Behavioural dynamic derail Small Business Department causing R3bn loss of tax payers money

SASMEF CEO Carl Lotter, on behalf of SMMEs, today attended the Portfolio Committee (PC) on Small Business Development. The PC was considering the 2017 Budget Review and Recommendations Report (called the BRRR) which is required by the Constitution in terms of Section 77(3) as procedure to amend money bills and to recommend to the Minister of Finance to amend the budget to departments in the Medium Term Budget Policy Statement.

The above gave rise to the BRR which assesses the effectiveness and the efficiency of the departments use and forward allocation of available resources.

Parliament_featuredThe Department of Small Business Development needs more money to fulfil its mandate and support SMME. In the BRR it is an opportunity to argue for more resources. So, the BRRR is a very important event in the life of DSBD.

The PC prepares the BRRR based on presentations by the Department and its subsidiaries, stakeholders including the Attorney General regarding the audit of the Department and its entities. One of the PC’s core objectives is to oversee, scrutinize and influence the DSBD and its agencies. This includes holding the Executive to account.

The Executive Head, the chief accounting officer, namely the DG, was absent for this important mile stone in parliamentary agenda. It is where the elected officials, the MPs, on behalf of the people of South Africa speak to their assessment of their tax money and how it was used, whether more money is needed and so on. In this case the subject is “SMME and Cooperatives” whom government says has to create 90% of the 11 million jobs as indicated in the NDP.

Currently the budget is R3 billion over 3 years. It is vastly inadequate. As the Chairperson Ruth Bhengu graphically said, we are expecting the Department to deliver this mandate with a code 8 drivers license but they really need code 14 license to drive this important development “truck”.  This is what the BRRR should effectively be arguing. But the DG was absent.

Not only was the DG absent, but in the compilation of the report, assembling all the reports and assessment undertaken by the PC, the Department has been found wanting and hence 19 observations of the BRRR arise from poor performance by the DSBD and more precisely at the door of the Chief Accounting Officer.

Arising from this observation the PC made 10 recommendations. These recommendations appear more as instruction to reform and change direction where the word “must” appears regularly. But will it be done?

A mood of desperation permeated the PC members as they grappled not so much with the report and its technical aspects but the consistent way in which the DSBD has ignored the observations, insights and guidance provided by the PC in its oversight role. The question therefore arose how to bring the department to book, when the accounting officer does not priorities meeting with the PC.

Important among the recommendations are issues of how DSBD relates to the SMME community.

The DSBD argues, recently, that it does not have the budget to appoint the National Small Business Advisory Council (NSBAC) as required in the SMME act nor the Stakeholder Policy which it promised in its Annual Performance Plan. This is central if the DSBD wishes to serve SMME with an inclusive policy framework. The DSBD clearly does not wish to hear the voice of SMME or the wider private sector.

Or, there are powerful selective voices and advisers that prevent the DSBD DG from executing her job.

How else would one explain the non-performance of the Department of Small Business Development?

There are many technical reasons given in the report that require attention but if assessed rationally they are quite simple to overcome. And I believe the Minister, DG and Staff are capable of doing so.

It is not capacitation restraints of money and people, although there is evidence to this, it is not the primary reason.

The reason is executive behaviour similar to what is understood to be “behavioural economics”. The staff at the DSBD do their best against all odds and they are genuine in their commitment. I would even submit that the DG, the chief accounting officer, has good intention.

The DSBD, Minister, DG and staff are dominated by anti-democratic powerful forces both within the department and external who derail the DSBD and the executive.

If only the DG would take the chair of the PC into her confidence and accept the support from the private sector, she will not be averse to attending the PC meetings but she will be empowered to handle the demonic forces that plague and derail the support to SMME.

DSBD return to your mandate to provide a support system for SMME development!

Grab hold of support in the private sector and use the National Small Business Council and the Stakeholder Strategy to harness “good energy” that will be the safe rudder to success in this  vital role of SMME support, which is the primary route to inclusive economic growth, job creation and poverty alleviation.

Founded in 2012, the South African Small and Medium Enterprises Federation (SASMEF) is a national private social enterprise that unlocks resources from the political and economic centres as a catalyst for the creation and development of sustainable SME’s.

General  Contact:

Carl J Lotter
+2772 881 7900

Media Contact:

The Spaza Agency
Dylan James
+2766 206 2109

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