Op-Ed: Harnessing the Power of Small Business in Jamaica
By Richard Kildare
It is a fact that micro, small and medium-sized enterprises are critical to the development of every nation’s growth. It is not a position that can be seriously disputed; MSME’s are a virtual powerhouse and one of the primary socioeconomic platforms that are used to convert national poverty into state prosperity.
Micro and small business are not “alien theory” to Jamaica. One must remember that during slavery we had enterprising slaves who nurtured crops in their spare time and were allowed to take their produce to the markets to sell. This assisted them in their personal endeavor and lessened the costs associated with the slaves’ living expenses to their masters. With such a rich business history it’s of no surprise that Jamaica is considered one of the more entrepreneurial countries by the Global Entrepreneurship Monitor Report.
After the abolition of slavery, the success of the Free Village movement in places such as Sligoville and Steer Town were based primarily on the former slaves’ ability to be successful in growing crops, animal husbandry and artisan activities.
These early Jamaican entrepreneurs had no desire to again work on the plantations. The independence, pride and association with freedom were so strong that the plantocracy had to seek alternative employees, thus the advent of indentured workers.
With that said, let’s look at some countries and the part that their small businesses are playing as it relates to some key economic indicators.
The United States’ Small Business Administration, a policy and development institution of small business organization reports that over 97 percent of all businesses are from the SME sector and they employ approximately 60 percent – 80 percent of all new jobs. India is home to some 26 million businesses — they produce 8 percent of GDP and employ 60 million workers — and are growing rapidly.
The small business sector makes up 97 percent of all of Taiwan’s established companies; they generate 28 percent of commercial activities and employ 77 percent of the workforce.
The Brazilian economy’s16 million small businesses contribute to 20 percent of GDP and employ some 60 million people, or 56 percent of the labour force.
The Economic Environment Report, presented in Hong Kong, although more dated, highlighted Singapore with approximately 103,000 SMEs accounting for 92 percent of businesses. They employed approximately 51 percent of the labour force in Singapore. Their manufacturing sector accounts for 15 percent of GDP, commerce accounts for 11 percent of GDP, with the service industry contributing 17 percent of GDP.
The European Union was quoted as having 19.3 million enterprises, of which approximately 98 percent are described as being SMEs. They employ approximately 75 million people. The study further showed that approximately 18 million enterprises employ fewer than 10 people. The European Union boasts that the Small and Medium size sector contributes to over 56 percent of private sector turnover. (Figures are quoted from the 6th Annual Report of the European Small Business Observatory).
In the United Kingdom, there exist 3.7 million businesses, or one for every ten adults. One in eight of the workforce, or 2.3 million people, are self-employed. This sector contributes over 52 percent of turnover while 90 percent of businesses employ 50 or fewer employees. Women are responsible for approximately a third of start-up businesses in the UK.
The report spoke of the Caribbean comprising 24 countries with a population of approximately 30 million people. The Caribbean is said to have well over 500,000 SMEs, of which two thirds employ less than ten persons.
Small businesses employ a large portion of the labour force, if not the most, in economies. They contribute to development, they are considered to be lead agents in innovation and creativity, they often compliment the productive capacities of large businesses and are critical to macroeconomic inflows.
Some of the strongest and most popular businesses leading the charge with innovation, creativity, employment, profitability and modern day solution-centered products like Microsoft, Apple, and ACER of global repute, Angostura Limited of Trinidad and Tobago, Barons Food of St. Lucia and our own LASCO, Sandals (ATL Group), Grace Kennedy and many others, all transitioned from garages or small ideas that have grown to be powerhouses and still growing.
Dr Gene Leon the International Monetary Fund Country’s Representative to Jamaica indicated in a function organized by the Small Business Association of Jamaica, The SBAJ Business Mingle on June 30 of last year that small businesses also contribute to a country’s growth through the development of skills in entrepreneurship. They also ensure the expansion of market activities, they utilize indigenous raw material, promote labour-intensive ventures and encourage export promotion and import substitution.
As we look to position small and medium size enterprises to engender start-ups, provide access to financing through non-traditional means, to provide a sound regulatory platform that will act as a catalyst to growth and to grow and transition into larger entities so as to be able to compete aggressively with international players, we must at all times remember that there is nothing small about small business. And Jamaican MSMEs can become an awesome super power.
Richard Kildare is an entrepreneur, business strategist, marketer and former banker. He is the first vice president of the Small Business Association of Jamaica. He can be reached at email@example.com.
Note: the opinions expressed in Caribbean Journal Op-Eds are those of the author and do not necessarily reflect the views of the Caribbean Journal.