Conferences in South Africa often take a predictable turn when question time arrives. What follows are often long-winded ramblings with only occasionally any real question of any significance thrown in.
In much the same way the country's small business development is no different - often amounting to a whole lot of talk - but too little action.
The country prides itself in its ability to reach broad consensus among its people, after all if Nelson Mandela and the ANC could negotiate a new constitution with the apartheid state, there must be hope that it can solve any of its many other problems. South Africa's successful hosting of the 2010 World Cup was another indication that the country is capable of great things.
But despite some gains, eradicating poverty, lowering unemployment and reducing inequality have proved more elusive. Since the drafting of the White Paper on Small Business Development in 1995 it's been hoped that the promotion of small businesses would be key to tackling these.
But the country's small business policies have made little impact - something even the government is quick to admit (Small Business Development Minister Lindiwe Zulu, pictured above is the latest to do so).
Since the creation of the Department of Small Business Development earlier this year by President Jacob Zuma, the debate around how to improve support to small businesses has gotten a lot noisier. Yet six months since she was sworn in Zulu has yet to detail any clear plan to boost small business.
Her time since April it seems has mostly been filled with loose pledges on how her department will help develop the sector. This week she came the closest to laying out her plans for the sector in a speech at the latest of a number of recent small business pow-wows, the National SMME Policy Colloquium. However what is lacking is a grand all-encompassing plan backed with numbers, delivery dates and projections.
Is South Africa stuck in a talk-for-talk sake's cycle? Why has the small business sector not held the promise it had back in the 1990s of spreading wealth more evenly and helping the country to boost economic growth? Here are some thoughts:
South Africa has one of the highest business failure rates in the world. This is likely the result of a poorly educated people with little experience in business. Extraneous factors like unnecessary red tape (South Africa doesn't have too much compared to other emerging economies) act as the final straw. Without improving the quality of basic education little real progress will be made in tackling the problem.
Too often policies are constructed with little understanding for the real needs of small businesses because the country has few reliable statistics on the sector from which to draw on. Planning right might make a difference as the case of Chile and Malaysia shows, but unlike many of its emerging economy peers South Africa publishes no regular small business census or survey. Zulu made a call at the colloquium this week on the need for more research. But surely it's the department that must set this up? And what happened to the Department of Trade and Industry's plans to set up a regular census or survey on the sector?
No voice for small business
One reason why the small business sector has made little if any progress, is that it has no real voice. Unlike in other emerging nations there are not a wide number of industry bodies representing small businesses. What business organisations South Africa has are divided along race lines, too often they represent big business, are poorly managed, or too often become the preside of one person's fiefdom. Business owners must work more with one another. An effective small business council in government, with business and government representation should also be set up.
Bad business environment: concentrated economy, red tape
South Africa's concentrated economy and onerous labour legislation and laws which often hit small firms harder than they do big firms, hold back too many from expanding their businesses. Policymakers might make a difference if they ensured regulatory impact assessments were indeed carried out on all new laws and amendments. Special regulatory dispensations and exemptions for small firms from certain laws (especially labour laws) should also be explored. But importantly, without the fundamentals in place, like good education, there are limits to what cutting red tape can achieve, as the case of Georgia shows.
While there are various other things Zulu could do to boost the effectiveness of policy, South Africa critically needs to focus more on promoting innovation and getting various entities (government, incubators, venture capital funds, business organisations, universities and others) to work with one another to build a better functioning entrepreneurship ecosystem (see this blog piece on US expert Dan Isenberg's advice).
The main talk by South Africa's small business development department up till now has been on assisting the informal sector. The latest is an announcement at the colloquium by the department's acting director-general Pumla Ncapayi that the department would soon invite applications from municipalities for incentives to cover the building or renovation of infrastructure for small firms in townships.
It's essential to support the informal sector, but a different strategy and arguably even different organisations, are needed to serve the various segments of the small business sector (these being informal-sector enterprises, lifestyle businesses and high-impact businesses).
The department must come up with a detailed plan and then pick strategic programmes to focus on - in the same way that the Department of Trade and Industry has opted to single out incubation and enterprise development programmes as an effective way to boost small businesses.
Stephen Timm writes on small business. He has visited and conducted research in various emerging economies - check this out here. Follow him on twitter @Smallbinsight.
Stephen Timm is a