Eye on the Business Environment

The ‘32^nd Constituency’: the Entrepreneurial Ecosystem

Let’s be honest: There is little surprise that a newspaper column dubbed the “Business Perspective” will be talking about the Entrepreneurial Ecosystem. Practically speaking, it would be more of shocker if it didn’t. Thing is this, though. As we inch closer to November 11^th, it becomes increasingly important for this country’s business community—which we could “colourfully” give the epithet the 32^nd Constituency—revisit its own “manifesto”.

Generally speaking, we tend to think in terms of geographic constituencies, where voters are clustered in 31 zones from Corozal North to Toledo East. But we can take a little more liberal approach when talking about the “business constituency” that is stretched out across the entire country. As business people we vote too. And like any constituency, the ‘32^nd Constituency’ needs the government to effect beneficial policies.

The reality is that the country needs businesses. Picture what will happen if every micro, small, medium-sized business simultaneously decides to permanently shutdown. Immediately, we will have approximately 70% of workers joining the unemployment line. With statistics saying that Belize has just about 170,500 persons employed as of last September, which then suggests that roughly 120,000 persons would be out of work if such a hypothetical scenario plays out.

But it’s not just employees. Close to 90% of Government’s $1.2 billion in total revenues are derived from tax revenues (approximately $1.1 billion), of which almost 27% comes from taxes on income and profits. Roughly another 56% comes from taxes on goods and services, and just about 15% coming from imposts on international transactions. One could easily draw a line from any of those tax classifications to business activity.

But this connection between government revenues and business isn’t so hard to fathom in COVID 19 is it? Central Bank data for April to June in the current fiscal year shows that current revenues fell by roughly 37% relative to the last fiscal year. One need only recall the economic shutdown enacted in April to appreciate this correlation.

Finally, when one recalls what government revenues are used for—that is, paying teachers and other public officers’ salaries, fixing roads, building schools, and providing other government services including Food Pantry—it becomes hard to miss the need for the 32^nd Constituency in a mixed economy like Belize.

If businesses are clearly so important to the operation of an economy, then the logical next question is this: What is it that we need to do to make sure that we get as much healthy business activity as possible? Thankfully, the answer to that question isn’t a mystery. Simply put, it has to do with the Entrepreneurial Ecosystem, the domains for which are key determinants in how well your businesses will be able to perform.

One way to look at this ecosystem is by looking at the common pillars; namely, (i) Access to Markets, (ii) Human Capital/Workforce, (iii) Funding and Finance, (iv) Support Systems, (v) Regulatory Framework and Infrastructure, (vi) Education and Training, (vii) Universities as Catalysts, and (viii) Cultural Support.

Over the next few weeks the BP column will look more closely at these pillars for two conspicuous reasons: First, while the business environment has always been essential, the present pandemic-induced recession demands renewed focus if we are going to climb out of the current downturn in the shortest possible amount of time. Secondly, as a voting constituency in this country, the business community must voice its concerns in the lead up to the November 11^th elections so that all contesting political parties have a clear picture of the path to private-sector development.