Small and medium enterprises (SMEs) account for roughly 85 per cent of all businesses in TT, contributing at least 30 per cent to the nation’s GDP. Despite its contribution, this sector is still very much exposed to global shocks and hazards, such as supply chain disruptions, power outages, cyberattacks, the effects of climate change and other potential shocks.
These are the findings of the Employers’ Consultative Association of TT (ECA) in a report – Perspectives on Business Resilience in Trinidad and Tobago, launched virtually on Wednesday. The ECA, through surveys and interviews among its 700 membership with agencies such as the Ministry of Trade and Industry, Nedco and UTT, identified some of the main challenges facing the SME sector and its preparedness to face disasters and shocks.
It found that, very often, SMEs do not have sufficient plans in place to face hazards, shocks and changes that may come their way. The ECA suggested that an updated policy for SME resilience which focuses on collaboration with the public sector is needed.
Just like big businesses, SMEs were battered by shocks over the last three years, against the backdrop of the covid19 pandemic, which affected supply chains to TT, access to finance and higher inflation rates among other issues.
In its survey, the ECA asked businesses about the hazards they faced. It was no surprise that 27.6 per cent of respondents identified pandemics and epidemics as among the main hazards out of 16 options presented to them. The second highest identified hazard was utility outages, (14.2 per cent) followed by ransomware and cyberattacks (10.2 per cent).
Businesses that listed its own hazards included inflation and pandemic-related vaccine hesitancy.
The ECA found that almost half of the SMEs surveyed (48 per cent) were hit with at least one, and up to three major hazardous events in the past 24 months. About 30 per cent, mostly in essential and professional services, were able to maintain operations by pivoting to remote work during lockdowns and said they faced no major hazards. About 12 per cent – mostly from the manufacturing sector and the accommodation and food service industries – said they were constantly under fire from hazards.
Despite identifying these hazards, the ECA found that not much is being done in the SME sector to buffer against such potential disasters. The report revealed that 22 per cent conducted a risk assessment, 12 per cent have developed recovery plans, 20 per cent have developed a business continuity plan and 30 per cent developed an emergency response plan. But 15 per cent did not have a plan at all.
The report said most respondents that had a positive response came from an industrial-type sector.
The survey also indicated that while half had access to contingency funds the other half either did not (30 per cent) or didn’t know if they did (20 per cent).
It also showed that there was only a 17.5 per cent collaboration with peer organisations to exchange risk-related information and share early warning systems.
“Apart from the lack of awareness of the importance of developing business continuity plans, SME access to finance and insurance are key impediments from focusing on this area of business,” the report said.
It added that while a government-enabling environment of SMEs is robust, it is not well directed or co-ordinated which results in overlaps in the delivery of service and a lack of collaboration.
“There is no overarching SME strategy/policy that has business resilience embedded in it, mapping out the roles of the various actors. There is a need for significant capacity building among both SMEs and government agencies with regard to business resilience,” the report said.
The report's recommendation is that the ECA should step in to ensure that businesses are resilient.
“The proposed role will require a concerted effort on the part of the ECA to deepen the engagement with its members and the wider business community by enhancing its business resilience training infrastructure and providing fearless advocacy for targeted interventions to help build business resilience capacity among SMEs.”
The report said for that to happen institutional strengthening support from the ILO and other bilateral and multilateral development agencies is needed.
“To this end the ECA should seek to develop a forward looking, robust resource mobilisation plan to secure the requisite human and financial resources required to fulfil the heightened role and meet its objectives.”
The report added that there was a need to enhance the role and function of government in collaboration with industry bodies to take the lead in strengthening the business resilience among SMEs. It said that there was a need to scale up the ODPM’s awareness building campaign on the benefits of being prepared, and a need to increase the TT Bureau of Standards’ community engagement with the ECA.
The report also said there was a need for more business resilience advisory services to SMEs.
“The ECA should establish a consultancy service for SMEs as an offshoot of the SURE (Sustainable and Resilient Enterprise) training programme, enhance the role and function of Nedco and other financial institutions in promoting business resilience among SMEs, urge Nedco to offer business resilience financing products and services to SMEs and strengthen the capacity of Nedco to incorporate BCP into their feasibility assessments of SME loan applications through the enrolment of its front-line staff in the ECA-SURE business resilience training programme.”
The business resilience boot camp – one of the programmes created by the ECA to safeguard against crises – was identified as the perfect programme to assist SMEs in facing hazards and changes in the shifting business landscape.
The course as explained by Denise Caesar, one of the teachers of SURE, said the programme is designed to equip businesses with the tools to lead in a crisis, identify risks and opportunities that can affect sustainability, develop a capacity to identify and assess important functions and strategies to keep businesses agile, engage stakeholders on sustainability strategies, building and nurturing a sustainability culture and creating sustainability strategies.
“Think of your business resilience as a muscle that you can develop and strengthen. This resilience muscle allows you to navigate through challenges, adapt to new situations and thrive,” she said.
She said leaders are needed to guide businesses through turbulent times. She said the programme teaches leaders to make tough decisions and inspire teams to steer the ship through turbulent times.
Business ecosystems that the programme exposes leaders to will also allow them to develop functions so they could build a well-rounded and robust ecosystem that could withstand shocks and identify potential hazards.
Presenter Ronald Ramlogan said the report and its findings should serve as a call to action for SMEs and its stakeholders to place a higher focus on business resilience.
“Specific attention should be made to strengthening the engagement of the financial services sector and government bodies. There should be stronger interdependency between the utility sector and SMEs. More engagement and collaboration between the SMEs and stakeholders is also needed and more capacity building and applicable guidance for SMEs is needed,” he said.
The full report, policy suggestions and details on the business resilience boot camp can be found on the ECA's website.