We knew that the COVID-19 pandemic was going to be a major disruptive force in our economy, we just did not anticipate that the damage would have been this deep and so prolonged.
There has been nowhere to hide from its dangerous tentacles. What has made the disease so utterly discomforting has been its unpredictability. Just when the scientific world made us relax with new suggestions that the pandemic was about to dissipate, we saw the emergence of variants that caused us to consider reinstituting restrictive mitigating measures.
One of the most heart-breaking revelations came recently from chief executive officer of the Small Business Association of Barbados (SBA) Dr Lynette Holder. She stunned us with the news that around 100 small businesses had folded during the pandemic.
The revelation from Dr Holder was a grim reminder of the critical role played by these micro, small and medium-sized enterprises (MSMEs), and their contribution foremost to employment levels and more specifically, the employment of women.
As individual entities, it may be easy to dismiss the impact of small businesses on employment and economic activity. However, cumulatively, MSMEs pack a powerful punch, and represent a critical arm of the economic engine of our country.
It is well documented that these small and micro firms, employing between two and 25 persons, represent the “backbone of regional economies”. They are credited with promoting innovation, generating new employment and contributing to economic growth and development of the Caribbean Community (CARICOM).
Often labelled as “fledgling” and “vulnerable”, small enterprises have proven that despite their persistent struggle to build resilience, they are credited with contributing to more than 50 per cent of employment in the country. In fact, Jamaican authorities have reported that small businesses there may be providing up to 75 per cent of employment opportunities on that island.
Yes. It is true that small businesses have been subjected to high failure rates . However, the COVID-19 pandemic has demonstrated to us that being a big business did not automatically provide these companies with insulation from the worst impacts of the disease.
Dr Holder revealed that “just from going around, you see businesses closed and from looking in the press. Last year we brought in interns to help do some data mining and they had to write around 100 firms off our database, either due to death or closures. That is a significant number to me, and we are very concerned.”
She added: “What you need to remember, each business off the list may mean two or three people unemployed. The character of small business is they are able to rebound so you see some re-engineering where people start up with something else. One of the ways this will not happen is if they retire altogether.”
The pandemic has not provided the kind of environment that would encourage growth, but small business owners, with very limited or no reserves at all, have learned to pivot and to do so quickly. These enterprises, however, have been hampered by a lack of technology to allow them to shift their business model in a way that adequately responds to the present circumstances.
“The reality is both the cost of doing business and the cost of living overall are high, and these are factors we are looking at. We are preparing a report for the relevant authorities . . . where we are looking at factors such as energy costs, as fuel affects every business.
The former Government Senator also broached a subject that few are prepared to: “to revisit the two per cent levy on foreign transactions, and I know Government was talking about removing the sewage tax from agricultural businesses. Plus, we need to address the difficulty in accessing resources.”
While we sing the praises of small businesses, we have to accept that far too many small business owners are not paying their fair share of taxes and prefer to operate on the periphery or the informal economy where they can evade taxes and other statutory obligations.
Given a choice, most of us would run from the tax man, but we can also witness what the state is doing with that tax income it is collecting from us. Small businesses must be encouraged to register and step into the formal environment where they can be included and respected as an important arm of the economy.
At the same time, the state must create an enabling environment where small businesses can grow and thrive.
