Business: Making small businesses work

Small businesses, collectively, add significantly to a country’s economic base. In the USA two out of every three new jobs are provided by small businesses. Small businesses also account for approximately half of the overall employment by the USA. The small business sector is also a significant contributor to the USA’s high technology industry. Over 40 percent of the employees in high tech industries are small businesses. In 2004 small businesses supplied more than 23 percent of the total value of federal prime contracts and over 20 percent of the value of exports. In general, small businesses increase the competitiveness of the marketplace and erode monopolistic positions. They are also an important platform for the development of entrepreneurial skills and innovation.

Women are attracted to small businesses as entrepreneurs and contribute significantly to their families and communities income.

In 1995 the CARICOM Secretariat requested member governments to enunciate policy statements to establish their commitment to small enterprise development. In the policy statements member countries were to outline the various measures to be undertaken in fiscal incentives, financing, licensing, marketing, training and extension services for entrepreneurs of micro and small businesses. The Government of Guyana has taken a number of policy initiatives in the area of training, credit provision and business regulations and has also established and supported technical training and credit institutions that have an impact on small businesses in all of the populated regions of Guyana (except for region three, Essequibo Islands and West Demerara); conducted technical training through the Ministry of Culture, Youth and Sports and semi-autonomous agencies such as SIMAP; supported and encouraged the funding of NGOs, including IPED, LEAF and the Prince of Wales Trust and facilitated donor agencies operations in Guyana including USAID, IDB, CIDA, the EU and UNDP in technical Training and credit programmes.

Guyana enacted small business legislation in 2004. The Small Business Act was passed in the National Assembly in 2004. It provides for: the establishment of the Small Business Council, the Small Business Bureau; and the Small Business Development Fund;

Guyana’s Small Businesses Act does not distinguish between micro and small businesses as is done at the operational level by credit providers such as IPED, LEAF, SBDA and Microfin. The Act defines a small business as an incorporated company or one registered by Business Name, a partnership, a private limited company a cooperative society and a holding company that satisfies at least two of the following conditions: employs not more than 25 persons; has gross annual revenue if not more than 60 million dollars; has total business assets of not more than 20 million dollars.

The small business sector has continued to be affected by a number of constraints. Foremost has been the difficulty in acquiring finance from both the traditional financing institutions and the specialized credit institutions. Entrepreneurs often lack collateral that is acceptable to credit providers. Other constraints are high taxes that discourage growth and encourage tax evasion, high utility rates; insufficient entrepreneurial development and training programmes; little development of technical skills and management capabilities to set up new or expand existing enterprises; lack of market information and marketing know-how especially in outlying regions, inadequate communication and coordination linkage between small businesses and their credit providers;, inadequate information on the sector and on the performance of participating institutions, low levels of training in technology and quality control and insufficient testing facilities; inability to easily identify feasible investment opportunities, including the preparation of bankable project profiles and inadequate consultancy and extension services in this sector.

Small businesses have also been hampered by a lack of: centralized source of hard data to support programme planning and evaluation, mechanisms to compile and disseminate information to support planning, decision making and networking processes and too little exposure to international best practices in the sector.

Members have been appointed to the Small Business Council from a cross section of the business community. An important function of the Council is the maintenance of a register of approved small businesses. The economic implications of being listed on the Council’s register include participation in the procurement of goods and services required annually by the government. Section 11(1) of the Small Business Act requires government to, “use its best efforts to ensure that at least twenty percent of the procurement of goods and services required annually by the government is obtained from small businesses.” Unfortunately the Council is yet to implement any of its mandated tasks despite meeting periodically since 2006. Its major hindrance in fulfilling its mandate appears to be funding.. For the two financial years 2006-2007, parliament voted a total of GY2.5 million dollars for the Council.

The Guyana Small Business Association (GSBA) is a non-governmental organization (NGO) founded in 1988 in response to CARICOM’s declaration of, “The Year of Small Business” and was incorporated in 1992. It seeks to serve the interest of small businesses in Guyana at both national and international levels by providing them with: advocacy at local and international levels; training to facilitate their organizational development; consulting services to provide business advice and information to assist them to overcome their size weaknesses; advertising to boost their commercial activity and profiles to enhance their sector knowledge.

The GSBA definition of small business is consistent with the Small Business Act of 2004. The GSBA claims that its current membership of two hundred and fifteen (215) businesses is largely due to their advocacy for small businesses to secure government compensation during the 2005 floods in Guyana. Interest in the membership in the GSBA’s activities is evidenced by the significant number of persons (140 persons in region 4) that attended their five-day European Union funded training programme (2007) in Basic Management, Basic Marketing and Sales Strategy, Basic Record Keeping, Government Policies and Export Trade Policies and Business Plan Preparation.

GSBA membership is involved in a wide cross-section of business activities such as retailing, photocopying, craft (furniture and leather), computer training, auto sales, real estate, farming, taxi services and fruit and vegetable processing. These businesses are located throughout Guyana.

At present the GSBA has its secretariat in Waterloo Street, Georgetown and its nine-member executive comprises a president, a first and second vice-president, a secretary and treasurer and an assistant secretary/treasurer and three committee members. The executive meets on a monthly basis. The secretariat is managed by a staff of four persons.

The GSBA has proven its resilience. Over the years it has weathered the storms of executive council wrangling and lack of funding to support its secretariat. At present the GSBA claims that its secretariat is largely funded by membership dues and donations. The GSBA’s goal is to expand and strengthen small enterprises competitive ability in a sustainable manner to reduce the incidence of poverty in Guyana. However to effectively discharge its mandate the GSBA’s capacity needs to be strengthened. The following components need to be addressed:-

Strengthening of human resources: Strengthening of the human resource endowment of the GSBA to improve their capability to deliver their mandate through training, external advisory services, business outreach and external relations.

Investment in information and communication technology: Support the establishment of modern communication network and improve
the efficiency and functioning of the GSBA secretariat. Including having the popular business programme, “The Entrepreneur in You’ aired on a regular basis.

Establishment of a credit union: Operationalize the credit union planned for its membership to increase competitiveness in the financial sector and the multiplier effect it would have, especially as it relates to access to and reduced cost of capital. Also, a strong credit union will improve the financial strength of the GSBA.

Support for logistics: Provision of transport and other support facilities to effectively service the outlying regions of Guyana.

Within the context of the Government of Guyana’s overall objective of reducing the high incidence of poverty through skills training, improved small business facilities and creation of additional business opportunities strengthening the GSBA will contribute to the fulfilment of these objectives. It can also create a domino effect to increase business trade and industry activities, reduce the high levels of migration of skilled workers and more importantly strengthen the self confidence of the Guyanese people through increased employment, income creation and taxation remittances.

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