Unlocking Opportunity in Scotland: Lessons from Jamaica and Beyond

Ordinary people can do amazing things when opportunity is available, and the environment encourages entrepreneurial activity.

Lying stretched out on a Jamaican sunbed, I recognised the approaching voice: “sea-gars”, get your “SEA-Gars”. Those unforgettable piercing tones had broken my peace 10 years before, on that very same stretch of beach.  Unlike myself, Mr Cigar didn’t look a day older as he pounded through the sand, laden with goods. I never saw him make a sale back then but he was obviously making a living through his sustained vocal effort.

My interest was piqued.  Particularly when I lay there reading The Money Kings by Daniel Schulman. This fascinating book examines the pedlar origins of the United States banking system. Could traders like our beach vendor become powerhouses in the Jamaican economy? What lessons can Scotland learn from 'Pedlar Power'?

We tend to think of Goldman Sachs and Lehman Brothers as the titans of Wall Street but these banks have/had very humble origins. Their Jewish founders hailed from a nineteenth century Germany where certain professions and city access were often blocked to their religion; trading goods was one of the few open occupations. When opportunity beckoned across the Atlantic, they took with them both an eye for a deal and keen business minds.

Marcus Goldman started with a horse drawn cart, flogging goods around Philadelphia where he later opened a shop before moving to New York. From there he brokered IOUs, then commercial paper and, after Sachs joined, moved into investment banking. The firm now employs 45,300 workers with annual revenue of $46bn.

Henry Lehman also peddled round the doors of Alabama before opening a small shop. Debts were often settled in cotton, and it wasn’t long before trading cotton became more profitable than their shop. It was the same with the shiny metal they accepted for payment in California during the gold rush. They worked their way from lowly pedlars to becoming commodity traders. Before the bank’s crash in 2008, Lehman Brothers paid the wages of 26,000 staff.

This patten of starting small and ending big should be familiar to many Scots. Italian immigrants peddled ice cream and produce before opening chippies (my grandfather was the best frier in the Grassmarket) then restaurants. The mighty trading company Cargill had tiny beginnings, when the son (William Wallace Cargill) of a Scottish sea captain opened a small store in Iowa. He couldn’t fail with that name.

I’m not suggesting Pedlar Power as a way to get the Scottish economy moving. Not at least in the form it took at turn of the century. But ordinary people can do amazing things when opportunity is available, and the environment encourages entrepreneurial activity.

Modern examples include: Duncan Bannatyne (started selling Ice Cream, now worth over £300m); Mike Ashley (started one shop with borrowed money, now worth nearly £4bn); fashion tycoon Jens Grade started selling newspapers (now worth £240m); Tom Hunter started by selling training shoes out the back of a van (now worth £1bn).

How we encourage the next generation of Scottish business owners is too important a question to be left to Scottish Enterprise; every community should be asking how open they are to opportunity.

I live in East Lothian, which is probably the largest building site in Scotland, as the countryside gives way to 10,000 new houses.  We’re continually promised new shops and services but seldom see any. If affordable housing is such a necessity for these new schemes, where are the affordable small business units?

Local markets and high streets are an antidote to the large shopping retailers, whose only loyalty to Scotland is profit. Are traditional shops, famers markets or car boot sales growing or shrinking in number? I doubt the figures are even collected centrally but they are one way to measure new business openness. Sadly, every week the East Lothian Courier reports a traditional shop owner folding.

There is also a dire need to understand the impact and cost of this new cashless society on smaller traders.  Lighter payment processing options should be available, and the banks should be forced to provide them with accessible cash services.

Tax policy is a reserved power but tax bends economic activity considerably. The HMRC limit of £1,000 on personal trading, before having to register as self-employed, should be raised to £10,000. Equally, The VAT registration threshold should be upgraded for inflation to £103,000. Both these current low limits, set in Westminster, are clear disincentives to doing business in Scotland.

IR35 legislation remains a drag on fledgling IT companies.  Tax should encourage risk taking and experimentation for small businesses. I used to pedal IT services around many large companies as a self-employed contractor, before finding an opportunity to expand and employ others. I would not have taken that risk under the current IR35 tax regime that encourages contractors to think small.

Parts of the town where I live, Prestonpans, are some of the most deprived in Scotland. The industry and opportunities of old have gone and little has been done to connect people with the new. I know of no local person employed on construction of the giant wind energy transformer, rising in place of Cockenzie power station. The housing boom is subcontracted out to its back teeth and the Council have gone typically quiet on the promised apprenticeships. Opportunities do exist in Central and West Edinburgh but transportation options are being lost to green virtue signalling by Edinburgh Council.

Every time a 20mph sign goes up it pushes work further way. Every pothole raises the cost of commuting. Every road clogged continually, like the Edinburgh bypass, shrinks opportunities. A Scottish government war on the car, when there are few alternatives, is self-indulgent. Our economy will simply tank if the only consideration when making policy is the Tory Net Zero target (NB this was introduced by Theresa May). There needs to be a balance of considerations, with access to opportunity given appropriate weight. All over Scotland, major road restrictions are being introduced without any thought to the impact on employment.

Edinburgh also suffers from having an aging and remote financial market that’s difficult for new entrants to access. I recall meeting the head of Fintech Scotland when the quango was first launched and suggested they run a marketplace for new products. He looked at me as if I had two heads. I recognised the exasperation of Beeks Financial Cloud (see below) last week when they reported having no Scottish clients. Technology companies, like my own, can often trade successfully abroad and never have a customer here.

I’ll return to Jamaica later this year to catchup with those enterprising locals. Visiting emerging market countries can often provide more practical tips on how to expand our own. It’s not all about Angela Investors, Venture Capitalists, Techscalers and the Dragons Den. Making markets open and accessible matters much more to small technology businesses. So let’s all look at what’s going on locally across Scotland and question the volume of genuine open opportunities.