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#BTColumn – Black insolvency

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by Ralph Jemmott

Two articles in another section of the Press on February 24, 2022, caught my attention. Both related to insolvency and indebtedness in the black business sector. I have contended for some time that Black Redemption will depend on two key development.

One is the restoration of the integrity of the black family, nuclear or extended and the other is black economic enfranchisement, black people’s ability to control their economic dynasty.

Without these, black people in Barbados and much
of the diaspora will go nowhere. Too many of our children will face conditions of financial and social insecurity and many blacks will continue to sell their labour to capital at very marginal rates.

Speaking on the Appropriation Bill 2022 on February 23, Supervisor of Insolvency in the Office of Insolvency, Esther Springer, noted that “a lot” of Barbadian businesses were functioning on the edge of insolvency.

This is perhaps not surprising given that historically many black enterprises in Barbados have tended to be undercapitalised.

The average would-be black businessman does not have large reserves of start-up capital and there is often an insufficiency of working capital.

There may also be some truth to the perception that lending institutions often appear reluctant to underwrite
small black enterprise, ostensibly because of an anticipation of failure.

Given the constraining effects of the Covid pandemic which has reduced consumer spending across a number of sectors it may not be surprising that small business black and white has seen a reduction in revenues.

What was more surprising in Ms. Springer’s speech was the admission that many small enterprises were poorly run because of an apparent lack of expertise and competence. She is quoted as saying:

“They are unaware of the ability to costs their products, their statutory obligations in relation to tax, to national insurance, the obligation if they are employers in terms of calculating vacation pay, and these are things that have strangled the business from the outset.” It is hard to conceive of anyone starting an entrepreneurship without a satisfactory understanding of the business obligations mentioned by the Insolvency  Supervisor.

It is clear that while many small manufacturers know how to make things, they often lack the financial and administrative knowledge about running a business.

As the enterprise develops and the administrative requirements become more complex, the business flounders, particularly in cases where the small business owner is reluctant to ask for or accept outside assistance.

One cannot help but feel that too often persons go into private enterprise for the wrong reason. Often the motivation is that they want to be their own boss and “do not want to wuk for anybody.”

This sometimes ignores the real challenges of establishing a personal business before it begins to show a viable profit. Another issue for small black business persons is that often they want to show prosperity before the concern is safely established. Hence they adopt a consumerist lifestyle that undercuts the viability of the commercial enterprise.

In treating to black business, one has to be careful about appearing to perpetuate a negative narrative in a manner that might be discouraging. Conversely, we will not
redress existential problems if we do not confront the issue frontally and honestly.

One answer to the dilemma is some form of business education. Springer herself suggests that the problems, “need to be dealt with even at the levels of our schools in terms of what we teach our children.”

Others have contended that business acumen is an innate talent which one has to be born with or otherwise learn at an early age from being raised in an entrepreneurial environment.

Entrepreneurship can probably be taught but as with so many other cognitive acquisitions, there are some who may never acquire the skill set or some whose personality flaws obviate successful learning.

An acquaintance whose enterprise collapsed went before the court when the business was being wound up. The presiding legal authority stated that he had never seen a business so badly run.

The ‘businessman’ has done a one year course in business management in Europe. In another case a business man running a small enterprise was in the habit of raiding the till to take his lady friends to lunch. When the business was booming, there were apparently many lady friends.

In Bajan parlance, it was felt that “he had a dollar bill”.  At the end of each month he had no idea what his profit margin was. The enterprise failed and the girlfriends quickly disappeared. On another occasion I was among a group of very young businessmen.

Being the only teacher in the group I kept quiet as the conversation turned to making money and talk about how much this or that person was worth. Later I concluded that the group sounded more like hustlers seeking to make a quick buck than adroit and serious entrepreneurs.

Another thing that has emerged is the fact that individual Barbadians are increasingly falling into debt. Springer spoke of persons with eight credit cards, using one card to pay off another.

Somewhere along the line we have become caught up in a highly consumerist culture. Maybe it was when we were approaching ‘first world status’. Now the whole country is in debt with fading prospects of paying it off even as we continue to borrow.

In one of his public lectures, Owen Arthur spoke of creating “a new entrepreneurial class”. Such a new creation would be a grand vision, a consummation devoutly to be wished.

For it to be meaningful, it would certainly have to involve a widening of entrepreneurship to include a greater percentage of the black majority. It is easy to talk of creating a Brave New World, it is incomparably more difficult to actually do it, particularly in these perilous times.

Ralph Jemmott is a respected retired educator.

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