Investment in micro, small and medium enterprises (MSMEs) is the key to unlocking economic growth in Barbados and the Caribbean, the president of the Caribbean Development Bank, Dr. Warren Smith, has declared, as he called for more attention to be paid to MSMEs.
In a speech this morning at the Small Business Association’s (SBA) State of the Sector Conference at the Lloyd Erskine Sandiford Centre, Dr. Smith maintained that MSMEs were essential for the country’s and the region’s long-term growth and development.
“[MSMEs] are the backbone of the private sector and are key drivers of economic growth, and social inclusion in Barbados.
“Their importance for this island’s long-term growth and development is undeniable,” he said.
A 2016 SBA survey showed that MSMEs accounted for approximately 92 per cent of formal enterprises and over 60 per cent of private-sector employment.
But while Dr. Smith said those statistics were impressive, he contended that MSMEs in Barbados could contribute much more.
He suggested that MSMEs should play a larger role in exporting goods both regionally and internationally.
He declared: “If MSMEs account for such a significant proportion of enterprises, and provide the bulk of employment, should we not also expect them to make a bigger contribution to Barbados’ exports?
“Certainly, if our MSMEs are operating efficiently, then it would be reasonable to assume that they are competitive and have the potential to export.
“Therefore, we have to figure out how to unravel those issues that are preventing them from operating more efficiently, more productively and more competitively.
“If we understand the constraints, we can design workable solutions to unleash this potential and create a business environment in which MSMEs can grow and flourish in a well-functioning market economy.”
But the CDB president acknowledged there were several challenges facing MSMEs across the Caribbean.
These included a weak enabling environment; high energy and other production costs; limited and poor product, service quality and standards; and limited access to both loan and equity finance, he said.
Referring to the World’s Bank Doing Business report which ranks Barbados 129th out of 190 countries, Dr. Smith said much work remained to be done.
He said: “Our Governments must remain committed to improving the business environment and scale up their efforts to create a policy and institutional framework that responds appropriately to the characteristics and special needs of MSMEs.”
Dr. Smith paid particular focus on the “struggle” of MSMEs to secure adequate and timely financing.
He pointed out that even though there were high levels of liquidity in the financial system, MSMEs still continued to struggle to access resources.
He said: “The issue is not simply that funds are unavailable.
“In fact, even in situations where the financial system is reporting high levels of liquidity, MSMEs struggle to access resources from the banking system at acceptable interest rates.
“Diagnostic studies conducted by the Inter-American Development Bank reveal that only three to five per cent of Caribbean micro-entrepreneurs has access to financing.
“Indeed, financial institutions are generally reluctant to lend to MSMEs, because they lack adequate collateral; they operate in unfavorable business environments; or they have limited access to affordable accounting, legal, auditing, and other services.”
Dr. Smith said the bank was focused on ramping up its engagement with Barbados.
randybennett@barbadostoday.bb
