the industry. Beyond procurement opportunities, we are also reshaping the ownership landscape of our Y’ello stores, with the goal of better mirroring the demographic tapestry of South Africa,” Molapisi explains.

MTN’s Xlerator will also offer support to participants in a number of ways, to aid their growth and ability to meet the programme requirements.

The short-term processes focus on assisting with working capital funding and will include early payments and working capital loans for small businesses.

Longer-term processes will include low-interest loans, asset finance and guarantees, it says.

“Through MTN Xlerator, we are transitioning our supply chain strategy from transactional to values-driven, with ESD at its epicentre. The programme aims to be a beacon of economic transformation, where budding entrepreneurs and suppliers are nurtured, while fostering competitive markets that catalyse job creation and establish self-reliant communities,” adds Molapisi.