Ensuring the integrity of the low carbon small business support project

It took almost ten years since the passage of the Small Business Act in the National Assembly in 2004 for us to come as close as we now appear to be to the allocation of meaningful financial resources to the development of the small business sector.

As an aside, small businesses – as interpreted under the provisions of the Act – can actually be pretty large enterprises, the qualifying criteria being that the enterprise must have in its employ no more than 25 persons, that it must own no more than $25 million in assets and that its annual turnover must not exceed $60 million. Using those criteria the majority of business enterprises in Guyana would qualify as small businesses.

Part of the reason why the Small Business Bureau (SBB), in effect a state-run small business secretariat, has not been up and running since its creation some years ago under the provisions of the Act is because the government has been unable to find funds to render it operational ‒ that is, up until some months ago. We now know that funding for the Bureau’s small business support programme will come in the form of a US$5million allocation from the Guyana REDD+ Investment Fund, Norway’s US$250 million forest protection agreement grant to Guyana. A further US$5 million from the same grant has been earmarked for further work on small business development.

What makes the project, titled “low-carbon alternative livelihoods for vulnerable groups in Guyana” interesting, is, first, that it represents the largest ever state ‘subsidy’ for small business development ever allocated by the Government of Guyana; secondly, that it provides small business support in a number of areas including grants, loans  and training; and thirdly, and perhaps most significantly, that it offers a credit guarantee fund and interest payment support facility which are designed to respond to the age-old small business headache of not satisfying commercial bank requirements to access loans.

On the surface at least the project appears to provide a life-support mechanism for a huge swathe of the country’s small business sector which appears to be going nowhere, though, given the fact that more than 2,000 small businesses have already registered with the Bureau’s database, it has to be said that, contextually, US$5 million does not appear to be that large a sum of money. Still, the project does appear to have the potential to impact positively on the growth of small businesses since at least some enterprises will benefit from what it has to offer. Of course, the question that arises here is this: given the aforementioned seemingly generous criteria for an entity qualifying as a small business, how much room will be available at the window for the “vulnerable groups” which are the ones (at least so we are told) that the project really seeks to target.

One thing that can be anticipated is that once the Bureau opens its doors there could be a run on its resources. We are very much in a season of the creation of small businesses of one type or another. In  fact, it is probably the ensuing diligent search for money to throw into these businesses that has led acting Tourism, Industry and Commerce Minister Irfaan Ali, under whose portfolio the Bureau (and the overarching Small Business Council) to state that there will be “no free money” available under the scheme, by which he means that beneficiaries will have to meet certain criteria, not least of which would be that the viability of their businesses plans would  have to stand up to a measure of professional scrutiny.

Without wishing to be either judgmental or precipitate in assessing this project, there is good reason to raise the issue of the importance of fairness and transparency in its administration, particularly in the matter of the allocation of resources to businesses seeking them. Frankly, it is by no means beyond the realm of possibility that projects of this nature can turn into feeding troughs for a favoured constituency, leaving the rest out in the cold, so to speak.

Interestingly, the observation has been made that the Small Business Act affords the government absolute control over the two key mechanisms that govern the project, the Small Business Council and the Small Business Bureau. Certainly, upon reading the actual legislation it is difficult to get through too many paragraphs without encountering a reference to the prerogatives of “the Minister.” The government, therefore, needs to guard against anything that might lead to the conclusion that the facility is being manipulated – or at the very least, tweaked – in a manner that turns it into a cauldron of nepotism that favours its supporters.

Of course, the government could still provide the country as a whole with a measure of reassurance that the project will be professionally managed by ensuring, first, that the Small Business Council comprises persons who will make judgments that avoid political bias and that the Bureau comprises fair-minded professionals who will not be blinded by partisan loyalties. That way, we ought to be able to spare the project the opprobrium that it will otherwise attract.

If we must give the project a fair opportunity to work – and the sooner the Small Business Bureau opens its doors to the thousands of small businesses that desperately need its help, the better – there is absolutely nothing wrong with raising the issue of the need for fairness and transparency in the allocation of its services if only because if managed fairly and even-handedly, it might actually make an important difference to small business development, job creation, the growth of key sectors of the country’s economy and the national economy as a whole.

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