The damage to the fishing sector from Hurricane Beryl in June this year is still being assessed. Understandably, there have been calls for boats and other equipment to be insured, for there to be levies imposed that can help to finance improvements in the sector and better access to financing for practitioners to invest in new equipment and capacity building.
Generally, what is required is the formalisation of the sector considering its importance to the lives and livelihoods of scores of Barbadians. The contribution to economic and social development will be easier quantified through formal systems of operation.
While this is ideal, administrators and policymakers in the small business sector know there will always be some level of informality in the sector. This must be accounted for in development planning. No economy will ever have 100% formalisation in its private sector; however, the goal should be to employ realistic strategies to ensure that business owners are incentivised to formalise their operations and that an enabling regulatory regime is in place to facilitate this.
The recent work therefore by the Western Fisherfolk Community organisation in partnership with the Division of Fisheries, the Small Business Association of Barbados and other stakeholders, must be commended. Not only did this team focus on delivering relevant training solutions to assist practitioners in the sector to build capacity and strengthen their managerial skills, they also looked pragmatically on how these business owners can mitigate risk and access development assistance available through formalising their operations.
For several weeks in July and August, representatives from the Barbados Revenue Authority and the COB Cooperative Credit Union, collaborated with the team to organised capacity building interventions for the island’s fisherfolk community. This initiative focused on providing assistance with two basic functions in business – registration as a legal entity and acquiring the necessary tax identification status, and the setup of a corporate account with a financial institution to facilitate better management of receipts and payments. Both the BRA and COB Credit Union are to be commended in this effort towards bringing a level of structure and formality to those operating in the sector. In the words of Churchill, ‘you should not allow a crisis to go to waste’.
This effort, though necessary, does not address the wider issue of a focused agenda on formalising aspects of the micro sector.
This was contemplated in the now defunct National Policy Framework for the Development of MSMEs. Appreciatively developed in 2017 to address the business environment at the time, some improvements are needed at present considering the many exogenous issues that have been affecting the economy. To be governing, however, without a policy framework defies best practice in governance and management. Using the rubric of SMART objectives, it is impossible to know what are the specific and measurable objectives for the sector and equally, to assess if the current action items are attainable, realistic or what is the timeframe for achievement.
To address the issue of helping firms to transition from informality to formal structures the Policy Framework portended a number of initiatives including, transitioning businesses through the provision of a set of relevant incentives; and the introduction of a data collection mechanism to enable evidence-based decision making, among other areas. The point on data collection would influence the cultural shift required in using data to inform policy and other critical decisions in development planning.
A review of the policy underscored that the regime sought to reduce the number of persons operating without legal status, not benefiting from the development assistance available and not captured in the overall reporting on economic activity.
One objective focused on the formalisation of micro businesses through the following policy initiatives:
- Facilitate an increase in the number of business registrations by providing an exemption from the first band of taxable income;
- Facilitate the ease of business registration through an online facility and the creation of a central repository of data on business registrations; and
- Business owners will be required to honour their statutory obligations, specifically as it relates to their National Insurance contribution, to retain the benefits associated with the business registration status attained.
Another objective highlighted the significance of data collection. Data on businesses within each classification will be collated annually through a centralised information management system. This will enable research to monitor evolving and existing industries and the associated economic activity, inter alia, size of the firm, structure, impact on resources (imports and exports), and industry financial performance. Other areas include additional information on the MSME sector useful in facilitating a timely implementation of policy and/or legislation and investment.
In a well-functioning economic system, an established centralised information management system to facilitate the annual collation of data on businesses would be in place to address the issues of programming and development for the sector.
The issues with the fishing community should be a wake-up call that some sections of the economy need intervention to formalise their operations. Had this been done, after the devastation caused by Beryl, an assessment of the impact on the sector could have been easier done relative to the level of insurance coverage in place, the capitalisation needed for recovery, and anticipated loss of economic activity during the recovery period.
A clarion call is therefore being made to bring a greater level of strategic focus to policy and programming in the small business sector.
