As expected, Barbadians will be in a reflective mood this week, reviewing their accomplishments during the year just ended and making resolutions for 2024. Adopting the old adage “if you fail to plan, you plan to fail”, the beginning of a new year is seen as a good time for reflection, renewal, and refocusing of one’s priorities, both at the individual and the institutional level.
Barbadians have already been warned about what to expect this year. Several noted economists are projecting a challenging year due to continued disruptions in the global supply chain with the concomitant impact on the availability and cost of commodities. The ongoing war in the Middle East threatens to further destabilise the supply of oil and gas, resulting in increased cost of fossil fuel in the local market. Bajans were therefore told to tighten their belts.
The earthquake yesterday in Japan and the threat of a Tsunami recalls the heightened seismic activity in the region at the end of last year and the threat of not if, but when the Caribbean will be affected by an earthquake and/or Tsunami. Natural disasters seem imminent for the region.
The projections all around look very grim. Planning therefore in such an environment appears challenging for the studious business owner, yet planning we must!
Business Basics sought the views of small business owners on their outlook for the new year and what improvements they desire to assist them in navigating this year. As expected, the overwhelming response focused on access to capital. This point is being made so often that onlookers may soon question the efficacy of this request in light of the many announcements of funding being procured by the Government. The undeniable fact is that increased capitalisation of Government’s funding agencies has not been the outcome of the administration’s acquisition of loans and grants. The first item therefore on the Wishlist for 2024 is increasing the funding pool available to the MSME sector.
The second item for business owners is the level of taxation on inputs and processes that retard the competitiveness of firms. Examples cited were the 2% tax on online transactions, the sewage tax on water bills, and the high cost of fuel at the pump, to name a few. These have been described as disincentivising businesses, in circumstances where the increased cost cannot be easily passed on to consumers. Small business owners opined that to encourage e-commerce as a new business model, yet taxing these transactions is nothing more than an oxymoron and counterproductive. Additionally, the agro-business sector, which demonstrated its viability and resilience during the COVID-19 pandemic, is burdened with a sewage tax that retards the growth and competitiveness of the sector.
With both telecommunications companies recently announcing increased cost of their products offerings, and the expected increase in the cost of electricity, the rise in utility costs will be a further burden on the firm.
A third area mentioned by small businesses was the regulatory environment. Persons are querying the status of the collateral registry, which was touted by policymakers as a salvation for the many who did not have the traditional form of security to access loans. After much song and dance this appears to have died a natural death.
The Approved Small Business Status which forms a key part of the Small Business Development Act was no longer seen as an incentive and, as such, firms were not applying for the programme. The Act has been under review for some time, maybe 2024 will be the year when its amendments will be finalised.
Then there is the issue of emerging industries. With the persistent debate on diversifying the economy, the question was asked, what are the new industries under consideration? Since the development of the financial services sector in the 1980s there has not been any sunrise industries in Barbados. Hopes were dashed for many who developed business plans and sought to access funding to participate in the announced renewable energy sector. However, owing to the limitations of the grid, this sector is now stalled.
The cannabis industry is clearly not a viable alternative for many, due to the issue of financing, among other concerns. The lack of financing from commercial banks to develop the industry, results in retardation of this sector.
Space does not permit discussion on the issue of business facilitation, the prohibitive cost and unreliability of inter-regional travel and the regulatory regime to access digital media like Google, YouTube and Facebook for small firms to trade via these platforms.
It may be a case of the chicken or the egg - either Government creates a regulatory framework for industries to emerge or entrepreneurs disrupt the status quo with new ideas and innovations. While the jury may be out, the reality is that in small open economies like Barbados, the regulatory environment is needed to drive the growth and development of business.
While 2024 may not be looking that bright, as the old folks say, where there is life there is hope. Against all odds, small business owners and the self-employed must rise to the occasion and champion their path this year. Access to money, markets and the development of management competencies should be pursued to realise sustainable businesses.
Happy new year to all!
