Government is about to save approximately $2.5 million annually in subsidies to at least one state entity.
Minister of Industry, International Business, Commerce and Small Business Development Donville Inniss today announced that come April 1, he expected Fund Access – the agency charged with providing development finance for micro enterprises – to become independent of Government financing.
He also announced that after thoroughly reviewing the demands of the small business sector and the operations of Fund Access policies surrounding the new special $50 million fund to be administered by that agency, the first tranche of $10 million was made available today.
It was during his 2016 Financial Statement and Budgetary Proposals last August that Minister of Finance Chris Sinckler announced the establishment of the $50 million fund, to be administered by Fund Access, to provide a blend of soft loans and grants to small businesses in Barbados.
Addressing the first annual members’ meeting of the Small Business Association (SBA) for the year at the Bagnall’s Point Gallery, Inniss said Fund Access was currently undergoing institutional strengthening, which should lead to it being more efficient and therefore not requiring Government subsidy.
“Currently Fund Access receives an annual subvention of $2.5 million from Government. It is my considered opinion that with this new level of funding the agency must immediately find efficiency levels and engage in best loan and finance practices that will lead it to become self-financing. I expect therefore that the Ministry of Finance, with effect from April 1, be no longer require to finance Fund Access,” Inniss announced.
“We must appreciate that state agencies must always strive to be efficient and must wherever possible relief themselves off taxpayers of this country. You cannot have on one hand a constant complaint about the size of the deficit in Barbados, the amount of transfers from the state . . . and don’t do anything about it.”
He gave the assurance that none of the $10 million released today would go towards financing Fund Access’ operations, and he served notice to small business operators that he had already directed the board of the Fund to carry out careful assessment before disbursing loans or grants.
“This is no slush fund and because we are almost in election period, this is no election gimmick either,” Inniss stressed.
“You may ask what about the other $40 million, and I will answer that by simply saying first, please, don’t believe that this is any money that has been printed . . . this is part of the industrial credit fund that has been accumulated over the years,” he said, seemingly making light of Government’s controversial practice of printing money to fund its programmes and pay wages.
The minister said the second tranche from the $40 million would go to Fund Access within six months after a thorough review, adding that funds from the industrial credit fund would also be made available to the Barbados Investment and Development Corporation to help with some of its initiatives.
Inniss announced that the loan amount from Fund Access had been increased from $100,000 to $150,000 under the new arrangements. However, he said it was left to the board to determine the amount any company would receive in grants.
Between 1998 and 2016, Fund Access approved 1,706 loans totalling just over $51 million. Inniss said he expected “a significant increase” in the amount of loans approved over the next year.
He added that the fund would be more enabling, with competitive interest rates, while funding would be channeled to areas where it is most needed.