‘Bank would bring ease’
A United States-based Professor of Economics is calling for Barbados to create a development bank that would ease the problems of businesses accessing finance.
Professor Jay R. Mandle of Colgate University in New York, made the plea while presenting a University of the West Indies Lunchtime Lecture yesterday at the Cave Hill Campus. The lecture was sponsored by the UWI’s Department of Economics.
He told a large audience that Barbados’ financial system does not adequately provide the investment funds that economic change in the country requires.
According to him, “Barbados ranks at very low levels with regard to the financing available through local equity markets, access to loans and the availability of capital.”
He remarked further that the rankings of 98th, 113th and 112th, suggest that the private business sector is all but starved for the resources that would be needed for economic diversification and export success.
“What is needed is a source of pressure to move the government to create a development bank to offset the shortfall in financing provided by private banks,” he recommended.
He said that the absence of financing business development is one of two shortcomings the Global Competitive Index (GCI) has pointed to in relation to Barbados. The other is the fact that the public sector bureaucracy seems to act more as a brake on economic change than its facilitator.
The Professor told his audience that the assessment contained in the GCI is corroborated by a 2013 survey of entrepreneurial experts in Barbados undertaken by the Cave Hill School of Business at the UWI. That survey, he said, “concluded that in terms of financial support, the entrepreneurial experts in Barbados gave most of the existing structures a below average rating”.
What is also required, Professor Mandle suggested, is the implementation of civil service reforms “that would transform the bureaucracy from an obstacle to change, becoming a positive agent of development”.
Faced with mounting problems in relation to financing business development, the country established what was known as the Barbados Development Bank (BDB) in the late 1960s. However, it was closed in the mid 1990s after the then government said the Bank was technically insolvent.
Two new enterprises, the Enterprise Growth Fund and Fund access were set up to perform some of the functions of the closed BDB.
Professor Mandle indicated that in light of the country’s infrastructure and the fact that Barbados is able to retain well-trained managers and skilled engineers, the question that remains is ‘Why doesn’t Barbados possess a more diverse and productive economy?’ (JB)