Last week I listed five reasons why South Africa should not set up a small business ministry. This, in response to ANC secretary-general Gwede Mantashe's announcement earlier in April that a stand-alone ministry for small businesses could be unveiled soon after the elections - set to take place on May 7 .
The reasons I listed included: the risk of increasing red tape and the public wage bill, the concern that it would likely be headed by a junior minister and that it risked placing small firms' issues into a silo both of which risked diluting its powers. And in those countries that have small business ministries there's no evidence that the establishment of such a ministry has led directly to improved small business support.
So you might ask, what then is the solution to improving small business support? If the government is to play a more active role in supporting small firms, is some kind of institutional body necessary?
I argue that better co-ordination among the various public agencies and departments that interact with small firms would help the government boost support to small businesses. The examples of Malaysia and Brazil reveal that governments don't necessary need a stand-alone ministry to boost support to small businesses, but that focusing on co-ordination is vital.
Brazil: Not quite another ministry
Rather than set up another full ministry, which would add to Brazil's already high public wage bill, a decision was taken last year to appoint a small business secretary (Guilherme Afif Domingos, pictured left) who has the full powers of a minister, but whose office falls under the Presidency. The secretary performs a largely a co-ordinating role overseeing present programmes and the formulation of new policies.
Because issues relating to small business are spread across a wide range of ministries - everything from trade and industry to labour, justice, tourism and even police - co-ordinating policies and programmes often becomes important. This may go some way to ensure that the good work of one department is not being undone by unnecessary regulation from another department.
Housing the office in the more powerful ministry of the Presidency makes more sense if those in charge of small business want to reduce the risk of not stepping on the toes of other ministers.
Wolfgang Thomas, who helped draft South Africa’s 1995 White Paper on Small Business, supports the Brazilian model.
In the 1990s, at the time of drafting the White Paper, Thomas advised against setting up a separate ministry for small business, arguing then that it risked deepening the division between large and small firms, when what was really needed (and still is) are strong bonds between the two.
Thomas, who is also a member of the governance committee of Stellenbosch University’s Centre for Corporate Governance in Africa, believes a body based in the Presidency could offer more overarching support than a ministry could.
Malaysia: Get them to work together
In Malaysia the responsibility for co-ordinating small business programmes and policies is undertaken by the government’s small business agency SME Corp, as well as by the National SME Development Council, which is headed by the Prime Minister Najib Razak and falls under the agency.
Small business policy analyst Septi Bukula (pictured right), of Osiba Research - who warns that the formation of a small business ministry risks “ghettoising” small businesses - speaks highly of the Malaysian example.
Bukula was one of four experts that carried out a small business review for the Department of Trade and Industry presented in 2011. He says South Africa needs something similar to Malaysia’s National SME Development Council, which includes representatives of various institutions and departments involved with small business support.
Bukula believes such a co-ordinating council could be held in the Presidency and could include representatives from the departments of trade and industry, economic development and science and technology, as well as the various agencies that support small business.
With the heads of various agencies and departments present it's more likely that the key issues affecting small businesses can be dealt with the authority they deserve.
He has a point. The current National Small Business Advisory Council, made up of eight representatives (drawn from civil society) that advise the minister of trade and industry on issues affecting small businesses in the country has proven largely ineffective thus far.
If a council on small business is to work opening meetings to the public and getting the right representatives (from both the private and public sector) to constitute the body would go a long way to placing small business issues higher on the government's agenda.
There's no doubt that the sector needs more support. But before jumping on the bandwagon and setting up a nice-to-have small business ministry, policymakers should think long and hard about whether a separate ministry really is the way to go.
Getting public servants that have something to do with small business to work together to increase the reach and effect of current public programmes and tweak those that are not working will remain the state's biggest challenge. And another ministry isn't about the change all that.
Stephen Timm writes on small business programmes and policies in emerging countries. He is in Brazil now. Follow him on twitter: @Smallbinsight or subscribe to the Small Business Insight newsletter - to be launched soon.
Stephen Timm is a