By Jacquelyn Hamer
High levels of unemployment in the formal economy and the necessity among low-income earners to pursue means through which to subsidize their incomes render it increasingly necessarily for Guyanese to pursue self-employment options. The options available to working class individuals and families include modest undertakings mostly in the agricultural, poultry, food, handicraft, dressmaking, vending and retail sectors. They vary in their levels of financial investment, size, profitability and in the extent of their efficiency as business outfits. Many of these enterprises have grown over time and though they still qualify as no more than small businesses many of them are relatively well-organized, managed with a tolerable level of efficiency and provide a steady income to their proprietors. Many have emerged suddenly, out of dire necessity and continue to struggle to find their way mostly on account of relatively poor planning and limited financial resources with which to sustain them.
Women particularly have embraced the option of starting small businesses mostly in the vending, poultry rearing food and handicraft and sewing sectors. In the three latter sectors skills that were learnt either at school, in the home or through formal courses are pressed into service as money-earning pursuits. Poultry rearing is favoured for several reasons not least of which is the fact that on the very smallest of scales – say a few dozen birds – this pursuit requires a relatively small financial investment that can realize reasonable returns. Two other factors influence women’s choice of the poultry sector; first, the technical skills levels required on the operational side are relatively low; secondly, small poultry-rearing businesses are essentially ‘bottom house’ and ‘backyard’ arrangements which allow for women with children to ‘double up’ as small businesspeople and parents. Additionally, children are usually pressed into service as assistants.
Pursuit of small business ventures, both as income subsidies and as substitutes for low-paying and often tedious and demanding jobs in both the public and private sectors has, in some measure, resulted in unreliable unemployment figures which tend to account for small business operators among the ranks of the unemployed. This, of course, is not to say the unemployment levels in Guyana are not unacceptably high. The fact is, however that thousands of people who are usually numbered among the unemployed
engage in one form of small business or another though the earnings from these ventures are meagre enough to more properly place them among the ranks of the underemployed.
If, for example, you engage a street vendor or an itinerant vendor you are more likely than not to find that their daily takings are insufficient to meet their household needs. Here, the problem reposes in the fact that an overwhelming majority of street vendors are women, single women with school-aged children. I have not even bothered to wonder, how, day-in, day-out they manage to keep themselves and their families going. The same situation applies even in cases where those vendors operate more stable businesses from arcades. In the case of the New Water Street Vendors Arcade, for example, many of the occupants have had to make investments of, in some cases, up to half a million dollars to erect their stalls. Most of those with whom I have spoken say that they secured loans at considerable rates of interest to set themselves up. As was reported in this very newspaper a few weeks ago those stallholders are still struggling to make ends meet since the ‘new look’ Arcade is yet to catch on with consumers.
My mention of loans requires an explanation. Access to lending through the commercial banking system is difficult for small business operators. The Institute for Private Enterprise Development (IPED) and more recently a Trinidadian outfit named DFSLA facilitate small business loans at appreciable rates of interest. Much of the small business lending infrastructure reposes in informal and semi-formal arrangements. In some sectors small businesses have been set up through family loans while the vending and small retail businesses are sustained through loans that come in the form of large volumes of credit mostly, though not exclusively from distributors and wholesalers.
Access to lending is one of several factors that have served to stunt the growth of small businesses as well as to limit the expansion of the small business sector. Several such businesses are run on shoestring budgets that allow for little more than turnover and are insufficient to take account of situations in which it becomes necessary to recover from loss. A single failure, for whatever reason, can mean total ruin.
For this reason hundreds, perhaps thousands of small businesses in Guyana tend to function on a now-you-see-me-now you-don’t basis. Itinerant street vendors and small poultry operators, for example, tend to disappear and reappear with monotonous regularity depending of the vagaries of the market place.
There is much to be said for a more diligent application on the part of the Government of Guyana to supporting the development of small business. Apart from the fact that small business significantly reduces the pressure on both the public and private sectors to find work for the unemployed, it is reasonable to assume that where more people are engaged in legitimate income-earning pursuits the levels of crime and other social problems are likely to decline. Additionally, government can rid itself of much of the public and political criticism that accrues as a result of high unemployment by investing in institutions and facilities that facilitate small business development.
Legislation designed to provide more support for small business development has, up until now, done no more than result in the creation of a Small Business Council the activities of which are either unknown or unclear to the vast majority of the population. Meanwhile, talk of a Credit Bureau that can provide low-interest for well thought out business ventures has been with us for several years and though the need is obvious nothing has as yet materialized. Additionally, if we are to begin to regard small business pursuits as a major contributor to national economic activity, institutions will have to be set up to train people in the management of businesses since even the smallest of small business ventures require some measure of training.
Setting aside the problem of financing, far too many people who venture into small businesses are rushed into it through force of circumstances and without the luxury of being able to take into consideration the fullest ramifications of their ventures. Relatively large poultry operations (a few hundred birds) are often undertaken in the same ‘bottom house’ and ‘backyard’ settings that apply to a few dozen birds with little mindfulness of issues like veterinary services, considerations of hygiene and other critical aspects of managing a business. I know of cases for example where small scale poultry operators make enquiries about issues like markets and prices only when they are on the verge of slaughtering their birds, a circumstance that places buyers in a decidedly advantageous position and, for too frequently, results in considerable losses for the investor. Interestingly, for some operators the experience has been a repetitive one.
How to persuade small business operators of the virtues of formal training in the discipline of managing a business can, quite often be a considerable challenge. The problem with many small business operators is that they tend to see business at the two extremes – the extreme of acquiring or producing and the other extreme of selling, hopefully for profit. Inexperience allows for the ignoring of those intervening issues such as budgeting, marketing, packaging and record-keeping. Significantly, it is at one or another of these hurdles that many small businesses perish.
The need for a higher level of official support for small business is evident and some examples of how small business has developed to a point where it makes a considerable contribution to economic growth and to reducing unemployment and the attendant social ills in other developing countries might persuade our own government of the virtues of pursuing the option of paying more attention to the growth of the small business sector.
I propose to place the outcomes of my own research into small business development in other countries in the public domain in the hope that these can help provide a basis for a more spirited and meaningful public discourse on the virtues of small business. Hopefully too, there will be examples from which we can learn.
