ONE of the consequences of the so-called Free Market System is the extent to which small firms and business entities are squeezed out of the system through unfair competition with larger entities.

Evidence abounds that the larger entities are able to muster the resources needed to bid for large Government contracts — something smaller contractors are unable to do. In Guyana, this practice is most widespread in the construction sector and in some areas, such as the provision of drugs to Government. The outcome is, of course, growth of monopolies, whereby a handful of contractors get access to most of the contracts and smaller contractors are marginalized or forced to leave the arena out of frustration. In the final analysis, this contributes heavily to the ever widening social and economic gap in the country.

While this complaint has been around for a long time, it escalated over the last two decades when political cronyism in the tendering process exacerbated the already uneven tendering process. Attempts by the then Opposition parties to reform and democratize the procurement process were frustrated because the then Government did not agree with the reform proposals.

It is therefore not surprising that the current Government has been under pressure to hastily do something to correct that situation. After all, we do live in a country where it is generally accepted that one of the major functions of Government is to protect the weak against the strong.

Many were encouraged when Finance Minister Winston Jordan, in his budget presentation last year, announced that Government intended to invoke a little-known provision in the Small Business Act, enacted in 2004, which mandates that 20 percent of all Government contracts should be awarded to small and medium size businesses.

In the excitement generated by the immediate post-election environment, many of the stakeholders did not latch on to the Minister’s announcement. Some may have missed it entirely, while others may have thought that it was mere rhetoric. After all, this provision was there in the law for eleven years.

Whatever the reasons, the issue was revived this past week when Minister of State, Joseph Harmon, made a similar commitment during a meeting with executives of the General Association of Contractors of Guyana. The Minister was quite emphatic: “If the country gives out $10 billion dollars in contracts per year, 20 percent of that should go to small contractors.”

He is reported to have assured the contractors that the Government is also taking a “fresh look” at the rules that determine qualifications in the tendering process, and that his Ministry would collaborate with other Ministries, such as the Ministries of Public Infrastructure and Business.

Guyana Chronicle welcomes this announcement. Activating this “affirmative action” is necessary and long overdue. We are all too aware of what this means for economic democracy in Guyana. Not only would small contractors get much-needed work, but we feel that more poor men and women in our diverse communities would gain employment, as it is well known that the identity of the contractors often determines who the workers are. In other words, the more diverse the awards, the more diverse the beneficiaries are likely to be.

Now that the Government has made its intention known, the smaller contractors would have to get their houses in order. It is heartening to see that they have organized themselves into an association. They and other stakeholders would have to ensure that the cronyism that has characterized the larger system does not ensue in this area.

Government has to guard against falling into that old trap. Perhaps, it should take a look at the reforms being enacted in Antigua and Barbuda, where the Government in that sister CARICOM country has put provisions in place to prevent individual Ministers from using contracts as a form of personal and political patronage.

The small contractors would also have to avoid the “crab in the barrel” mentality that has long worked to the disadvantage of small entities. While small contractors must be guaranteed a piece of the pie, this practice must not benefit only certain small contractors. If a hierarchy is developed among the contractors, then it defeats the purpose of the initiative.

The Government also has to impress upon the contractors the need to avoid scamming the State. There should be zero-tolerance for all rogue contractors, big and small.

Finally, the vexed question of financing for the small contractors has to be addressed if these contractors are to take full advantage of this new opening. There is dire need for at least one new banking establishment that makes credit available to small contractors.