Minister of Energy and Business Development Kerrie Symmonds has criticised Barbados’ financial sector for being risk averse and lacking care and ingenuity when it comes to granting loans to small businesses.
In a frank, exclusive interview with Barbados TODAY, he said lending institutions were falling short, failing to recognise and accept non-traditional forms of assets when demanding collateral from entrepreneurs.
“I think that the financial institutions are going to be forced to come around to the reality that, as with everybody else, it cannot be business as usual…. I think some people in this country are tone deaf, people in high places have started to get a little bit tone deaf,” he said.
“…We have to find ways of emancipating ourselves from financial institutions that are just being too sluggish and unresponsive, and are, quite frankly, risk averse,” Symmonds added.
He stressed that although many small businesses did not have assets in the form of stocks or land, they owned expensive pieces of equipment to support their trade and those should be acknowledged and taken into account by financial institutions.
“For example, the person in the agricultural sector . . . may be renting or leasing land, but he [doesn’t have] the title deeds…. Don’t tell me that he will never be able to get loans to access an improved scale of performance simply because he does not own title deeds,” Minister Symmonds argued.
“He may have a couple of tractors – they have value; he may have an account receivable because he is taking his potatoes and his yams, etc. and selling them somewhere and people are paying him. These things have value, and it is possible to lend against the value of things which are not necessarily seen in the strictest sense as intangibles that we traditionally said that you have to go to a bank and show.”
He pointed out that this way of developing small businesses is successfully being used in Latin American countries and some parts of Africa.
“And it’s not being used at all in the Eastern Caribbean outside of Jamaica where it’s now beginning to take root. It [has] got to happen here,” Symmonds insisted.
Reiterating that small businesses were getting a hard time when they were seeking financing, the Minister added: “Nowhere in the world are people accepting slipshod, happy-go-lucky type of treatment…. I have said to my colleagues in Parliament that we have to have a plan ‘B’, and part of that plan ‘B’ is being worked on in this ministry right now.”
He explained that in this case, plan ‘B’ was the Government’s proposal to develop a collateral registry portal that would create a robust platform for businesses to register both tangible and intangible assets as security to enable them to borrow money.
