Why Most ESD Programmes Fail to Show Real Impact — And How to Fix It

27 Apr Why Most ESD Programmes Fail to Show Real Impact — And How to Fix It

Spending the ESD budget and running an ESD programme that works are not the same thing — and the gap between them is bigger than most scorecards admit. The B-BBEE Commission’s own research into Enterprise & Supplier Development found that of roughly R26 billion in ESD funds allocated in 2021, only 61% was actually implemented, continuing a five-year pattern that never once broke 61%. That’s not a funding problem. It’s an execution problem, and it’s worth understanding exactly where it comes from before designing (or redesigning) your own programme.

The Real Numbers Behind ESD Underperformance

Implementation rates against allocated ESD budgets have sat at 44% (2017), 60% (2018), 51% (2019), and 61% (2020 and 2021) — five years of a company setting aside real money for enterprise and supplier development and then failing to deploy close to half of it. The same B-BBEE Commission survey found only 62% of participating entities had a formal ESD strategy at all. Commissioner Tshediso Matona’s read on the findings was direct: the prevailing pattern is unstructured, ad-hoc implementation rather than a planned programme with clear objectives.

Underspending the allocation is only part of the story — the harder problem is that even fully-spent budgets often don’t translate into beneficiaries who are measurably better off a year later.

Reason 1: Financial Contributions Without Operational Support

The Commission’s research identified a specific mismatch: measured entities tend to prefer financial contributions — grants, early payment terms, loans — because they’re simple to administer and easy to report. Beneficiaries, meanwhile, more often need operational support: market access, mentorship, and help building the financial management and governance structures that let a small business actually absorb growth. A cheque without market access or governance support treats the symptom, not the constraint that’s actually holding the beneficiary back.

Reason 2: No Strategy, Just Compliance Spend

When ESD is designed to hit a scorecard number rather than a business outcome, spend flows to whichever beneficiary is easiest to onboard, not the one likeliest to grow. Programmes run this way tend to look identical to a compliance checklist rather than a functioning pipeline — which is consistent with the finding that most participating entities don’t have a documented ESD strategy in the first place.

Reason 3: Participant and Market Misalignment

Even well-funded, well-intentioned programmes fail for reasons closer to the ground: selected beneficiaries who aren’t ultimately able to commit the time a growing business demands, capital that gets absorbed into the wrong expenses instead of the ones that build capacity, and programmes that stop at onboarding without ever connecting a beneficiary to a real market or a growth path beyond the initial contract. Any one of these is enough to stall a beneficiary’s progress regardless of how much was spent getting them started.

What Actually Fixes This

The programmes that consistently show real impact share three things the underperforming 39–56% mostly lack: a written strategy with beneficiary selection criteria set before spending starts, a support mix that pairs financial contributions with the operational help beneficiaries say they actually need, and a named internal owner tracking progress against agreed milestones rather than just against rand value spent. None of this requires a bigger budget — it requires treating the existing budget as a programme to be managed, not a number to be met.

Frequently Asked Questions

Is a low ESD implementation rate a compliance risk on its own?

An unspent allocation directly affects your scorecard’s Enterprise & Supplier Development points for that measurement period, separate from any question of the programme’s real-world impact — so underspending has both a compliance and an outcomes cost.

Do beneficiaries generally prefer grants or operational support?

Research from the B-BBEE Commission’s own survey of ESD implementation found beneficiaries more often need market access, mentorship, and governance support than pure financial contributions — even though financial contributions are what most measured entities default to.

How do we know if our ESD programme is actually working?

Look past rand value spent to beneficiary-level outcomes — revenue growth, jobs sustained or created, and progression to larger or repeat contracts — tracked against the milestones your strategy set at the outset.

Want a clear-eyed read on whether your ESD programme is built to show real impact, not just spend? Try the free ESD Programme Scorecard self-assessment, or book a free 30-minute programme review.