Can the Small Business Bureau make a difference?

Small and micro businesses across the country that have, over the years, grown used to operating in an informal, even illegal environment, neglecting to register as a business, failing to comply with the requisite safety and health regulations and evading taxes will have to agree to a much higher level of compliance if they are to benefit from the financial and other forms of support that will soon be on offer under the provisions of the 2004 Small Business Act.

The Small Business Bureau (SBB) the executing agency for the largest small business initiative ever undertaken by the government says that strict compliance with national laws and regulations including honouring obligations to the Guyana Revenue Authority (GRA) and National Insurance Scheme (NIS) are among the conditions that will have to be satisfied by small businesses seeking support under the Bureau’s US$5 million loan, grant and loan support programme.

The Bureau’s Chief Executive Officer Derrick Cummings says that what the agency hopes to do is to begin  to alter the culture of “informality and irregularity” that has characterized a huge swathe of the small business sector. Evasion of obligations to the GRA and the NIS has been part of that culture. “We are engaging those agencies in order to ensure that businesses that are part of our database honour their obligations,” Cummings says.

The potential benefits associated with ‘signing up’ with the Bureau have so far attracted more than 2,000 small and micro businesses, both groups and individuals. Cummings says that the extent of the response now positions the Bureau to properly scrutinise the credentials of the applicants to ensure that they meet the compliance qualification criteria. With the numbers on the database likely to reach as high as 5,000 within a matter of weeks, Cummings is confident that even before the Bureau opens its doors for business it will be positioned to bring an enhanced sense of order to the small business sector. “Among the things we can do at a pretty basic level is to help those operations assume a proper business structure where that structure does not exist. This is where the training that we will provide will be useful,” Cummings says.

When, eventually, the Bureau opens its doors for business, it will effectively be activating the provisions of the Small Business Act, passed in the National Assembly in 2004 but placed in mothballs immediately thereafter. Even after a structure comprising an overarching Small Business Council and a Bureau were set up a few years ago, it remained dormant, attracting no significant financing from the state with which to pursue its mission.

Now funds have materialised. A few weeks ago representatives of the local Ministry of Finance and the Inter-American Development Bank signed a US$5 million grant agreement to fund a project titled “low-carbon alternative livelihoods for vulnerable groups in Guyana” with monies sourced from the Guyana Redd+ Investment Fund (GRIF). The scheme seeks to assist recipients with seed funding and technical and business development training as well as establish a credit guarantee fund and interest payment support facility to support recipients’ creation and expansion of small businesses. Funding for the grant programme draws from Norway’s $250 million forest protection agreement grant to Guyana.

The project’s potential to change the face of the small business sector is readily apparent. Up until now there has been a considerable gap between official pronouncements regarding the importance of the small business sector to the country’s economy and the extent to which government has helped the sector realise its potential.  Frequent calls from the business community including, most recently, the Georgetown Chamber of Commerce and Industry (GCCI) for the creation of a development bank to provide lending for small business development have come in the wake of difficulties associated with meeting the lending requirements set by commercial banks. So far, these calls have yielded no public response from government.

What Cummings says he is more concerned about at this time is that those small businesses that are thinking about engaging the Bureau “put themselves in order.” By that he means that they must not only be a registered business but that they must provide definitive evidence that their operations are actually structured along business lines. “We want to ensure that we are dealing with entities that want to grow as businesses and not just short-term aspirants who see the project as an opportunity to make some money,” Cummings says.

During an interview with Stabroek Business a few weeks ago, Chairman of the Small Business Council, the overarching monitoring agency, Sukrishnalall Pasha said that part of the function of the Council would be to support the Bureau in evaluating the viability of business proposals in order to ensure that funding is not dispersed on projects that are unlikely to bear fruit. Pasha says that there are mechanisms that are being put in place to make realistic assessments of the viability of business proposals. It is, he says, a way of ensuring that business initiatives are able to offer value for money.

Some of the owners of those small businesses that are already part of the Bureau’s data say that they welcome the single most significant state-funded small business initiative ever to be undertaken by the political administration. Up until now there has been a considerable gap between what government says is the important role that small business plays in the country’s economy, and, on the other, the lack of any real support for the development of small and micro enterprises.

Not least amongst the Bureau’s challenges is the task of ensuring that those enterprises that benefit from the support that it provides delivers the 2,200 jobs to which the entity is committed over a two-year period. Here, there are concerns that large numbers of local, family-run small businesses might be hard-pressed to deliver on this particular requirement in view of a lack of training in orthodox business management practices. Cummings says that the Bureau’s monitoring role will enable it to recommend and actually provide training where this is necessary.

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