There is a severe deficit of business investment in Barbados despite billions of dollars sitting in the banking system doing nothing, says President of the Barbados Economic Society (BES) Simon Naitram.
The economist said while a number of Barbadians were coming up with innovative ideas, they were having a difficult time bringing them to life because they were still having trouble accessing financing from banking institutions.
“At present in Barbados it is extremely difficult for a person who simply has a great idea, to be able to fund it without already having wealth and without knowing someone of wealth,” Naitram told the Barbados Coalition of Services Industries (BCSI) business forum at the Savannah Hotel on Friday.
“Barbados has a hole in its financial market . . . We have billions of dollars sitting in our savings accounts doing absolutely nothing. Meanwhile, people with ideas, entrepreneurs, small business owners – complain about the inability to access serious funding,” he lamented.
He said according to data, banks lent 68 per cent of savings to businesses in 1990 and by 2018 they only lent 28 per cent.
“The result is that Barbados has a severe deficit of business investment. In the rankings of investment capital to GDP [gross domestic product] Barbados is 143 out of 168 on the IMF’s [International Monetary Fund] list,” he pointed out.
Naitram said to get the money from the banking system into the hands of businesses and prospective enterprises, an entirely new financial market needed to be created.
“We need a revolution of financing, we need venture capitalists, private equity investors, angel investors, angel groups, and corporate investors. We need to create financial intermediaries that will attract funds from people seeking returns on their investments and channel them to small businesses, which have the growth potential to general those returns and to generate economic growth of the country,” he explained.
Pointing out that the returns could be big from investing in small businesses, Naitram said he was pleased with steps being taken by Government to encourage more investment opportunities.
In fact, he said the plan by Government to develop a junior stock market and create a crowd-funding and peer-to-peer lending project would “democratize” business in Barbados.
“But these are only the first steps towards a new funding model for small and medium enterprises and the government is, at its best, only providing us with a market. This is only a framework,” he stated.
“We still need the emergence of the actors in the financial market. Finance professionals who have the capacity to build out this market; investors to come forward with money and business with ideas and the plan to use funds in creative and innovative ways. All these actors would be working towards the common goal of getting money from accounts of the average Barbadians, and into the businesses of the average Barbadians,” he explained.
During the one-day seminar, which was held under the theme Services Unplugged: Advancing a World Class Economy, a range of operators in the services sector had the opportunity to share ideas on growing the economy, and discussed a variety of issues affecting them.
The government need to legislate to force investment. They gave corporation tax deductions for no productive reason. When they really should have rewarded the companies for new investment.
The easiest way to get this money into circulation is to reward the commercial banks, the account holders, and borrowers for creating new businesses, a little less for business expansion, while penalizing those with huge bank balances. This is a very simple solution.
There is no culture of risk investing in Barbados. Bajans have always enjoyed risk free investing by buying government debt, High interest on Saving Accounts. The whole world changed in 2008. There is little or no interest earned on Passive Bank deposits. Anywhere. Government Bonds pay little or no interest and some are even negative. We are now faced with this reality and we are scared and in shock. Furthermore we collectively have little faith in our own Country and leave investing to Foreigners and then complain that we no longer own our own country. We also do not trust each other and lastly the Red Tape, Regulations, Restrictions, Legal Fees make raising Capital prohibitive.
“FIND DIFFICULTY IN ACCESSING FINANCING”.
Does the same apply to “WHITE & INDIAN” ?????.
Couple friends of mine came back to BIM with big ideas of holding down some PIGS & CHICKEN farms and got blown out of the water point blank by all the BANKS. They wont lend them “a cent”, cane up with a different kind of stuff why they do not qualify. So the 4 of them return to Boston.
“A HOME AWAY FROM HOME”.
These foreign banks are not here to help the average Bajan to grow. There interest lyes in the rich, who who are mostly foreign and come to Barbados to further grow their wallets.
Even though the face you see at the banks are Bajan, they was to strictly follow the policies of these foreign banks or end up on the bread line themselves.
So even though the central bank became more profitable, by being no longer run by government, it no longer has the interest to the average Bajan in its plans.
Just take a good look at all these “auto parts stores” popping up on every street corner and not one owned and operated by a BLACK BAJAN.
The owners of these establishments do import lots of “METAL”.
Think about it, read between the lines and do the math.
BLAME IT ON THE DLP!!!.
@Rude boy – Spot on.
@Alex Alleyne – Of course the white and indian is not included, they were trained to wear their own hair, support each other and not to waste money on material BS, so they have it all. What u will find is that any so called black innovator will have to rely on the said white for financial help and u know what this will amount to – a 51:49 to the investor partnership if he/she is lucky. Absolutely none of this is any surprise to me at all. These governments are all talk when it comes to their own people and financiers/concessionaires to the few. They just keep their people on the poverty line paying the various tax bill via low paying jobs like gas attendants, cashiers, etc
I know a few small business people who have got loans and their businesses were not even doing that great. Why those ones and not the others?