The Small Business Bureau: Mission, Challenges and Accomplishments

Small Business

Dr Lowell Porter

The Small Business Bureau, a semi-autonomous agency within what is now the Ministry of Business, commenced operations in 2010, based on its mandate as set out in the Small Business Act of 2004 (SBA). The role of the Small Business Bureau as outlined in the SBA is to:

 

●             Develop and implement programmes to foster small business development

               and growth inclusive of access to finance

 

●             Review and promotion of Government policies which address the issues

               affecting small businesses

 

●             Monitor and review access by ‘approved’ small businesses to 20% set aside,

                for Government procurement opportunities for goods and services

 

●             Be the source of information on the small business sector

 

I believe that The Small Business Bureau over its years in operation has been able to significantly deliver on most of its aforementioned responsibilities, given that SBB was “really operational” from 2013. In this regard the GRIF funded ‘Micro and Small Enterprise Development and Building Alternative Livelihoods for Vulnerable Groups Project’ (MSED Programme), which commenced in 2013, allowed the Bureau to commence delivering on its mandate with respect to access to finance. This programme also allowed the SBB to provide significantly enhanced Business Development Services as well as contribute to exposure to best practices for businesses operating in key sectors.

In addition to the foregoing, the SBB has been given the mandate of implementing business incubator/accelerator services in Berbice Industrial Estate as well as within the Lethem Industrial Estate. The focus is to accelerate emerging companies’ development by providing hands-on assistance during vulnerable start-up years. Assistance typically takes the form of a package of business and technical support services including guidance and mentoring on business strategy, management, marketing, financial, legal, and product development issues as well as facilitated exposure to a “know-how network” of outside business resources and sources of capital.The construction of the Berbice facility is expected to be completed before the end of the year while the Lethem facility will be completed by mid-2019. 

In July 2017, SBB with support from a CUSO volunteer, reinforced its M&E system by developing a structured process for the impact evaluation after interventions. Towards this end, on-site surveys continued to date. Monitoring visits conducted so far confirmed that 70% of clients were still in operation. Jobs created ratio was also confirmed as 1:1. We recognised however the need for more handholding and monitoring since only 14% of the businesses visited are continuing to keep records. Clients have been encouraged during interviews to establish regular deposit relationships which are generally assessed frequently by the FIs in determining potential lending.

Of note is the fact that access to finance continues to be an issue for MSEs as identified in recent studies done by the IDB[1]. It is against this background and based on overwhelming demand in this regard, that the SBB has undertaken to continue to implement programmes which will address both funding and capacity issues faced by MSEs in their quest for growth.

Initiatives for 2019 are intended to address remaining gaps identified in current programme offerings, particularly with respect to training, so as to tailor more needs specific support to MSEs with high growth potential, as well as provide direct financing options. Support programmes and products for 2019 are expected to identify business skills and other developmental needs, foster the development of more innovative green and technology based enterprises, as well as identify and work with high growth enterprises with export potential. These are all in keeping with the tenets of both the Green State Development Strategy including the thrust towards the achievement of Sustainable Development Goals (SDGs), particularly with respect to the reduction of poverty, economic growth and the promotion of innovative and green technology as well as value added products (SDGs 1, 8, 9 and 13[2]). With this as well as the strategic objectives of the Ministry of Business, in particular: (1) Support the development and exports of value-added industries, and (2) Increase the economic opportunities and capabilities of vulnerable groups

With this in view, SBB expects to continue to build on previous in-roads made by continuing current activities as well as piloting others, under the following sub-programmes:  

 

►           Increased access to finance

 

►           Training and Education

 

►           Information gathering, visibility & awareness

 

►           Promote policies and programmes for small business development

 

►           Business and Technical Support

 

SBB has demonstrated its capacity to manage business development programmes successfully with the MSED Programme which is about to be closed out, as well as the In-School Entrepreneurship programme and Youth Entrepreneurship Programme (YouthBiz592), both of which were piloted during 2017. Both of these programmes will be delivered in a more expanded way during 2019.

Business management and technical skills training are key success factors in the sustainability of small businesses, when these business owners have limited knowledge or capacity. All our initiatives will be supported by training and coaching to support individual needs, in order to maximize the success and sustainability of the projects supported by SBB.

As regards human resources required for effective delivery of all the aforementioned programmes, it is critical that SBB have the required human resource capacity, to be able to implement planned initiatives for the rest of 2018 and beyond. Of note is the fact that the remaining MSED staff is now down to six (6), of the current total of 15 staff.

