By Jacquelyn Hamer
Just over a week ago all of the various sections of the print media published reports on the launch by Scotia Bank of its Small Business Banking (SBB) an initiative which this newspaper described as ‘a suite of products which promises to help proprietors grow their businesses.”
I have little doubt that Scotia Bank means well and that those ‘small businesses’ that are “operating at a significantly higher level than micro-enterprise” will benefit from the new credit streams and on-line and business card services that are part of the Bank’s new business banking suite. The move to curb cash transactions, for example, is a consideration that has to do with both safety and convenience while the revolving credit arrangement will help to enhance the liquidity levels of those businesses whose growth have been stunted by financial limitations.
And yet I suspect that Scotia Bank and the Minister of Finance would be the first to admit that Scotia’s new banking suite is decidedly limited in its capacity to respond to the challenges that confront the small business sector in Guyana. Why? Because access to Scotia’s menu of small business services is conditioned by a particular definition of just what constitutes a small business and as Scotia’s Country Manager Amanda St. Aubyn was careful to point out during the launch of the new banking suite there is no room at this particular Inn for micro-enterprises.
Mind you, I have no quarrel with what is obviously a concern by Scotia that access to its banking suite be underpinned by criteria that protect the bank’s investments. That is as it should be. My point is, however, that for all the media focus on the new menu of services now being offered by Scotia Bank, we remain light years away from a working relationship between the commercial banking sector and the local small business community that can enable that great leap forward for small business that is necessary to significantly transform lives and set the country’s economy on a more forward-looking path.
I imagine, for example, that ‘small businesses’ seeking to access those services which Scotia now offers through its SBB will be required to meet particular criteria which, of course, will be set out by the Bank. It is here, in my view, that the rubber hits the road. I have never been clear in my own mind as to what – in the context of Guyana – constitutes a ‘small business’ and what constitutes a ‘micro-business.’ The fact is, however, that there is a distinction to be made between the two and the Scotia Country Manager made that clear during her own presentation.
Banks being what they are it would be my guess that their own criteria for arriving at a distinction between ‘small’ and ‘micro’ will have to do with both the size and scale of the particular enterprise as well as organizational features, notably those that have to do with aspects of financial and other forms of management; and with the best will in the world I believe that when those criteria are eventually put before us we are probably likely to find that many, perhaps most of those businesses that may well consider themselves genuine ‘small businesses’ may not qualify on one count or another.
This, of course, is hardly Scotia’s fault. The fault lies with our failure – for one reason or another – to create a regimen for small business growth in Guyana that takes account of the various considerations associated with running a business as against what we loosely describe as simply making money.
Is it likely, for example, that the vast number of ‘thriving’ but in many cases largely unstructured farming agricultural enterprises in various rural communities across Guyana will have SBB access? I think not, in many cases. I believe that they are likely to fall at the hurdle of financial management practices, for example and that many of them have simply become too steeped and comfortable in business practices that favour cash transactions to want to make the change, anyway.
When we look at the bigger picture I am inclined to believe that the vast number of presumed small businesses in sections of the retail trade, handicraft, poultry- rearing, dress-making, food processing and some aspects of service delivery – which comprise a sizeable portion of what in my view is the real small business sector – will probably not, at least in their present organizational condition – qualify for SBB services.
Again I stress that while no blame can be laid at the door of Scotia Bank for the fact that so many small business enterprises do not qualify for the services being offered under SBB one can hardly help but lament the fact that such a large swathe of the legitimate business community will find itself excluded from these services.
What the Scotia initiative does is to remind us of the need to revisit the manner in which the small business culture has developed in Guyana. I have written previously that I believe that small business really originates as a means of earning an income or subsidizing an already existing one. The structures of most of these enterprises have revolved purely around buying, growing or manufacturing and selling, a simple process that excludes most other considerations that have to do with orthodox business practices; and this culture has simply been allowed to grow and take root without any meaningful intervention that takes account of the need to transform them into real businesses.
Interestingly, and despite these limitations, there are several small enterprises across the country that continue to do remarkably well due mainly to the hard work of the people who run them and the good fortune of limited overheads and, sometimes, captive markets. When, however, these businesses seek to become more absorbed into the formal economy they tend to fall at the various criteria-related hurdles set up by banks and other lending institutions. That, clearly, is not as it should be.
Part of the problem here in my view – and this is an issue on which we desperately need some measure of clarity – is that too often there is a lack of clarity among ordinary Guyanese – as to exactly where we draw the line between ‘small’ and ‘micro’ and exactly what are the constituent elements of the two. Unless this is sorted out and the various criteria made public every poultry rearer with a few dozen chickens may feel justified in considering themselves a ‘small business.’
The other issue of course has to do with turning small into micro so that, for example, the benefits of a facility like SBB can have a greater impact. I am unclear as to the nature of the curriculum for students undertaking the course known as Business Studies in the secondary and tertiary institutions. I believe, however, that we may do well to pay more attention to the offerings of the United Nations International Development Organization (UNIDO) – run programmes in various other developing countries, primarily in Africa where the various Ministries of Education receive support in the running entrepreneurial skills courses at the secondary level. Personally, I found the course offered to secondary schools in Uganda particularly instructive since- unlike what appears to be the case in the Caribbean – this was not simply a Business Studies course designed to add to the number of passes that a student gains at the CXC Examination – but a course of study linked directly to equipping students to own and operate properly organized businesses. These courses actually teach students that entrepreneurs create businesses and that businesses generate employment, income and wealth. Before they actually enter the business world these students actually have a chance to learn the basic skills that help them determine what people are interested in buying, how to turn opportunities into business and how best to manage enterprises in a competitive environment. Apart from the fact that they are shown the importance of paying attention to the community as well as to the natural environment these students also acquire the qualities of creativity, innovation, resourcefulness, planning and leadership that are all trademarks of successful entrepreneurs. Interestingly, these courses combine three elements; classroom teaching, the involvement of prominent entrepreneurs who serve as prominent role models or mentors and practice in starting a business while they are still at school.
The point to be made about the UNIDO pilot projects in countries like Uganda and Mozambique is that they begin from the position, first, that entrepreneurs must be taught and secondly, that small business accounts for a significant share of employment and income generation in most developing countries. It is the same in Guyana as it is anywhere else.
My concern in the Guyana context is that there are hundreds of start-ups in business that are either going nowhere or else, unsure as to where they are going because the people who run them, for all their eagerness and drive, still do not understand what it takes to become an entrepreneur; and they have no one to teach them. What this means, of course, is that they will continue to be locked out of the mainstream economy, unable to access those various services –like SBB – that are critical to their growth and development
