IT?HAS?BECOME increasingly popular to say that the private sector should act as an engineof growth and that small businesses can help to bolster the country’s economy. Still, many argue that not enough is done to help small and medium-sized enterprises (SMEs) reach their full potential. Much of this developmental responsibility tends to fall to Government.
In his 2010 Budget, Minister of Finance Chris Sinckler noted that in the current economic crisis, small businesses continued to play a key role inthe economic stability of Barbados by creating and maintaining employment for workers.
However, he said it is well known that small businesses can encounter challenges in accessing working capital as well as training for the development of their activities.
“There is a need to extend the scope of Government’s assistance to this group to allow for working capital needs of small businesses which are stuck by undercapitalization.
“The Government has a duty to ensure that these businesses have a chance to survive,” Sinckler said.
Technical assistance
The minister proposed to allocate $1.5 millionto Fund Access to empower it to facilitate the needs of the small business sector through additional technical assistance for existing and new businesses, training and working capital.
“I wish to note that there are many examples of companies using funds from Fund Access which are able to survive the difficult economic environment and Fund Access has also only recently provided technical assistance out of its normal budget to benefit businesses which suffered from the ravages of Tropical Storm Tomas.”
He noted that Fund Access had been in business for some 13 years and knew the typical risks to small businesses as well as reasons for business failures or success.
Noting that e-commerce is the way of the future and that the Internet will present many opportunities for small businesses, Sinckler said Government would mandate that part of its subvention to the Small Business Association to be used for the provision of website development and e-commerce services to members.
He also announced that after careful consultation and planning, the new factoring programme would be launched on December 1, 2010.
“This will provide another ease for small and medium sized businesses that do business with the Government but have to wait extended periods of time for settlement of payments. This should vastly improve cash flows,” he said.
According to the September 27, 2010 BARBADOS BUSINESS AUTHORITY, Barbados Small Business Association (SBA) president Celeste Foster believes that for small and medium-sized enterprises (SMEs) to survive, larger companies have to work with them.
She said: “Working together would create a positive local impact through the development of strategic partnerships.
“Such partnerships can effect capacity-building in the SME sector through basic skills training, technology transfer, sharing of knowledge and direct investment in infrastructure. . . . These relationships serve to improve the competitiveness of the SMEs,” Foster advised.
She said while it was key for larger and smaller businesses to work together, the SMEs should also “look beyond the shores” of Barbados if they were to survive, grow and thrive.
“There is limited access to finance for SMEs in Barbados. Financial institutions are reluctant to fund SMEs, perceiving them as high risks and having high transactional cost,” she said.
Foster said “a favourable regulatory framework” was crucial to the development of the SME sector.
“SMEs must have access to tax incentives and business subsidies similar to those available to bigger companies. It is important to note that the access to such should not be shrouded in bureaucracy.
“The burden of regulatory measures should be relaxed and an enabling environment created . . . SME registration and monitoring needs to be less expensive, faster and more transparent,” the SBA president said.
Accelerate CSME
Meanwhile, it was suggested in the July 26, 2010 BARBADOS BUSINESS AUTHORITY that Barbados must do its part to accelerate the full emergence of the CARICOM Single Market and Economy (CSME) in order to benefit the local small business sector.
This call came from Lynette Holder, chief executive officer of the Barbados Small Business Association (SBA), who believes that capitalizing on the regional market would particularly enhance Barbados’ productive sectors.
She commented on the underdevelopment of the CSME in light of the downturn in the island’s major productive sectors over the first half of 2010, for example, sugar receipts by 20 per cent and manufacturing by 7.7 per cent.
“One of the things that I realize we’re not forcing enough on is the CARICOM Single Market and Economy. The CSME represents an opportunity for our SMEs to grow their markets, to export and to strengthen their customer base. It is an opportunity for us to stretch our muscle within this region before we can even look extraregionally at tapping those markets,” she told BARBADOS BUSINESS AUTHORITY in a recent interview.
Holder questioned the status of necessary legislative provisions required by the revised Treaty of Chaguaramas “that would allow us to begin to look at the single economy”.
“Where are we with the Single Economy for the movement of goods and capital and people? I think these are issues that need to be looked at and I want to see Government really paying attention as it relates to moving the CSME forward and Barbados playing its part within the CSME.
“Our small firms will be the greater beneficiary of a single market and a single economy,” she stressed.
