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The Small Business Procurement Programme under which firms designated small businesses will have access to 20% of state contracts in designated areas was supposed to come into full effect in 2019. While small business owners in Guyana still await the implementation of this programme, business giants in Guyana mostly represented by the PSC and GCCI continue to aggressively push for legislation that will allow their companies to benefit from the economic development boom that is certain to accompany the expansion of the oil industries here in Guyana.
A common interpretation of local content describes a policy that encourages the supply of input into the local economy through transfer of technology, the creation of local employment opportunities and increasing local ownership and control. The urgency in pushing for a local content policy reflects the interests of mostly entrenched local businesses who are enthusiastic about fully participating in the current and future economic development created by the new oil boom in Guyana.
Small business owners in Guyana though, still await a little local content of their own. They have not yet been able to benefit from the planned 20% set asides and though licensed and equipped with the relevant skills and talent, many of these business owners often do not have access to the capital necessary to take advantage of even medium sized contracts, in an environment where government and private sector accounting departments process payments in a painfully slow, time wasting and often humiliating process. A process which involves small contractors showing up, calling and pleading for reliable status updates on when payments for services already rendered will be made available.
For a small business person in a cash based society like Guyana, cash flow is critical. Entrepreneurs must juggle payments to staff and other operational expenses which are dependent on receipts for services rendered. Receipts which often average 60 days and can take as long as 6 months before they are able to credit these payments to their accounts. Small business owners often survive by “digging holes to fill holes” because of the unpredictable and inefficient payment processes in place today.
Interestingly, there have been cases reported in the media of large contractors who routinely receive advance payments on major projects and who often times, did not complete these projects, did not complete these projects on time or did not complete the projects to the satisfaction of the Guyana taxpayers who often foot the bills or who will be required to repay the loans and interest used to fund these major projects.
Advance payments for smaller contracts is not a usual benefit available to small business owners, a group especially vulnerable to cash flow issues and more in need of even partial advance payment to help them to capitalize major projects.
The thunderous roar of the international business giants who will enter the Guyanese market are not to be feared, and certainly not to be feared simply because of their size, resources-HR or Financial, their vast global networks or their well trained people. A significant advantage to international companies is their strong business cultures which were often honed over decades of global experience. Cultures which almost always include in depth research and analyses into developing countries in which they invest. Cultures which insist that they hire the most competent employees who understand their clear goals and objectives and who consider environmental variables in their ongoing decision making. Cultures which embrace the investment in training employees, providing competitive wages to employees and empowering their talented employees to make the necessary decisions that will allow for profit maximization in risky markets.
Even as the larger local businesses in Guyana lobby for local content protections, they must take active steps now, to ensure that they make themselves globally competitive. Local businesses must innovate and upgrade their respective areas of expertise. They must hire bright employees, train them well and then empower them to compete globally or to add value to partnerships with the foreign companies in Guyana.
Guyana’s local content policy legislation must also articulate very clear set asides for small businesses and historically economically disadvantaged groups in Guyana. Women, Indigenous citizens and small business owners must not be left out of the projected economic boom in Guyana. The local content policy must also clearly address how these historically economically disadvantaged groups will benefit from the economic boom. A persistent concern is that the local government policy draft will make significant economic considerations for mainly large, already wealthy, business owners in Guyana. It is our belief that the policy must also specifically mandate how business opportunities will also be allocated historically under-represented business entities, through subcontracts and service agreements with large local or foreign companies.
Absent this direct intervention, what the PSC fears will happen to its members–that is, the domination of large industries by foreign companies, will be a reality of those small business owners who are still struggling even today, to benefit from the 20% government contract policy. More directly said, large Guyanese businesses will become larger and wealthy Guyanese businesses will become wealthier; while historically economically disadvantaged groups like women, Inidigenous business owners and small business owners will continue to be left out in the [economic] cold. Affirmative action must be taken to engage, empower and capitalize small businesses or the gap between rich and poor will continue to widen in Guyana. Guyana’s local content policy must be inclusive and considerate of all groups of Guyanese citizens.
