By Kay Menzies
Many people speak of the private sector in generic terms, without seeing themselves as members of this group.
Investopedia breaks the definition of private sector down clearly, stating that it is “the part of the economy that is not state controlled, and is run by individuals and companies for profit.
“The private sector encompasses all for-profit businesses that are not owned or operated by the government. Companies and corporations that are government run are part of what is known as the public sector, while charities and other non-profit organizations are part of the voluntary sector.”
If you have a business that is intended to earn a profit, if you produce items for sale and/or sell a service or product, even if you are the only employee, you are a member of the private sector.
Why do we need the private sector? Here are just a few reasons:
Job creation. Collectively we are by far the nation’s largest employer.
According to the Statistical Institute’s most recent Labour Force Survey, for September 2013, 84.8% of employed persons (more than 108,000) are working in the private sector.
The Government of Belize, on the other hand, employs 11.6%, totalling just under 15,000 people.
Taxes. The private sector also pays the largest proportion of taxes to the government.
In the 2013/2014 budget, approximately $581 million, or 80%, of the total $727 million in estimated tax revenue is projected to come from or through the private sector. This does not include stamp duties, land tax, and several other taxes to which the private sector also contributes. It also doesn’t include PAYE, some of which is contributed by private sector employees.
New ideas and products most often originate with the private sector.
At lunch yesterday, did you ask your server for pepper sauce? Perhaps you clean your tools with a citrus degreaser.
And while you’re watching that new TV show on a local channel, do you snack on plantain chips or Belizean-made chocolate?
These are examples of businesses built from scratch by an entrepreneur with a new idea. Many of them failed at least once on their journey to success, but each of them had persistent founders who believed in their product and invested their savings, made loans, or found other sources of investment to make their dream real. Some are well established, some are still very new, but each is growing and more than one has taken a quality image of Belize abroad.
In a robust economy, the private sector seeks and makes investments. Lending to a business, or buying a share of it enables it to grow, often resulting in more or better employment. Individuals and businesses invest in other businesses for the purposes of growth, development and profit. Of course, credible investment alternatives must provide a higher return than bank savings, and that return should be proportionate to the risk the investor takes.
Export earnings. Obviously the productive and services sectors are especially important for this. Tourism, sugar and citrus are our biggest earners of foreign currency.
Other earners include shrimp, business process outsourcing (BPO) firms; the hair braiders who indulge visitors’ desire to have a ‘Caribbean look;’ the Belize musicians and other artists who work abroad, but bring their earnings home; the realtors who sell condos and other real estate to foreign buyers.
The importing sector also generates foreign currency earnings in cases where it imports goods to sell to foreign buyers from across the border, or to tourists. Of course, economic success requires exports to exceed imports by value.
Most businesses make charitable donations in different forms. Some give cash; some donate the products or services they usually profit from selling. However, schools, athletic teams, scholarship recipients, health causes, and many other entities that depend on charity will acknowledge that the business community does a great deal to assist.
Why do we need the private sector? Because a healthy, growing private sector that collectively contributes to its community in the ways described above also contributes to Belize’s economic development. Because the world’s most vibrant economies are built on a thriving private sector. And because the food, artwork and culture are irresistible.