The 20% state contract allocation for small businesses should be in place now

Two years ago, almost to the day, Finance Minister Winston Jordan told Guyanese in his 2017 budget presentation that it was the intention of the Government to preside over the full and effective implementation  of the provision in the Small Business Act allowing for small businesses to have access to 20% of state contracts which are within their competence to execute.

 If it did not appear at the time that the announcement was a breakthrough opportunity for the private sector it would have become evident upon more prolonged reflection that the full and effective implementation of the 20% allocation to small businesses could allow them access to multi-million dollar employment opportunities  that would trigger significant growth in employment, accelerated expansion of previously struggling small enterprises in various sectors and a division of labour that would assign jobs to businesses best suited to executing them.

And since the criteria for becoming eligible for executing state contracts includes various types of qualifications like adherence to national laws relating to, among other things compliance as far as honouring commitments to institutions like the Guyana Revenue Authority and the National Insurance Scheme is concerned, as well as a proven capability to deliver jobs in a  timely and satisfactory manner, full and effective implementation of the 20% allocation will mean that small businesses wishing to compete on that particular ‘playing field’ would have to raise their game appropriately. That would have meant a further plus for the small business sector and for the private sector as a whole.

What was apparent, as well, was that mechanisms would have to be put in place not only to ensure the proper implementation of a system of rules, but also to ring fence the entire process in such a manner as to ensure, as far as possible, that the entire system does not become quickly corroded by corruption such as often manifests itself  in instances where private companies are recruited by the state to execute contracts.

 While, therefore, it was anticipated that it would take time for a regimen of rules to be put in place to, as far as possible, allow for the system to run smoothly, we are being reminded that after two years of promises, a mechanism that has the potential to strengthen the small business sector by upgrading existing businesses and creating new ones whilst broadening the range of fields in which small businesses can function as well as open up thousands of new job opportunities, is still to be put in place. Meanwhile, the ‘big players’ continue to monopolize access to the really lucrative state contracts, arguably, even in areas where, conceivably the very smallness of small businesses might allow for some of them to deliver on some types of contracts more efficiently.

This newspaper, upon making inquiries some months ago, was told that the process of putting the requisite mechanisms in place had not yet been completed. Sometime later the Minister of Business publicly announced that the system would come into force in January 2019.

We have no interest in either not taking the Minister at his word or in suggesting that the creation of an enabling framework with which the 20% allocation can function smoothly and without distortion can be equated with a proverbial walk in the park. That being said and when consideration is given to the particular importance of the implementation of the 20% provision, we firmly believe that more than sufficient time has elapsed since the Finance Minister’s 2016 announcement without the provision being put in place. Certainly, we seriously doubt that having made the announcement just over two years ago, it was the Minister’s intention  that more than two years would elapse without implementation.

 More than that the Small Business Act, in which this provision is embodied, has been around for more than fourteen years. What this means is that the 20% provision really ought to have been in place some years ago.

Some months ago, in response to a question from this newspaper, the Chief Executive Officer of the Small Business Bureau (SBB) Dr. Lowell Porter provided a detailed briefing of the mechanisms that comprise the enabling environment within which the provision would have to operate including the various state entities that would have to be involved therein. In the process he seemed to be making a point not only about the importance of ‘getting it right,’ so to speak but also about the tedium involved in putting the whole thing together.

We believe, however, that the early full and effective implementation of the 20% provision for small businesses could be a landmark development in the local small business sector, a view which we believe is shared by Dr. Porter. Minister Gaskin too has come across as having an understanding of the contribution which the 20% allocation can make to changing the landscape of small businesses across the sectors. All of this amounts to saying that when the importance of this provision is carefully weighed, it would be, to say the least, entirely unacceptable, if full and complete implementation is delayed beyond the recently promised timeline of January 2019.

Around the Web

Comments