FEATURE ADDRESS BY HON. MANNIRAM PRASHAD, MINISTER OF TOURISM, INDUSTRY AND COMMERCE, GUYANA, AT THE SECOND ROUNDTABLE ON THE STRATEGIC PLAN AND COORDINATING MECHANISMS FOR SMALL AND MEDIUM ENTERPRISES, 24-25 OCTOBER 2006, GEORGETOWN, GUYANA

Chairman Mr. Kyle Jackman, Ambassador Lolita Applewaite, Ambassador Irwin La Rocque, Senator Sandra Husbands, Patrick Zephyr, President of Guyana Small Business Association, Delegates from the respective CCARICOM countries, Invited guests and Staff of the CARICOM Secretariat, Members of the media, Ladies and Gentlemen.

Firstly, I would like to welcome our overseas guests to bright and beautiful Guyana and to invite them to visit our resorts.

I am happy to be here this morning to participate in the Second Roundtable on the Strategic Plan and Coordinating Mechanism for Small and Medium Enterprises (SMEs).

I must first complement the CARICOM Secretariat for the initiative of developing a blueprint for addressing the development needs of SMEs.

I have noted that the objective of this Second Roundtable is to complete the work began at the First Roundtable held in Kingston, Jamaica over three years ago, through the finalization of a Five Year Strategic Plan, for the development of the SME Sector in CARICOM. It is a fact that small businesses are a powerful force for the reduction of poverty, and they generate significant employment, and contribute significantly to the GDP of countries in transition such as Albania, Georgia, Hungary Poland, Romania and others.

In Guyana, like other parts of CARICOM, it has been found that SMEs experience difficulties to access finance, information, appropriate technology, business services and other essentials for their growth and development. This Second Roundtable Discussion, therefore, must make it possible for all stakeholders who have an interest in the sustained growth and development of SMEs to develop a Strategic Plan and Coordinating mechanism for their success.

It is interesting to note that the First Roundtable discussion dealt with several issues affecting SMEs development, such as financing appropriate technology, information and communication technology, marketing management among others.

In the case of Guyana, the Government has recognized the abovementioned factors which need to be addressed, and has passed the Small Business Act, in 2004, to provide the legal framework within which programmes can be developed to provide the necessary assistance to SMEs.

The theme of this Second Roundtable which is “Focusing on the Need to Apply Innovative Approaches to Support the acceleration of SMEs” is a notable one. However, without the Legal and Policy Framework not much can be accomplished in moving the SME sector forward. The above named framework must first be put in place. With the required framework established, it is incumbent on us also, to listen to the concern of the SMEs, identify the obstacles they face and provide them with the required tools for them to grow, develop and to compete in an increasing global economy.

It is critical in your deliberations, in the finalization of a strategic plan for SMEs, to consider the design of appropriate regulations and procedures. Consideration must first be given to what impact present regulation and procedures are having on the growth of small businesses, with a view to making necessary changes if need be. Regulations must facilitate the activities of SMEs, rather than hinder them. The regulations and procedures used to register large business should not apply to SMEs.

I wish to make some brief remarks on the administration of the Legal and Policy Framework. A Legal Framework which is sound and supported by good policy through a consistent clear set of regulations, will never achieve their objectives, if they are poorly administered. It is therefore important that in administering the policy and Legal Framework for SMEs the following elements are present:

1. Transparency

2. Simplicity

3. Fair Treatment

4. Consistency and co-ordination

5. Communication

6. Decentralisation

i. The administration of the policy and Legal Frame work must be clear and transparent. Small business must know what happens with the information that is submitted and must know what right of appeal exists.

ii. Administrative procedures as they relate to Small businesses must be simple and easy to understand.

iii. Our treatment to small business must be fair and we must not seek to exploit them by any means.

iv. Administrative procedures must be consistent and well coordinated with other government departments.

v. Small business must know what is required of them and how they can meet their obligations.

vi. Small businesses are located all over the country. Administrative centres must therefore be provided at appropriate points where they can fulfill their legal and regulatory requirements.

Notwithstanding the above, I wish to comment on four other factors which are necessary for the growth and development of SMEs. They are:

1. Better business environment.

2. Technical assistance and capacity building.

3. Access to capital.

4. Access to information.

Better Business Environment

SMEs do not operate in a vacuum. They operate in a business environment determined by government policies, public and private sector institutions, physical infrastructure and other factors. Weaknesses in this environment impose major constraints to their development. Factors such as excessive demand for licenses, permit fees, burdensome taxes and lack of appropriate institutions present an inhospitable climate for Small Business. These and other factors must be taken into consideration in developing a better business environment for SMEs.

Technical Assistance and Capacity Building

Technical assistance and the building of capacity must be provided to SMEs. Technical assistance to SMEs is required in areas such as financial planning, quality assurance, marketing, human resource management and others. The needs of SMEs in the abovementioned areas will have to be assessed first, before the required assistance is provided.

Access to Capital

Access to capital is the main problem that face SMEs. Commercial banks and other financial institutions are reluctant to provide loans to small businesses which can not provide the required collateral. Innovative ways must be found to provide for the financial needs of SMEs. Two possible ways are to establish Loan Guarantee Schemes and Micro Financial Institutions. Through the Loan Guarantee Scheme government will guarantee loans which will be lent to SMEs, while the establishment of the Micro-Financial Institutions will provide loans at affordable rate to SMEs.

Access to Information Technology

Small business often lacks the awareness and skills to tap into the opportunities offered by the internet. Moreover, poor regulatory frame work, weak core infrastructure and networks are obstacles to be overcome in developing countries. The necessary legal framework and infrastructure must first be in place for SMEs to access the internet to be engaged in E-commerce. E-Commerce can help small businesses with small budgets find new buyers in overseas markets. Placement and fulfillment of orders, arranging of finance, accounting and insurance services and interaction with distributors can also be done online at a fraction of the Off line costs. Access to the internet must therefore be at an affordable cost.

SMEs must be looked at as important contributors to the economies of your countries and to the Region as a whole, therefore no effort must be spared in arriving at a strategy and coordinating mechanism for the development and growth of SMEs.

In closing I would like to encourage you to take full advantage of this opportunity for positive and fruitful deliberations.