Last week’s official launch of the Micro and Small Business Development Project (the full title of the Project is twice as long) under the watch of the Small Business Bureau is deserving of some measure of commendation if only because of the potential which the project has to enhance the fortunes of the local small business sector.
Not a great deal in the way of official support has been extended to the small business community, over the years, even though, in recent years, entities like the Guyana Art and Craft Association have benefitted from modest assistance -primarily through the Guyana Office for Investment – in the forms of logistical and financial support to participate in overseas trade fairs. There is, too, the role which the Institute of Private Enterprise Development (IPED) has played in providing modest loans to small and micro businesses and various forms of training which, in some instances, have helped those businesses become more efficient.
The Micro and Small Business Development Project, with its US$5m budget, in the first instance, offers the small business community much more than had ever been done previously.
It is not so much direct financial support as the opening of a promising window to sources of financing that is the Project’s biggest potential benefit to the small business sector. The element of risk involved in lending to small and frequently poorly organized businesses has always been a serious concern for the local commercial banking sector. What the Project does is to back small businesses by guaranteeing up to 40 per cent of the collateral required by the lending agency which of course means that small businesses that approach a commercial bank with the backing of the Small Business Bureau stand a much better chance of accessing bank financing.
An important corollary to that is that those small businesses seeking the support of the Small Business Bureau must possess the proper credentials, including a proper business plan. Other forms of training that have to do with business management, production and marketing are also available to small businesses under the Micro and Small Business Development Project.
The initiative goes further with the Small Business Bureau undertaking to fund grants and loans directly from its own budget so that those small businesses that may not meet the banks’ criteria for borrowing will not necessarily be turned away empty-handed anyway.
An important virtue of the Project is that it creates a nexus between access to the benefits that it offers and efficient business practices including operating on the basis of a sound business plan; and since the Project is committed to providing and/or sustaining 2100 jobs within a two-year period that implies that the Small Business Bureau will perform a key oversight function.
From what we have learnt from the Small Business Bureau several hundred small businesses have already signed on to the Project, that is to say that they expect either to benefit from commercial bank borrowing with the backing of the Bureau, or else, to access funding from the Bureau directly in the form of a grant or loan.
An initiative of this kind was of course long overdue given the fact that the facilitating legislation, the Small Business Act was passed in the National Assembly almost ten years ago. What the legislation makes clear is that the management of the Project which, in its entirety, involves two tranches of US$5 million each is being administered by government under the auspices of the Ministry of Tourism, Industry and Commerce. Indeed, one only needs to peruse the legislation to determine the extent to which “the Minister” exerts control over the Small Business Council – the body that oversees the work of the Bureau – and the Bureau itself. Not a few people have expressed reservations over the fact that the Project intended solely for the benefit of the private sector is being administered from within a government Ministry though that is not to say that the entities directly responsible for oversight and execution may not benefit from the requisite autonomy.
Another point to note, of course, is that almost ten years after the passage of the Small Business Act and a week after the formal launch of the Project we are still none the wiser as to when the Bureau will begin its actual work of facilitating bank loans for small businesses and pursuing its various other responsibilities to the sector. Somehow, and based on the limited responses that have been forthcoming from some persons associated with the Project, it may take yet another official – more likely than not, ministerial – directive to finally get the Project moving.