Financing critical
THE issue of micro-financing is one that Caribbean countries must address to help build out their micro, small and medium enterprises (MSME) sectors.
That’s the view of Minister of Energy, Small Business and Entrepreneurship, Kerrie Symmonds, who lamented that it is an issue that has bedevilled policymakers in this region for decades.
“...We are challenged at the policymaker level with the demand to be able to finance people who are unskilled; the demand to be able to finance those people who are unemployed; bedevilled by the demand to finance those people who are even unbanked, and this is a CARICOM-wide challenge. Now, while we have seen this bedevil us in this region, the truth of the matter is that I think the conversation in the region has not been well served, because there has been evidence existing in other places of practices that we could have focused on, and tried to borrow from, with a view to shaping our West Indian version, thereof,” the minister said.
In this respect, he was referring to the Grameen Bank, a microfinance and community development bank, which was formed in Bangladesh, in 1986. Minister Symmonds explained that by 1995, 90 per cent of the loans financed from that bank were funded from income of previous loans. He said a “veritable revolving loan fund” started to emerge from a policy initiative based on trust.
“The thinking behind that is that you build independence, you offer technical support, and you offer peer support, what nowadays you would call B2B type of support. The business person helps the other business person, but the reality is that you are investing in a community that previously was bypassed, not underserved, but unserved in many ways with respect to opportunities for business creation,” he stated.
Minister Symmonds noted that this idea of financing MSMEs was missing from the conversation in the Caribbean, until when the current Government in this country introduced the Barbados Trust Fund Limited and the trust loan model.
He stated, “But what I think we missed was the type of partnership with the academic community that would have intellectually oxygenated the conversation nationally, and perhaps even regionally, and allowed us to start thinking in terms of what is it really that we can do to create the regional equivalent of what is a village bank.”
In this regard, he said there is a role for The University of the West Indies (The UWI) to play, as he said that MSMEs make up 90 per cent of the enterprises in the region and account for two-thirds of jobs.
“Why are small, medium enterprises so challenged, if in fact they are so critical? Why do they exist in a state of almost permanent contingency, if they are the heart of our economic livelihood? Where’s the answer, the solution to that question? The International Finance Corporation of the World Bank will posit the view that the key to that answer lies in access to credit, that 10 to 12 per cent of the available credit to be found in this Caribbean/Latin American region is accessed by 90 per cent of the firms. I wish that I could say to you that I have the data that will demonstrate whether that is true in the Eastern Caribbean, but again, this is where I need the support of The University of the West Indies,” he said.
Emphasising the need for firms to access credit, he said the focus must shift to the acceptance of non-traditional types of collateral. Again, Symmonds said, The UWI can help “intellectually oxygenated, intellectually nourish” that conversation.
“There are interests in the insurance community; there are interests in the banking community; there are interests in the accounting fraternity, who need to be conversing with the role that intellectual property rights can play in providing collateral to a small business. The role that livestock, accounts receivable, inventory [can play], it is as simple really as even fishing boats [and] goodwill. All of these are ways in which now, in other parts of the world, more cutting-edge type of approaches, less orthodox type of thinking, is allowing opportunity to be unleashed to people [to] facilitate substantial economic opportunity and development,” he said.
Symmonds made the comments during the recent launch of the Caribbean Micro, Small and Medium Enterprise Centre at the Sagicor Cave Hill School of Business and Management. (JRT)