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.