So we have established a Small Business Council and just before I sat down to prepare this column I learnt that the establishment of a Small Business Bureau for which provision is made in the Act and which, in effect will serve as the national Small Business secretariat is scheduled for later this month.
Since much continues to be made of the role that small business has to play in energizing Guyana’s economy, it would, in my opinion, be perfectly legitimate to raise the question as to why we have allowed six years to go by without giving any real effect to the provisions of the Small Business Act.
Unquestionably, it is a question that has to be placed at the door of the government since the truth is that when one examines the Act even less than carefully it is quite clear that “the Minister,” – in most cases the Minister of Tourism, Industry and Commerce and in one particular case the Minister of Finance will be calling the shots as far as several critical aspects of small business administration are concerned.
Two of these, particularly, interest me. First, there is the matter of ‘the purse strings’ – so to speak. The language may be a trifle delicate BUT WHAT THE Act says in effect is that the Small Business Development Fund – which, in effect, will be the consolidated fund of the small business sector will come, more-or-less under the control of the Ministers of Finance and Tourism, Industry and Commerce. Here, I will not bother to comment on the caveat “after consultation with the Council” articulated in the Act.
Surely, we cannot pretend to be comfortable with a state of affairs in which the state, with all of its preoccupations and inherent inefficiencies is holding fast to the reins of the machinery that plays a central role in the growth and development of a sector to which we look for real improvement in the national economy.
My other concern here is that state involvement inevitably brings with it a degree of bureaucratization which, over time, has done much to anger, frustrate the private sector and, in some cases to deter external investment. Returning to the provisions of the Act, I note with not a little concern that “a small business desirous of becoming an approved small business has to “make an application” and that, in the final analysis it is “the Minister, inevitably, who must issue a “declaration” that a business “is an approved small business.” What this in effect says is that there are ‘small businesses’ and small businesses’ and that you could well be a small business without reaping the benefits of being a small business as set out in the provisions of the Act. Bottom Line! The Minister is ideally positioned to determine which are small businesses and which are not, under the Act.
One understands, of course, that you couldn’t set up a charitable organization on a political party and seek to have it registered as a legitimate small business; and though that is all well and good it seems to me to be sufficiently obvious to have been taken for granted and really ought not to have been mentioned in the Act itself. Let me say why I say so. In my experience caveats like those in documents are very often the subject of intense controversy and are sometimes used as a form of political ambush. What happens, for example if a senior and high profile member of the ruling party or the opposition seeks registration for a small business. My guess is that, conceivably, the status of the applicant as a political figure might well cause the aforementioned clause in the Act to be cited and that might occur even in cases where the qualification criteria for the business seeking registration might be impeccable. If you ask me why I believe this I will simply respond by asking which among us do not understand this to be simply the way of our society.
There are people who claim to have read the Small Business Act and who assert that the Act provides a clear definition of what a Small Business is. I disagree. In fact, there is a sense in which it confuses the issue. I have examined the legislation and the truth is that it decidedly does not make clear the distinction between what constitutes small and what may be medium or micro, as the case may be. What it says in fact is that to be deemed a small business an entity must satisfy two of three criteria viz. it must employ not more than twenty five persons; it must have gross annual revenues of not more than sixty million dollars and it must have business assets of not more than twenty million dollars. Any two of the three aforementioned criteria would do under the law so that you can fail to meet any one of the three criteria and still qualify as a small business under the law. That sounds a bit ‘cas cas’ to me. Curiously, having satisfied the aforementioned criteria “the Minister” may specify “other criteria” which you are also required to satisfy.
Two things puzzle me here. First, where exactly does one draw a line that separates “small” from “micro,” for example. The law sets a ceiling – “not more than” for qualification as a small business but it sets no floor. Where does small stop and micro start?
This is not just a mundane issue. It becomes relevant because in the real world there are small business criteria for accessing various types of services including financial support and just who qualifies and who doesn’t is a matter of much more than academic importance. In fact, the issue of qualification for small business support will attract increasingly robust national debate as commercial banks and other lending entities roll out their assorted ‘small business products.’
My second concern is with the quantifiable criteria used in the legislation to ‘define’ what a small business is. Except I am thoroughly wrong a significantly large number of local business enterprises that are commonly deemed small businesses employ less than twenty five employees, have revenues of less than sixty million dollars and, similarly, have business assets of less than twenty million dollars. Since the legislation provides no ‘floor’ criteria, how far below twenty five employees or how much less than sixty million dollars in annual revenues can I have without being deemed something other than a small business.
I propose in my next column to examine what I consider to areas of the Act that require some measure of greater explanation and to look at the challenges that lie ahead in pursuit of the strengthening of the small business sector through the implementation of the provisions of the Small Business Act.
