Crime and corruption stifling business ecosystem in Jamaica — PSOJ President
Difficulty in accessing capital hindering SMEsSunday, July 07, 2019
BY ABBION ROBINSON
President of the Private Sector Organisation of Jamaica (PSOJ) Howard Mitchell says Jamaica has a large, informal Small and Medium-sized Enterprises (SME) economy due to the difficulty they face in accessing capital.
In an interview with the Jamaica Observer's Sunday Finance, Mitchell said the main reason why there's an informal economy in the SMEs sector is because many small businesses face challenges in accessing capital for growth and development.
He added that many SMEs are not officially registered with identification to pay taxes or gain access to the formal banking system, to be approved for loans.
“In that informal space, there is a lot of indiscipline and irregular activity,” the president said. “That irregular activity breeds a lot of money. Because [SMEs] are not registered, there is a tendency to pay people and that is a crime.”
He explained that as a marginalised group, many businesses may feel excluded from opportunities offered by financial institutions or business development organisations.
“When you feel excluded, you feel disadvantaged and you'll have a tendency to act individually and selfishly,” he said.
These activities, he believes, are only short-term opportunities that have long-term consequences, as it facilitates crime and corruption which ultimately stifles the business ecosystem in Jamaica.
“One of the first things we have to do in order to reduce indiscipline is to bring people into the system to give them the support structure that the system gives, to allow them to appeal to the authorities to fix their problems, and make them pay taxes, so that taxes can be used when we fix the corruption in Government.”
He added that as a business evolves and becomes successful, it becomes more legitimate and has the opportunity to enter the Jamaica Stock Exchange, where it will be heavily regulated but in an environment that fosters growth.
As for a collaborative effort between the Government, private sector, and the SME's sector, Mitchell said getting universities on board will allow business owners to improve services and products offered. SMEs will learn how to get, analyse, and use information, which will in turn boost productivity and contribute to the national economy.
He however emphasised that transparency is a key factor in creating a healthy formal ecosystem for SMEs. SMEs should offer transparency in business practices and with the State.
“For a successful society, we need to be more open in our dialogue, communication, and our information,” Mitchell said.
According to the PSOJ head, SMEs contribute significantly to the country's gross domestic product annually and collectively employ approximately 80 per cent of the labour force, yet they receive 11 per cent of private sector credit. PSOJ initiatives such as 'The Access to Finance Panel' and the 'SME Empowerment Workshops' are means to bridging the gap between SMEs and financial institutions.
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