A road to recovery and a bright, prosperous future for Guyana

Dear Editor,
“We want to build Guyana ripe with business opportunities…” was a part of the vision articulated in the Inauguration Speech made by President Ali during the inauguration of Guyana’s ninth Executive President.
The road to recovery, prosperity, and economic development in Guyana is steeped with many challenges.
Now that the debilitating elections impasse is over, the new Ali Administration faces a global pandemic, continued ethnic polarisation, a tattered national image, the need for border protection, climate change issues, high migration of the tertiary-educated, local business downturn, and an inherent mistrust by one half of the Guyanese population.
In a recent interview, President Ali committed to enhancing the Private Sector. The Private Sector forms the backbone of the economy in Guyana, much like in developed and developing countries. The Private Sector generates a significant share of employment and wealth creation. Although Guyana experienced reform activities over the past two decades, the Private Sector is still affected by several constraints.
An Inter-American Development Bank study in 2018 showed that 57% of small firms and 48% of medium-sized firms in Guyana were either stagnant or declining. A similar report showed that 70% of small and medium-sized enterprises in Guyana failed between 2013 and 2018, with the highest closure taking place in 2015.
One of the primary reasons for small businesses’ failure is the limited access to finance. Often, commercial banks in Guyana do not lend to small businesses, due to the inability of SMEs to meet the requirements to provide formal business statement and collateral.
Limited access to finance, small markets, and poor locations were cited for the high closure rate of SMEs. Only 8.7 percent of business owners had benefited from a university-level explanation. The small number of university-educated business owners may be directly related to Guyana’s 93% emigration of tertiary- educated persons every year; and this is the highest in the world.
However, SMEs share some responsibility in the lack of access to finance. More than 60% of SMEs in Guyana are not formally registered with the National Insurance Scheme, the Guyana Revenue Authority, and the Deeds Registry.
Additionally, a burdensome regulatory financial environment prevents high tech entrepreneurs from exploring new business models, according to Business Environment Reform Facility (BERF).
While the U.S reported that 300,000 small businesses that closed due to COVID-19 would not reopen, there is no reliable data available in Guyana to show how many companies closed permanently because of the pandemic, or even before the epidemic.
Harvesting and storing business data is an essential area that requires renewed attention from the new administration. Such information would be useful not only in the Private Sector and academia, but also in designing evidence-based decision policies and budgetary allocations for the Private Sector.
Before 2004, SMEs in Guyana did not receive any policy attention, until the Small Business Act N0.2 was enacted. This legislation essentially created the legal and regulatory framework for promoting the SME sector’s growth and development in Guyana. The Act established the Small Business Council (SBC), the Small Business Bureau (SBB), and the Small Business Development Fund (SBDF).
To restore and rebuild small and medium-size businesses that can survive beyond five years requires a new approach and policy initiatives that expand the scope of the legislative framework of the 2004 Act.
Creating an enabling environment for business development is critical for the growth and sustainability of SMEs. To build a robust and sustainable Private Sector, the administration must stem the tide of migration of tertiary-educated Guyanese, and attract Guyanese talent and investment from the diaspora.
To achieve greater performance in the Private Sector, President Ali promised to develop a collaborative and consultative relationship with the Private Sector and other stakeholders.

Sincerely,
Wayne Forde