Small busi­nesses are a big deal

Jamaica Gleaner - - ACROSS THE NATION - De­bra Kerr Email feed­back to col­umns@glean­erjm.com and dkerr.pro­fes­sional@gmail.com.

WITH GREAT re­spect for the cur­rent ad­min­is­tra­tion in their ef­forts to steer the coun­try in a new di­rec­tion, I humbly sub­mit a few points for re­view as a con­cerned cit­i­zen and sole pro­pri­etor of a small ar­ti­san start-up busi­ness.

The list of pri­or­i­ties for sus­tain­able growth, which the coun­cil it­self pro­claimed as sum­maries of al­ready ex­ist­ing plans, is still com­mend­able, es­pe­cially on the ba­sis of it be­ing pub­lished for all to see. I am a firm be­liever in gov­er­nance for the peo­ple, and the ad­min­is­tra­tion’s at­tempt at some form of trans­parency in­sults my in­tel­li­gence way less than the pre­vi­ous ad­min­is­tra­tion’s shadow op­er­a­tions.

How­ever, though all the plan­ning and pretty words seem in­dica­tive of a move in the right di­rec­tion, how does this trans­late into real terms for the ev­ery­day en­tre­pre­neur or man on the street try­ing to make a liv­ing?

If we pur­port that Ja­maica’s econ­omy is driven by the MSME Sec­tor (busi­nesses em­ploy­ing 10 per­sons or less), the Lee-Chin-led coun­cil should be tak­ing some of its cues di­rectly from them, and though the part­ner­ship with stake­hold­ers in the pri­vate sec­tor and in­ter­na­tional com­mu­nity is laud­able, what per­cent­age of these busi­nesses is rep­re­sented by the busi­ness as­so­ci­a­tions that guided the process?

The ba­sic trans­la­tion for the Eco­nomic Growth Coun­cil agenda in real-life terms should have some ba­sic ef­fect on the day-to-day busi­ness en­vi­ron­ment and should take the out­comes be­low into con­sid­er­a­tion: Put in place a le­gal frame­work and leg­is­la­tion for­mal­is­ing cot­tage in­dus­tries for mi­cro and small busi­nesses that can op­er­ate from res­i­den­tial premises. Too many busi­nesses fail or re­main in­for­mal and un­sup­ported for lack of a com­mer­cial ad­dress, and the over­head ex­penses one such lo­ca­tion at­tracts re­main at an all-time high. Mi­cro man­u­fac­tur­ing of food items and baked goods, cater­ing ser­vices, ar­ti­san-crafted jams and jel­lies, ar­ti­san hand-made cos­met­ics, wood­work, lo­cally made cloth­ing, up­hol­stery prod­ucts, mi­cro farm­ing, on­line gro­cery shop­ping, on­line re­tail of goods, host­ing on­line classes/train­ing, mar­ket­ing, and so­cial-me­dia man­age­ment ser­vices are just some of the ar­eas that re­main im­mea­sur­able, un­der­es­ti­mated, un­der­ap­pre­ci­ated, and, there­fore, un­reg­u­lated.

An­nual amnesty for con­ver­sion of sole pro­pri­etor­ship (busi­ness name reg­is­tered) to tran­si­tion to in­cor­po­rated com­pa­nies with lim­ited sta­tus. For­mally reg­is­tered com­pa­nies have ac­cess to ser­vices and in­sti­tu­tions from courts to banks, as well as to new mar­kets, which drive growth and cre­ate em­ploy­ment. Free on­line con­sul­ta­tion work­shops pro­vided by Tax Ad­min­is­tra­tion of Ja­maica to re­view drafts of fi­nan­cial state­ments or tax re­turns on­line be­fore for­mal sub­mis­sions. You would be sur­prised at how many small busi­ness own­ers re­main un­reg­is­tered and non-com­pli­ant be­cause of a lack of know-how, or pay out large sums of money to char­tered ac­coun­tants when not even re­port­ing a profit for a given year or qual­i­fy­ing for in­come tax thresh­olds. We have made the ‘self- em­ployed’ sta­tus one to fear and are ac­tu­ally not an ac­cepted em­ploy­ment sta­tus on some of the newly in­tro­duced Pro­ceeds of Crime Act forms now re­quired at many com­mer­cial en­ter­prises. Tax in­cen­tives and duty waivers for busi­nesses us­ing a cer­tain per­cent­age of lo­cal raw ma­te­ri­als, equip­ment, or en­ergy-sav­ing tech­nolo­gies. A waiver or grant spon­sor­ship for in­no­va­tive prod­ucts with ex­port po­ten­tial to go through the ap­proval/reg­u­la­tory frame­work with

