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Tuesday, December 5, 2023

What should the government do to help small businesses to survive?

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By Basiru Cham

Government play many key roles in the Gambian economy, and these role impacts business activities in so many ways. Government is one principal customers to business in the country, government buys thousands of different products from business organizations, say, office supplies, office buildings, management and engineering consultancy services etc. many business in the country depend on government purchasing if not for their survival then at least for a certain level of prosperity. Total government expenditure last year alone was approximately GMD 12.99 Billion.

Government as a provider of essential services that help business activities to go smoothly. The government facilitate business activity through the services they supply, they provide high ways, the issuing of money, and statistical data on which to base business decisions. It also tries to maintain stability through fiscal and monetary policy. All these activities create a kind of stability that encourage business activities. Considering these government should take measures to promote small business and even encourage young entrepreneurs to have the confident and take risk to invest their time and other resources to enter in to business, but this can only happen if the environment is created. For these to be materialize I believe that government must act as a balanced regulator and a fair protector to small businesses within the country.

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Government as a regulator
The government regulates many aspect of business activity through administrative boards, tribunals and commissions, e.g. is the competition commission. Reasons for regulating business activities includes, protecting competitions, protecting consumers, achieving social goals and protecting the environment. Competition is crucial to a market economy and that is where Gambia is going, so government regulates business activities to ensure that healthy competition exists among businesses. Without such restrictions, a large company with vast resources can drive smaller firms out of the market. Gone are the days when a business will operate independently.

Measure that should be taken are, for example, drafting processes, procedures and platforms that that will guide the competition process. Allowing business to operate anywhere they wish within the country I think is very unfair, many businesses in all industry are taking the advantage of their size to operate at any location they wish, which can easily damage the small businesses that are providing the same product or services.

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A typical example would be in the restaurant industry, supermarket industry and the foreign exchange bureaus as well. Many business people in the Gambia always establish their business sometimes not going deep into identifying the best suit location. Question to answer, if there are 10 supermarkets within a 100 meter area how would be the competition? In the Gambia, we must unlock our thinking when locating our businesses to get the right help from government. “LUI SUMA WARSAK DINAKO AM”, people need to be oriented and sanitize when it comes to starting their businesses.

For government to help small business to operate smoothly and effectively the Gambia Competition Commission must be strong to address the basic marketing mix issues that bigger organisations used to drive out the smaller once, they should make sure that the competition process is well understood in all industries. Or establish what I mention earlier an administrative board, that will control the small business activities and allow them to enjoy some benefits from it, say, backing them in both experience and fund whenever it is a necessity.
World Bank studies have shown that regulations adversely impact small businesses, in four ways:
· Regulatory compliance puts a disproportionately large burden on small companies because they don’t have as much revenue to spread the costs over, as do large firms.

· Regulations make small businesses less competitive against foreign competition.
· Regulations add uncertainty, which keeps small businesses from investing in capital purchases, services and hiring.

· New regulations add complexity and often have unintended consequences.
So, for businesses to do well and have the required support from the government via the competition commission. As it is well explained in their mandate.
“The GCCPC is mandated by the Competition Act 2007 to promote competition in the supply of goods and services by prohibiting collusive agreements and bid rigging, investigating and controlling other types of restrictive agreements, monopoly and merger situations, and promoting understanding of the benefits of competition and related matters. The Consumer Protection Act 2014 mandates us to protect consumers from unfair and misleading market conduct, establishment of Consumer Tribunals to deal consumer complaints and connected matters. Finally, the Essential Commodities Act 2015 mandates us to jointly regulate in the interest of the general public, the importation, distribution and retailing of essential commodities in The Gambia, to ensure their availability at fair and reasonable price and connected matters.”


Strong legal protection of property rights is another requirement for a business environment to be conducive to innovation, entrepreneurial activity, and hence economic growth. Both individuals and businesses must be given the opportunity to profit from innovative ideas. Without strong property rights protection, businesses and individuals run the risk that the profits from their innovative efforts will be expropriated, either by criminal elements or by the state. The state can expropriate the profits from innovation through legal means, such as excessive taxation, or through illegal means, such as demands from state bureaucrats for kickbacks in return for granting an individual or firm a license to do business in a certain area (i.e., corruption).
Small businesses need this now more than ever.


Government as a tax imposer
We all know that tax is one of the major source of income for countries like The Gambia, but it doesn’t mean that they can impose anytime at any amount they wish. This will seriously affect the business sector most especially the small businesses.
Small businesses play a very important role in the development of the Gambian economy. The importance of small businesses cannot be underrated in the Gambia or any other country around the world however the size of that economy is, especially with regard to the creation of employment, innovation, uplifting the people’s standard of living, and the financial contribution to the growth of the country’s GDP. Therefore, imposing a high rate of tax can hinder and even stop interested entrepreneurs from investing into it. Lack of access to credit due to high price level that are brought about high tax level which is due to government intervention. This is indicated as a key problem for micro and small business enterprises.

The government should strategies in performing tax reform in the country aiming in transforming the small businesses through giving them the duration to establish before they start to tax the business. The government should come out with projects that will support the small businesses and perform tax reform in the country which will lead to more investment from the young people and those from the foreign zone. Through tax cuts will reduces the cost of production in a country hence making the products and services easily available and cheap. This will give chance for the entrepreneurs to increase investments and savings in the banks which will lead to reduction in interest rate this will also enable business people to borrow from the banks and involve themselves in the economic development projects. If there is tax increase it will limit them from engaging in much of the business due to increase in the cost of production which will lead to the increase in price hence the consumption level of the people will reduce as well.

Without any doubt the way tax collectors collect tax from small business is wrong and not convincing, most especially the corner shop those who are trying business for the first time. How on earth will a tax collector enter into a shop and automatically value the business and charge tax immediately without going through the records? Please do something about this.
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