Contracts under $30M set aside for small businesses from next year

Dec 09, 2018 News

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By Kiana Wilburg
From January 2019, small businesses will be able to benefit from all contracts under $30M. This was recently announced by Business Minister, Dominic Gaskin.
The Alliance For Change (AFC) Parliamentarian said that this is part of the Small Business Procurement Programme which is aimed at creating more opportunities for small businesses. This move by the Minister is part of efforts to comply with the nation’s laws, which state that small businesses should have access to at least 20 percent of Government projects.

Specifically, Section 11 (1) of the Small Business 2004 Act says, states that “The government shall use its best endeavours to ensure that at least twenty percent of the procurement of goods and services required annually by the government is obtained from small businesses.”
Gaskin noted that contracts will be granted to businesses provided that they have the capacity to execute the works needed.
“The Government is aware that there are many areas in which this set aside (of $30M) will have to be waived because there are no small business suppliers in certain fields. Government is also aware that the even if all the procurements less than $30M were to go to small businesses, it still may not amount to 20% of total procurement.”
The Business Minister added, “This programme is so important that it must begin and we must start collecting the data to show what percentage of Government procurement is going to small businesses so that we can make annual adjustments going forward until we hit the 20% target provided for in the Small Business Act of 2004.”
Gaskin said that capacity building is a very important component of the programme and the Small Business Bureau will be supporting businesses in this regard.
He said that the creation of a framework for sub-contracting to small businesses by the prime contractor is also being worked on.
If this can be achieved without clashing with the nation’s procurement laws and other best practices, then it would be something that will be considered to improve procurement opportunities for small businesses, he added.
SBB REPORT
The latest report of the Small Business Bureau (SSB), which was laid in the National Assembly last July, also called for more Government contracts to go to small businesses.
The Bureau pointed out that the Procurement Act (2003) provides for this. In fact, it met with representatives of the Ministry of Finance, Ministry of Business, the Small Business Council and other stakeholders to implement the provisions set forth in the Act.
However, the report noted that there are concerns relating to some contrasts between the Procurement Act (2003) and the Small Business Act (2004), which will require constitutional amendments.
SBB has to ensure a guarantee and commitment of 20% Government procurement from small businesses.
“Nevertheless, discussions will continue to ensure the smooth implementation of the Procurement Act, which will provide an opportunity for small businesses to be guaranteed, access to government contracts.
“While work is being done on the development of the Small Business Procurement Policy, the Small Business Bureau encourages, ministries, and other government agencies to buy from small businesses,” the report noted.
Further, the report highlighted that entrepreneurs in Guyana can be classified as necessity entrepreneurs, that is, individuals that are pushed into entrepreneurship because they have no better alternatives for work, reflecting the scarcity of decent wage-labour opportunities in the economy.
However, the report noted that despite the importance of entrepreneurship, there is an absence of a National Entrepreneurship Strategy or direct policy to support entrepreneurship.
The report noted plans to start preparation for this National Entrepreneurship Strategy.
During reporting period, the SBB stated that it continued to administer the Micro and Small Enterprises Development (MSED) Project resulting in the approval of loans for 63 businesses, which amounted to $237,743,000.
Under the MSED programme, the government of Guyana provides small business grants of $300,000 maximum, to small businesses. This is mainly provided for start-up businesses, but may be extended to existing businesses based on their needs.
The Grant Committee also approved 73 grants totaling $21,900,000. SBB noted that through the grant scheme and mutual guarantee scheme approximately 373 jobs were directly created and sustained.
According to the report, the SBB also established training agreements with several partners.
“Through these arrangements coupled with internal resources, 1,353 persons were trained across Guyana, in various areas including business management fundamentals and hands-on technical skills training,” the report notes.
Among the recommendations was for more fiscal incentives for small businesses. These incentives, according to the SBB, play a pivotal role in the strengthening of the country’s economy by boosting the growth of the small business sector.
The report highlighted the need for tax breaks for start-up businesses for at least five years of operation and reduced duty concessions for small businesses.
The report also noted internal efforts being made to serve clients better.
Based on the report, a review was done on the governance model employed by the SBB to ensure effective management both in its external engagements and internal management practices.
The report noted that the review and strengthening of an accounting policy and procedure manual to assist in strengthening the governance framework of the Bureau was undertaken.

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