By Al Edwards, Business Co-ordinatorSMALL AND Micro Enterprises (SME) should form the backbone of the economy and it is crucial that they receive both financial and technical assistance. This was the theme of a seminar put on by Pan Caribbean Financial Services entitled GoJ/EU MicroEnterprises at the Knutsford Court Hotel in Kingston on Friday.
Addressing the seminar, Pan Caribbean Financial Sevices vice-president, Anya Schnoor, said that the small and micro-enterprise sectors are primarily hindered by lack of financial and technical assistance products. She noted that the medium-size enterprises are more affected by an inability to find the right type of assistance to address specific needs.
Ms. Schnoor said, "The Micro Enterprise sector continues to represent a tremendous employment opportunity for numerous Jamaicans. At present there are approximately 475,000 persons living in poverty in Jamaica.
"The employment picture over the past 10 years has remained a consistent challenge. Although there have been year-to-year fluctuations, the national level of unemployment has averaged approximately 15 per cent, while the economy has recorded growth during the past two to three years.
HIGH COST OF CREDIT
"The structural problems underlying the country's inability to generate economic growth include the high cost of credit and an inadequately trained workforce. High levels of crime and violence further undermine efforts to promote investment, employment, and growth. Micro, small, and medium-size enterprises (SMME) need focus and tax incentives which would encourage the legitimacy of business in this sector. Although SMMEs are recognised by public and private sector organisations as key to development and growth, they remain under served.
"The small and micro-enterprise sectors are primarily hindered by lack of financial and technical assistance products. The medium- size enterprises are more affected by an inability to find the right type of assistance to address specific needs. In this age of globalisation, small and medium-size businesses must be prepared and have the tools to compete in the world economy.
TECHNICAL ASSISTANCE
"Through GOJ/EU programmes we hope to provide information to the small and medium-size sector about the various options available to them, not only in terms of loans but also technical assistance and planning, so critical to business development."
The Minister of Industry and Tourism, Aloun Assamba, was due to address this seminar but was unable to do so leaving a representative to stand in and delivered her address.
She said that the Ministry of Industry and Tourism has the responsibility for the small and micro enterprise sector and is intent on strengthening the international competitiveness of the sector and of exploring ways to integrate the productive capacity of the sector into the wider development of the country.
The text of her speech read: "The Government recognises that a holistic approach to the development of the sector through greater emphasis on technical assistance and support services alongside the provision of financial services is the only way sustained development of the sector will be achieved. In this connection MIT sees the following as the main pillars for the development of SME in an integrated manner.
Stable macro-economic environment
Appropriate institutional and regulatory framework
Access to appropriate financial services
Access to business development services
"We liken these pillars to a table with four legs. If one is missing it is difficult for the table to function properly."
The seminar's special guest speaker was the executive director of the Kingston Restoration Company, Morin Seymour, who said that in Jamaica, micro enterprises are defined as businesses operated by a person who either works alone or who uses unpaid family labour.
This is distinct from small businesses, which comprise firms that employ less than 10 paid employees. To emphasise his point on the importance of micro enterprises to the Jamaican economy, he said that in 1998 J. Hanna and T. Wilde did a study, which showed that micro enterprises represent the vast majority of the total number of business enterprises in Jamaica and about 25 per cent of the non-governmental and non-agricultural labour force.
It is a significant segment of Jamaica's economy, representing about 13 per cent of gross output in 1996.
The sector has a total estimated sales of $69 billion (US$2.0 billion) and has grown dramatically over the past 15 years to over 93,000 units in 1996 with a trebling of the number since 1983.
The sector has an average annual growth rate of over five per cent, well surpassing the country's overall GDP growth rate of less than two per cent.
In spite of this, productivity and income levels of most of the sector remain very low and the majority of the nearly 400,000 people in households dependent on the informal sector and micro enterprise live below the poverty line of US$1.76 per day.
DISLOCATIONS
In their study, Hanna and Wilde observed the need for support. In the absence of support for the sector this trend is unlikely to change and will most likely worsen as dislocations in private industry and the public sector derived from heavy international competition and structural reforms force more and more people into informal economic activity.
Mr. Seymour called on the Government to play a more active role in helping small and microenterprises and for the Jamaica Business Development Centre (JBDC) to become both a more efficient and effective body.
Pan Caribbean's vice-president for corporate banking, Edward Atkinson, said that many SMEs will now be eligible for a line of credit and that the creation of a new venture capital fund has been proposed and will be presented to the minister very soon.
With many small and micro businesses borrowing from many financial institutions with no track of who is lending to whom, the case for a credit bureau was made.
