Tedcor: Profitably creating sustainable enterprises while enhancing government service delivery

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Publication Date: 
01 January 2010
Author: 
Michael Goldman
UN Millennium Development Goal: 
Eradicate extreme poverty and hunger
Ensure environmental sustainability
Related group: 
Abstract: 

Tedcor started its community-based refuse removal system in 1992. Today, using TEDCOR's model, over 80 trained entrepreneurs operate their own small businesses in 16 local authorities. They provide employment to more than 1,000 historically disadvantaged people and supply waste removal services to around 400,000 households.

Although South Africa has made significant progress over the past 15 years in redressing the political, social and economic inequalities that existed under apartheid, a number of serious developmental challenges still face the country. As one of the three layers of government, the local government municipalities play a critical role in delivering on the mandate of the government. A recognized lack of capacity in municipalities, however, has hampered service delivery, including the provision of waste removal services that are important contributors to the community’s health and environmental well being.

The Tedcor business model is based on being an intermediary between local residents who want to create their own enterprises, municipalities who want to award large-scale waste management tenders to local contractors, banks who want to fund large-scale vehicle purchases for emerging black-owned enterprises, and commercial truck manufacturers who want to sell a large number of trucks to black-owned enterprises. By providing ongoingfinancial and business support, and certified training, to community contractors that are owner-drivers of fully-funded waste removal vehicles, Tedcor has been able to successfully compete for multi-year municipal waste management contracts.

Operating in the often difficult municipal tendering environment, Tedcor has invested heavily in gaining a deeper understanding of and access to procurement processes and decisionmakers. Tedcor’s for-profit status has presented an interesting challenge in attracting donor funding for the training and social responsibility of the model, while their non-traditional corporate structure has created difficulties in fully acknowledging their black economic empowerment status.

Thus far Tedcor has created waste management enterprises for 120 community contractors,some of which have gone on to use the capital accumulated through their businesses to create other enterprises. Within the R1 billion (US$133 million) private sector subcontractedmunicipal waste management market, Tedcor currently holds 10%. Through the monthly drawings of the community contractors and the salaries of their local workers, as well as the monthly spending on vehicle consumables in the community, approximately 80% of the revenue received from a municipality is reinvested in that municipality.

Citation:

Goldman, Michael. "Tedcor: Profitably Creating Sustainable Enterprises While Enhancing Government Service Delivery." GIM Case Study No. B092. New York: United Nations Development Programme, 2010