EDITORIAL - Tackle business financing

ACCESS to financing seems to be a major problem for business development across the Caribbean. It is one of the issues that has surfaced in Barbados and continues to be a talking point as well. In fact, it has affected Barbados’ ranking in the Global Competitiveness Index, which is an annual survey of how countries do when dealing with competitiveness as a marketing took for investments.

The recently published Global Competitiveness Report shows that Jamaica also has concerns with business financing, even thought that country’s ranking in the same survey is on the up.

Some other Caribbean states have also been complaining about the situation involving business financing, leaving one to wonder why is this the case, and why it has become so widespread.

While derisking has become a major headache for some countries in recent times – and which could hurt those in search of capital to get their enterprises going – access to financing has to be tackled head on. This is important because countries are reshaping their economies and would want to have access to appropriate financing for their enterprises.

So we have to make business financing a major issue, and not waste time just complaining about it.

The Caribbean has been blessed with a number of international banks which sought to bring some level of financing to these markets. While this has helped, it does not go far enough.

This has forced governments to create development banks to meet the requirements of entrepreneurs.

In this country, the Barbados Development Bank (BDB) – a Government owned institution – was set up shortly after independence to cater to the specific needs of those in the productive sectors.

The BDB was in operation for a while, and it was quite noticeable that it had a significant impact on the growth of the manufacturing, tourism and many other areas of business activity in Barbados.

Unfortunately, some who contracted financing encountered problems, resulting in them not being able to meet their commitments to the Bank. This institution also had other challenges as well, and it was closed in 1996.

However, quite recently there have been calls for it to be revisited. This was perhaps a recognition that the role it had played was a significant one.

At the time of the establishment of the BDB, Barbados was on the verge of diversifying its economy. This bank had assisted in the development of tourism, manufacturing, small businesses, and retailing.

These days the intention is for governments to reduce their presence in the economy and to let the private sector have more of a say in the economic life of countries. Indeed, private sector-led development has become the catch phrase as governments look to privatise state-owned enterprises and rid themselves of these activities, so as to deal with fiscal deficits and other negative economic indicators.

However, if countries want to pursue more private sector-led growth and development, there must be avenues where enterprises can access capital for such purposes. They therefore have to create the agencies to cater to the immediate requirements of those seeking capital, but at the same time allow these institutions to operate along the lines of the private sector.