The news that South Africa's Department of Small Business Development plans to reconstitute an advisory body may sound like a welcome move, but it could be yet another black hole of wasted taxpayer's money.
The department, under the Minister of Small Business Development Lindiwe Zulu (pictured above) put out an advertisement last month in a major local newspaper seeking nominations for those looking to serve on the National Small Business Advisory Council.
The council was launched by the country's then minister of trade and industry Mandisi Mpahlwa in 2006 to offer advice the minister (who chaired the council) on effective ways to support the small business sector. The council's second term came to an end in 2013.
Over the years small business association heads have voiced concern that the council had never consulted with them. Others questioned what the council’s role was.
At the end of its first term in 2010, Joanmarie Fubbs, the chairperson of the trade and industry parliamentary portfolio committee, questioned whether after spending over R7 million in three years the council, under deputy chairperson Thami Mazwai (now behind a new government programme - see this post) had made an impact (see this earlier post).
The second council, which had 8 members, was then headed by convenor Mthuli Ncube, even though as the then chief economist at the African Development Bank it meant he was more often than not in Tunisia than in South Africa (see this post).
The council one could argue has a vital role to play, simply because the voice of small business is all but silent in South Africa. Unlike many other emerging economies, the sector has few associations or bodies that represent it (see this earlier post).
Many of the country’s business chambers continue to represent mainly the voice of big and established businesses.
Those small business associations that do exist are either near defunct (wracked by infighting or with few paying members to support it) or act more like marketing associations than membership bodies advocating for the rights of small businesses. In some cases they are even plain frauds, set up to enrich their owners.
Just two things
If the council is to score some success it needs to firstly publish minutes of its meetings on a website, so SMEs can determine what is going on or better still open the meetings to the public.
Secondly the council needs to be made up of the right people if effective action is to be taken on any decisions members reach.
In Brazil (Fórum Permanente das Microempresas e Empresas de Pequeno Porte e da Portaria) and in India (the National Board for Micro, Small and Medium Enterprises) are made up of a sizeable mix of representatives from both government and business.
In Malaysia the prime minister heads their board and ministers or heads of agencies that oversee SME development are represented on the country's National SME Development Council.
South Africa's first council collapsed after two years in 1998 amid allegations of mismanagement. The last two councils may have squandered millions. Without opening the council up and placing the right people there, the next one risks going the same way.
Timm is a South African who writes on small business. He is currently based in Cape Town, South Africa. Follow Small Business Insight on Twitter at @Smallbinsight and on Facebook.
Stephen Timm is a