“Reckless Remarks” | Why the dubious recearch saga by SBI and SBP?

The Department of Small Business Development could have welcomed the early findings of our baseline study of SMEs to make better policy. Instead, they threatened us with ‘appropriate action’ in the Business Report. Here’s our response. We are ready and willing to engage them

LETTER TO THE EDITOR – “Reckless Remarks …Why the dubious research saga by SBI and SBP?

The article published by Dr Thami Mazwai, a consultant to the minister of small business development, entitled “Reckless Remarks …Why the dubious research saga by SBI and SBP?”, refers.

While he is perfectly entitled to consider the SBI’s remarks reckless (presumably our call for the doors to the ministry to be closed and the urgent work of small business support to be carried on elsewhere in government), he cannot question the findings of our research partner the Small Business Project (SBP). He has also confused the facts about SBP working well for many years with the department and other agencies of government supporting SMEs.
Had he read the media reports closely, he would have seen that the early – and deeply concerning – results of our SME baseline study are based on data collected by government itself, namely new firm-level information created by the South African Revenue Service and National Treasury from tax data. This dataset affords new insights into firm creation, employment and growth in South Africa and should already have been mined by the department to inform its work.

As the defender of the department we are holding to account, Dr Mazwai should have provided a list of its accomplishments. Instead, he suggests that it is ‘emotionalism’ for us to speak plainly about a ministry failing to help build the SME sector to play a role in transforming society, something we agree wholeheartedly needs to happen.
Our call to do away with the ministry is far from original: As recently as in March this year, members of the parliamentary portfolio committee questioned whether there is a need to keep the department. They have consistently taken the minister to task for under-spend on the department’s budget and failure to comply with public service regulations dealing with the department’s organisational structure (or lack of it). Concerns heard in parliamentary hearings citing maladministration, lack of capacity and dysfunctionality in the department are in the public domain. Failure by the minister to, as yet, present a national strategy for small business development, four years after the previous strategy closed and four years following her appointment and her department’s establishment, is a clear indictment of her failure to address her mandate. It means that programmes for small businesses are developed and instituted in a vacuum, and policies are based on little, if any, firm-level evidence-based research.

Rather than issuing a public threat to the SBI and the SBP – that the “department will take appropriate action” – government should embrace our attempt to present to the country a baseline study of facts on the nature, characteristics, size and dynamics of this very important segment of our economy. It will provide the evidence on which to base more structured policies and targeted development strategies; its findings will be open-sourced and the methodology peer reviewed. If Dr Mazwai needs a scapegoat for the department’s poor performance, he should direct his department’s ‘appropriate action’ to me and not the SBP. It is the Small Business Institute, as the ‘big voice for small business’ which made the plea for a more strategic, capable unit to administer SME policy.

We would hope that should the ministry remain in the President’s cabinet – one he has said he will shrink – it will move with the same alacrity to do its job as it has to ‘shoot the messenger’ by trying to bully civil society organisations into silence. Our motivation is simple: to galvanise a new compact to fulfill the President’s wish that “the growth of our economy will be sustained by small businesses, as in the case of many countries”.

Bernard Swanepoel
Chairman, Small Business Institute