Beware Of Bad Counsel

Beware Of Bad Counsel


An assessment two years ago by now retired academic Ferdi Preller of the North West University tested over 500 mentors and found that most could not do key financial calculations or interpret important financial terms. The assessment – as well as community interactions held last year by the Deputy Minister of Trade and Industry, Bongi Ntuli, which heard how consultants had failed to make enough of an impact in the sector – has renewed calls to professionalise business consulting.

In another development, the Small Enterprise Development Agency (Seda) board has limited the number of interventions the agency outsources to consultants. Entrepreneurs will now have to rely largely on the agency’s own advisors, many of whom have no business experience. It’s a move that even a top official at a Seda branch admitted was flawed. But Seda spokesman Marius de Villiers said the business advisors were “very capable” of delivering on their areas of responsibility and added that the decision to move to relying more on business advisors would be done through a “gradual, phased approach.”

Statutory body

Nothing illustrates the drive to reform business consulting more than the Institute of Business Advisors’ (IBA) plan to set up a statutory body similar to the Financial Services Board. If such a body is set up it will mean all business consultants wishing to assist entrepreneurs will only be able to do so if they have been accredited. Martin Theron, the IBA’s chief executive, said the organisation was presently in talks with a number of government development finance institutions and the Banking Association, on setting up such a body. The IBA often receives phone calls from business owners complaining about consultants who make promises but take the money and leave before fulfilling them and

Theron believes that a statutory body would help root out the thousands of unethical business consultants.

Attempts have long been made to professionalise the practice from various quarters. Another industry body, Coaching and Mentoring South Africa (Comensa), plans to introduce standards of competency for its members in May. Moves to professionalise business consulting now appear to have the necessary political backing. In the last two years the IBA has been transformed from a near dormant organisation with barely any members, to one with almost 500 mentors on its books. Much of this is thanks to a recent cash injection by Khula, the Government’s small business finance agency, which ploughed in the money after the IBA adopted a new grading system developed by Preller. The grading system ranks mentors according to experience, qualifications and references.


Yet, not all are in favour of a move to set up a statutory body. Some, like small business analyst Septi Bukula, say that such a body could exclude those who may in the future wish to set up or join an opposing body. Bukula believes a carrot rather than stick approach should be favoured when it comes to cleaning up the profession, with a voluntary body marketing its graded members to entrepreneurs. Whichever approach is adopted, government, the IBA and organisations such as Comensa will have to start working together to introduce some sort of industry code which will help to maintain standards and ensure that the best interests of business owners are kept in mind.

Stephen Timm is a freelance writer at Entrepreneur Magazine.