South Africa is the most unequal country in the world, characterised by extremely high levels of unemployment and poverty that reflect a legacy of racial exclusion. The economy consistently underperforms, and the majority of households are under significant pressure. Covid-19 has exacerbated the economic challenges of households, and amplified the need for business to drive social redress and inclusive economic empowerment.

We depend on a strong economy, productive households and healthy consumer demand to drive sales of our products. Poverty and inequality, on the back of social injustice, fuels divisions and resentments that, in combination with the emerging food, land, water, and climate crises, create a context ripe for social unrest, and presents compound social and environmental risks to business.

By driving economic inclusion and empowerment through our supplier network and procurement practices, and by investing in socio-economic development, we can have a positive impact on society and address key emerging business risks.

Approach

We support economic transformation in South Africa in alignment with the Broad-Based Black Economic Empowerment (B-BBEE) Act and related codes of good practice. Going beyond B-BBEE compliance, we aim to contribute to the building of sustainable livelihoods, internally and externally, through our core business activities, as well as through corporate social investment (CSI).

Internally, we promote inclusion and diversity, implement employment equity and practice equal pay for equal work. None of our employees are remunerated below minimum wage, and we have an active and robust wage negotiation process see our people. Externally, we drive enterprise and supplier development (ESD) through the Dipuno Fund, supporting small-scale farmers to become suppliers, and practice preferential procurement to ensure that those who were previously excluded are afforded the opportunity to participate. Our preferential procurement practices and ESD programme work hand-in-hand towards the transformation of our supply value chain. Our CSI activities are actioned through our socio-economic development (SED) programme, which is focused on providing food and nutrition support to vulnerable communities in close proximity to our operations.

We have a B-BBEE working group that monitors our activities and performance against B-BBEE compliance targets, relating to ESD, SED, employment equity and skills development. The working group reports into a B-BBEE subcommittee made up of the chief corporate affairs officer, the chief supply chain officer and the chief HR officer. The chief corporate affairs officer reports into the Exco on how these impacts are being managed and also in turn reports to the SETCO.

Our five-year ESD strategy outlines our approach to driving economic transformation and enhancing livelihoods in our external environment through our core business activities. The strategy outlines five key focus areas: preferential procurement, market access, capacity building, agri-development, and channel development. We updated our strategy in 2022, and the new strategy will guide our activities for the next five years, from 2023 onwards.

ENTERPRISE AND SUPPLIER DEVELOPMENT (ESD)

Our ESD programme focuses on developing the operational and financial capacity of black/black women-owned enterprises to become part of our value chain. We have made good progress on implementing our five-year ESD strategy, which has enabled us to successfully develop the enterprises of black farmers, suppliers and distributors, and integrate them into the heart of our supply chain.

We partner with black/black women-owned farming enterprises through our smallholder farmer and agriculture aggregator programmes, and actively support their inclusion in our supply chain. We aggregate small farmers into collectives to help them reach scale, and provide incubation, financing, business development and technical support to help them meet our supplier requirements.

We work with Bid Hub (an entrepreneur support agency) to identify potential participants, and produce a development plan for each participant, based on a financial analysis of the opportunity available, and a gap analysis in respect of the suppliers’ developmental needs. Our Dipuno ESD Fund is the primary mechanism through which we provide liquidity to participating enterprises, and invest in capacity building and business development and management support.

Key initiatives

Our focus in 2022 was to consolidate our aggregator and farmer development programmes, and enhance government partnerships in ESD, which we achieved successfully. We started supporting black distributors through the programme, a category of enterprise not previously covered, yet one that holds value for enhancing Tiger Brands commercial plan. We provided support to three black-owned distributors this year, against a target of four.

Our key initiatives included:

• The on-boarding of two new agriculture aggregators: Wouldn’t It Be Cool (WIBC) and Ekurhuleni Agriculture College.
  • A partnership with the National Department of Agriculture, Land Reform and Rural Development to finance agriculture aggregators across various provinces through our agriculture aggregator programme. In 2022, one of our aggregators, Khumo Ea Tsabo (KET), was awarded a R108 million procurement contract, which it was able to leverage through a co-investment of R20 million from the Tiger Brands Dipuno Fund and R40 million from government. This award has a footprint in five provinces (North West, Mpumalanga, Limpopo, Gauteng and Free State), and benefits 39 black smallholder farmers.
  • A partnership with Exxaro Resources to co-invest in Servicios Empresaviales Holdings (SEH), an agricultural aggregator that assists small women-owned enterprises in the agricultural sector. We invested R10,7 million and Exxaro invested R8,7 million to enable SEH to deliver on a R33 million procurement contract with Tiger Brands. This award has a footprint in two provinces (Limpopo and North West province), and benefits 18 black smallholder farmers.

Performance

We performed well this year, staying on track with most of our goals and building brand equity for Tiger Brands through work that makes sense for both society and business. The ESD team won the Heart of the Tiger Award at the Tiger Stripes Awards this year, which reflects this effort. That being said, it has also been a challenging year. The war in Ukraine increased the cost of agricultural inputs by 30% to 50%, affecting the financial performance of agriculture projects, and exacerbated by erratic weather, which has exposed the vulnerability of small-scale farmers to environmental factors, including climate change. This is a risk we need to pay further attention to in coming years. see environmental stewardship.

In 2022, we further capitalised the ESD fund with R19 million, bringing the total capital investment to R104 million, and thereby achieving our milestone target of an ESD fund of R100 million by 2025. To date, the Dipuno Fund has approved ESD projects in agri-development to the value of R54,4 million and a further R10 million set-aside for a stock credit guarantee that supports black-owned food distributors to buy stock from Tiger Brands. The programme unlocked procurement opportunities exceeding R130 million and government funding of R60 million for agricultural aggregators to deliver on Tiger Brands’ contracts. We supported 67 farmers through our aggregator programme created 271 permanent jobs and 628 seasonal jobs in the small farmer sector (2021: 157 and 302 respectively).

We were pleased once again to receive a number of ESD-related awards in 2022. In the fourth annual Absa Business Day Supplier Development Awards, held in November 2021, Tiger Brands was announced as the overall winner, and won the Collaboration Award.