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An enabling environment for doing business has been posited as a key determinant in creating an entrepreneurial society and facilitating economic growth.
It is a truism that Governments do not trade but rely on the business community to generate economic activity that will create yields in the society. These yields include inter alia, generating taxes from economic activity to finance the provision of social services, employment creation to engage school-leavers and realise economic gains from education investments and an overall improved quality of life for citizens.
Whereas Governments do not trade, they can stimulate or suppress economic growth. A quick scan of businesses in Barbados and some of our regional neighbours suggests that business facilitation is still a challenge for the private sector.
Improvements have been seen in the introduction of online payments for Government services and the digitalisation of processes including the application for services, licences and the provision of business data. These improvements, however, have not
kept pace with business and due to a lack of symbiotic integration with other units and processes, they often fail to generate the desired gains and result in added cost to doing business.
The World Bank in its last Ease of Doing Business Report (2020) showed that the Caribbean was one of the most difficult places in the world to do business, including for our indigenous entrepreneurs. In terms of the business environment, except for Jamaica and St Lucia, Caribbean countries including Barbados were ranked in the bottom half of 190 countries, globally.
The performance of Caribbean states in this report reflects the challenges in the business climate exacerbated by the overall slow pace of needed policy reforms. The business environment is characterised by inefficient and time-consuming business registration processes; limited access to affordable financing; excessive time taken for permits including those for construction and logistical and administration constraints to trading across borders. Quite simply, the hurdles are too many for businesses, especially micro, small and medium enterprises (MSMEs) who comprise the overwhelming majority of the private sector. Based on the challenges, the obvious question is whether there is a clear path ahead.
The answer is yes, though admittedly given the range of reforms required, the task can be daunting. The first approach is to recognise that the reforms needed cannot all take place at once. The Jamaican model may be instructive here, where this country
recognised the importance of reform and took a decision to focus on high priority areas in their reform agenda.
For example, in terms of policy reform, Jamaica focused on reducing the time to register a business as a specific project. They were able to reduce the time to register a business from 15 to three days. This is a good area for other countries to start helping firms to transition from the informal sector to the formal sector.
Secondly, finance is a big issue. In the Caribbean, the financial sector must do much more in having special-purpose financing facilities for MSMEs. Quite simply, accessing finance from most banks is a burdensome and time-consuming process with an
outcome that is not guaranteed. The onerous security requirements cannot be met by most micro enterprises. Hence, it is important to have special-purpose financial vehicles for soft loans and concessional financing in the Bds$10,000–$50 000 range.
Special financing can be accessed from institutions such as the Caribbean Development Bank (CDB) to precisely do this work here and across the region. This needs to be done in close concert with the existing financial institutions who must have a special window of financing for MSMEs.
Thirdly, many MSMEs are not participating actively in the digital revolution. Indeed, the overwhelming majority of small firms do not have a digital presence either for the local market or regionally. Consequently, it is vital that there are special-purpose programmes geared towards improving digital literacy, boosting digital capacity and supporting digital expansions of MSMEs. Strategic partnerships across business support organisations, financial institutions and Governments can be harnessed to introduced medium to long-
term programmes at the national and regional levels.
In summary, MSMEs are essential to fast-tracking recovery and building a resilient Caribbean. This however requires an enabling business environment where trade is encouraged and can be efficiently and effectively facilitated. MSMEs are the lifeblood of economies as they provide income, jobs and opportunities for our people.
According to the CDB, MSMEs make up between 70 per cent and 85 per cent of Caribbean
businesses and contribute between 60 per cent and 70 per cent of Gross Domestic Product (GDP). They also account for an estimated 50 per cent of total employment, and 40 per cent of businesses are owned by women, with up to 60 per cent ownership in some countries. Given that the data proves beyond any doubt, the importance of this sector and its significance to the region’s economies, it is logical that we need to give this sector the highest priority.
At the end of the day, we need to deliver jobs and opportunities for our people. They deserve nothing less.
The Small Business Association of Barbados (SBA) is the island’s non-profit representative body for micro, small and medium enterprises (MSMEs). Connect with the SBA: https://www.sba.bb/sba