Reinventing yourself is the here and now; formality, is the future.
The economic reactivation of the country involves including MSMEs, reducing tariffs, streamlining cumbersome procedures to obtain the Single Taxpayer Registry (RUC, for its acronym in Spanish), educating and raising awareness of the importance of formality. Regarding this, it is necessary to motivate entrepreneurs to join the formality and make them grow, especially taking into account the effect that the pandemic had and still has.
Within the framework of the Cerrito Forum event, in the panel “Barriers to formalization: the reality of MSMEs with the pandemic effect,” participated Luis Fernando Sanabria, general manager of the Fundación Paraguaya; Estela Maris Vázquez, from the Women’s Committee; Isaac Godoy, vice minister of Mipymes; and Bruno Defelippe, president of the Paraguayan Entrepreneurs Association (ASEPY), moderated by journalist Yehimy Alison.
Since last year we have often heard the word “reinvent ourselves”, which brought with it new entrepreneurs, who currently face countless barriers. Fundación Paraguaya, together with the Atlas Network –which works in more than 90 countries and with over 400 organizations–, is about to publish its latest study on informality in Paraguay. In this regard, Sanabria provided some data, such as that 65% of employed Paraguayans are informal, equivalent to 1.7 million people.
“The largest numbers are in rural areas and informality falls as companies grow,” he said. The sector where there is more informality is construction. In addition, informality occurs in the most vulnerable groups of people, such as the young, the elderly and women. These results were obtained from 10 cities, with 88 participants both formal and informal.
Sanabria concluded that more unemployment, sales reductions, business closures and reinvention were generated in the COVID context. In turn, he indicated that the motivations to undertake are in the need to generate more income and achieve economic independence, but that the barriers are still very notorious in the capital, such as in infrastructure, access to flexible credits, training, insufficient demand and low profit margins.
After these shocking numbers, Vázquez, a client of the Fundación Paraguaya and part of one of the Women’s Committees, came in to put a blanket of hope and inspiration to the meeting: “I understood that organized work brings us forward and I hope that very soon we can be formal, even though there are many barriers. With the work that we are doing from Los Bañados, we are planning to carry out trainings in bakery and other trades, to leave to the new generations more job opportunities”, she shared.
“We dream of creating an association of independent workers and have a website to offer different professional services, to guarantee quality and trust,” she added, pointing out that it is always difficult to hire, let’s say, a plumber, because people fear that if they let a stranger into their houses, they might get robbed.” Regarding formalization, she said that there are “many people who think: why should we do all that bureaucracy and spend all that money, if the Government is going to rob everything anyway. We have to formalize ourselves and demand that our money be invested as it should be”, she added.
For his part, Godoy admitted that for the Government there are two barriers: access to information and lack of coordination. “We need to forge alliances at the territorial level with subsistence micro-enterprises. Information must arrive faster, and tools must be available,” she added.
She mentioned that, for entrepreneurs to get their Unique Taxpayer Registry (RUC), for example, it is no longer necessary to have an accountant, as before. “Little by little we are cutting processes for these procedures and for the micro enterprises we are in the process of reducing tariffs. But I insist on one point: training must be a priority and show confidence,” she said.
DeFelippe insisted that it is urgent, from the Government, to simplify the formalization procedures to be able to sell quickly, because entrepreneurs, even more so in the context of the pandemic, are constantly looking for alternatives to sell and new channels to deliver their products. He said that all efforts have to be mobilized and that it is not only about isolated forces, “we have to put entrepreneurs at the center of the economic reactivation of the country,” he stressed.
“We have the tools to build, and we have a lot of work ahead of us. There have to be ways to make things easier to enhance formalization. It is a huge challenge, but we must demand what we need and show alternatives. In this sense, it is extremely important to be part of the unions and associations to channel doubts and promote support”, he concluded.
The speakers highlighted that motivation is essential and facilitation from the State for formalization should be combined with the different mechanisms for strengthening MSMEs. Formalization involves facilitating and making micro-enterprises grow, which demand to be formalized.