Small businesses need the local market

May 03, 2019 Features / Columnists, Peeping Tom

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The Ministry of Business, quite rightly, was keen on encouraging local businesses to go international. The Ministry even organized an exposition, exclusively for export-ready businesses.
Unfortunately, the response to that exposition has been below expectations. And therein lies an important lesson for government in its attempt to prepare Guyanese businesses for the export market.
The domestic market limits the prospects of growth for small and medium-scale businesses. And this is the main reason why the Ministry of Business has been pushing for export readiness of local businesses.
The problem which the government does not recognize is that access to the domestic market is necessary to allow for the development of export-ready firms. Research has long established a correlation between domestic demand and export competitiveness. In other words, the domestic market prepares you for international competition.
Unfortunately, there are numerous instances where the domestic market is closed to Guyanese small businesses. These businesses simply cannot access that market.
There is in our law books a requirement for 20% of government contracts to be allocated to small businesses. But all kinds of obstacles are being placed in the way of implementing that legislation. The result is that local businesses are not being provided with the opportunities they need to become export-ready.
Without the benefits of the domestic market, small businesses cannot become effective competitors internationally. This is something which the government needs to recognize.
The government signed a contract with Exxon Mobil with weak provisions for local content. It has since promised local content legislation. But the contract with Exxon supersedes any future law; it is those laws which have to be made compliant with the terms of Exxon’s contract and not the other way around.
And right now the hog’s share of business opportunities in the oil and gas sector is being gobbled up by the Trinidadians who have more than one hundred years advantage in that sector and who are using this edge to dominate the opportunities in the local oil and gas sector.
When the opposition United National Congress promises to create 50,000 jobs in that country, it knows that much of these jobs will come from Guyana. It knows that Trinidad will use the export-readiness of its businesses to dominate the emerging market in Guyana.
Guyana has no policy in place to support its local manufacturers. On Tuesday, this newspaper published that the government had procured exercise and other educational books, which can be manufactured locally, from Trinidad and Tobago. If Guyana has the capacity to produce the books, then why not encourage for the books to be published locally.
Right now, we have a situation where persons are buying from local suppliers and reselling to the government at a mark-up, when the same government could have bought directly from local suppliers.
The Ministry of Education must clarify whether any arrangement it has for the external publishing of exercise and other books, was tendered. It is important for the Ministry to clear up any doubts as to the basis upon which exercise books and other school books are being printed overseas when the same can be done locally.
The government must allow for local suppliers to tender; and its tender evaluation process must factor in some form of encouragement to local businesses, including the government owned printer which is capable of supplying exercise books.
Local printers are at disadvantage when it comes to competing with foreign firms. The local businesses have to source all of their raw materials. We do not produce ink we do not produce paper and our cost of electricity is prohibitively high.
And no one is suggesting that small business should be given an unfair advantage over their foreign competitors. All that is being suggested is that local manufacturers, including the state-owned printer, be allowed to tender for the production of school books and other local educational material. This is all that is being asked.
If local manufacturers feel locked out of the manufacturing sector, they will never be encouraged to become export-ready. The domestic market, though small is needed to nurture small producers until they are in a condition to compete internationally.
The other issue is why Government has to procure exercise books at all. Why cannot a company such as Exxon Mobil, one of the biggest oil companies in the world, as a good corporate citizen, agree to supply every Guyanese child with a dozen free exercise books each year?
If it could find US$10M from its Trust Fund to give to Conservation International, it can damn well invest in the education of Guyana’s children by providing them with free exercise books, locally produced.

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