the Bu­reau of Stan­dards and other reg­u­la­tory agen­cies as needed. Ex­tended mora­to­ri­ums on loan fa­cil­i­ties and capped in­ter­est rates for MSMEs in the pro­duc­tive sec­tor, across ap­proved fi­nan­cial in­sti­tu­tions, in­clud­ing com­mer­cial banks. Our cur­rent cli­mate in the fi­nan­cial in­dus­try starts to suck a busi­ness dry be­fore it is even up on its feet to start earn­ing and re­pay­ing loans. I Higher tar­iffs and im­port du­ties on im­port prod­ucts that have lo­cal coun­ter­parts of same or su­pe­rior qual­ity or spe­cial in­cen­tive for the lo­cal brands that will make their over­all pro­duc­tion prices lower and thus re­tail price lower than im­ported coun­ter­parts. If the ad­min­is­tra­tion of

the day wants sup­port for lo­cally owned busi­nesses, the Ja­maican prod­ucts can’t be more ex­pen­sive than the im­ported ones. It doesn’t spell sense.

Con­trary to pro­claimed in­di­ca­tors of eco­nomic growth, most of what is re­ported is widely in­ac­cu­rate as there is a large per­cent­age of in­for­mal busi­nesses op­er­ated by ev­ery­day peo­ple, many of them with 9-to-5 jobs in pri­vate-sec­tor or­gan­i­sa­tions that ex­ist where? In that un­quan­tifi­able, in­be­tween space dubbed the ‘in­for­mal econ­omy’.

We sell on Face­book, In­sta­gram, ecom­merce sites, op­er­ate mini stores and sta­tions within larger stores, of­fer de­liv­ery or di­rect ser­vices to clients at their doorstep. We can’t ac­cess fund­ing or loans be­cause our busi­ness cap­i­tal is funded by our sav­ings from em­ployee salaries, and while we would love to step out and work for our­selves and dare to even cre­ate a job or two, the bar­ri­ers to start­ing and main­tain­ing a prof­itable busi­ness re­main firmly in­tact.

Join­ing this na­tional con­ver­sa­tion about eco­nomic growth and improving the busi­ness en­vi­ron­ment in Ja­maica through the pre­scribed and touted chan­nels proves ever chal­leng­ing and a bit of a turn-off. For ex­am­ple, the MSME Al­liance, which could and should serve the name­sake busi­ness sec­tor, charges an an­nual fee of $12,500 for mem­ber­ship. Let’s not even broach the beloved PSOJ, which re­quires you to be re­ferred by an ex­ist­ing mem­ber be­fore you can be even con­sid­ered for mem­ber­ship, af­ter which there are still fees to be paid.

Speak­ing from ex­pe­ri­ence, this leaves the av­er­age, well-to-do Ja­maican with the im­pres­sion that these as­so­ci­a­tions, and others, have be­come old boys’ clubs with one or two in­no­va­tion awards thrown in for good mea­sure. Their mem­ber­ship ros­ters read like an all-too-fa­mil­iar one in which the stal­warts con­tinue to reign supreme and seem far out of the reach of the masses.

These as­so­ci­a­tions lack a leg of men­tor­ship or con­di­tional mem­ber­ships to start-ups and cot­tage-in­dus­try busi­nesses. If our agenda is in­deed growth, lit­er­ally signed in ink by Gov­ern­ment, the EGC and pri­vate busi­ness as­so­ci­a­tions alike need to act in­stead of print­ing pretty words on pretty paper – plans that have been in the drawer for years and taken out on oc­ca­sion and made to shine like new again in the face of pres­sure from a man­date for de­liv­ered re­sults.

IAN ALLEN/PHO­TOG­RA­PHER

Nigel Web­ster, a blind crafts­maker, works his magic. Es­tab­lish­ment bar­ri­ers pre­vent many small busi­nesses from be­com­ing for­mal or­gan­i­sa­tions, ar­gues guest colum­nist De­bra Kerr.

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