The Branding-Marketing-Awareness plan developed in 2018 for the Small Business Bureau, is expected to continue in 2019, with the objective being to position the Bureau as ‘the premier’ MSE development agency in Guyana as well as to motivate other prospective and existing MSEs to come into SBB to access programme offerings.  

The Business Bureau’s image was successfully enhanced during 2018 and 2019 activities are expected to build on success to date in this regard. Branding and marketing activities all served to raise awareness in the ten (10) administrative regions and this will be further developed with the operationalisation of the ‘help desks’ launched during 2018, in partnership with the Ministry of Communities.  

Help desks have been established in several administrative regions with the support of the relevant municipalities. This means of dissemination of information and communication within the regions is expected to enhance outreach efforts. Trained personnel within the regions will be able to perform basic query responses as well as be the point of contact and provide information to SBB, on the needs of the enterprises in these areas.

 Also SBB intend to implement a program where the SBB’s registered companies that have implemented solid standards on quality of their products and services and demonstrated service delivery excellence would be part of a list of companies SBB can recommend to large companies looking to sub-contract or contract a SME for products and/or services.

Advertisement would be made by SBB on behalf of those companies to promote their products and services to the large enterprises. These larger enterprises would contact the SBB whenever they have a business opportunity for a SME, and SBB would then recommend the qualified companies in this sector of activity. The large enterprise would only have to contact one SME of his choice or several to get some proposals. The project involves lot of business research in our database and in the field but we feel this can be a great program to promote the small businesses of Guyana.

The Business and Technical training will focus on six programs and initiatives, all aimed at developing sustainable enterprises:

 

●             Increase exports

 

●             Government Procurement, 20% to SME objective

 

●             Incubator program

 

●             Green fund program

 

●             Youth Innovation program

 

●             Loans from the SBDF mainly oriented at creation of employment as per the

                needs of each region, including former sugar industry workers  in region 3,

                4, 5 & 6 and other vulnerable groups

 

Emanating from an independent evaluation of the MSED Programme was the recommendation that the guarantee limit as well as the use of the remaining IPF funds should be reviewed for more effective deployment of resources.

SBB through the MoF, formally requested of the Bank that the guarantee limit be amended to a minimum of 70%, with a view to enhancing loan uptake. In addition, it has been proposed that that the grant limit be increased to USD$5,000, to allow for access by more innovative business ideas requiring funding. The CG limit was reviewed to allow for a minimum guarantee of 40% and maximum guarantee limit of 70% as per risk profile and collateral requirements. There is a dollar limit which is the equivalent of G$12million. These request were approved.

Original loan outputs were evidently overly optimistic. Hence, based on discussions with the then team leader as regards what were realistic outputs with only two Partner Financial Institution (PFI), namely GBTI and RBL, the expected loan outputs for the project period (prior to project extension from original end date of March 25, 2015), were revised downwards by the PEU from 800 to 78 loans. A downward revision was also done for job created and/or sustained. A follow up meeting was recently held with Scotiabank but has not borne fruit at the time of completing this report. 

With programme extension to Dec. 31, 2017, it was projected that some 96 loans would have been done for 2017. However, same was not achieved. While the banks have begun to demonstrate some amount of flexibility for the smaller loan amounts, with respect to collateral required for the remaining 60% cover (loans up to USD$1,500), small businesses still find it generally difficult to secure more significant loan requests as desired by PFIs. Discussions with the PFIs have indicated that they would find a higher guarantee amount favourable. The downside to this is the fact that MSED programme will end at October 31 which will not allow for sufficient time to test an increased guarantee limit, that increased loan uptake can be possible.

From 2014 to July 31, 2018, a total 192 loans were approved in the amount of Gy $ 803.5 million while 189 loans totaling $677.6 million were disbursed. This has contributed to the 487 jobs created with a potential 308. Of note is the fact that to date, delinquency has been minimized and this attests to SBB’s initial screening though further supported by the banks’ due diligence. The total value of claims to date of US$6,700 which is the equivalent of 0.43% of the total guarantee fund of USD$1.575 million.

For the same period 574 Low carbon grants totaling $177.45 million were approved with 544 in the amount of $162.2 million were disbursed. As a result, 900 jobs were created with 291 potential job creation.

I am confident, that SBB continue to be an agency relevant to the development and sustainability of successful SMEs that in turn, contribute to the development of Guyana’s growth. Even with the new found oil and gas industry, the GOG must continue to facilitate the upstream trajectory of SMEs.

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