Junior stock market, collateral registry still on cards

Officials are giving the assurance that the much-talked-about revival of the junior stock market and establishment of a collateral registry are still being worked on to help small businesses raise capital.

However, Chief Economist in the Research and Planning Unit of the Business Division of the Ministry of Energy and Business Development, Katrina Bradshaw, disclosed on Friday that it could take up to two years for the junior stock market to be revived.

No date has been given for the establishment of the collateral registry, which is a centralised database that records all securities or collaterals of borrowers, allowing for moveable assets to be listed as collateral for small businesses when they try to access loans from financial institutions.

Bradshaw told lawmakers it will require “much engagement and discussion which we are about to undertake with our financial community.”

She also indicated that legislative and policy changes will be required for both the registry and the junior stock market.

Bradshaw was speaking in the well of Parliament as she joined other officials from the Ministry of Energy and Business Development to respond to questions on day three of the debate on the Appropriation Bill 2023.

She disclosed that local officials were engaging countries that have established collateral registries, including Guyana and Nigeria.

In relation to the revival of the junior market on the Barbados Stock Exchange (BSE), which was rebranded in June 2019 to become the Innovation and Growth Market, Bradshaw said work was ongoing with the Caribbean Development Bank (CDB), the BSE and the Small Business Association (SBA).

She said careful thought was being put into the design of the junior stock market.

“We are hoping that at the end of it, we will see small businesses grow by being able to access capital while at the same time seeing them able to graduate from the Innovation and Growth Market onto the larger market of the stock exchange,” said Bradshaw.

She said one step towards resuscitating the junior stock market would be education. “Once we have whet the appetite and get our businesses interested, then we will be working with consultants to be able to diagnose and identify the gaps which will enable our businesses then to be able to meet the requirements and participate on a stock market,” the economist said.

“We are anticipating that with these interventions, we will see a number of firms being able to offer shares and be able to raise capital through such a mechanism. The project is approximately two years, but we will be working with our stakeholders and ensuring that we can be able to primarily see a change or shift in the attitude of our businesses towards equity and see them moving away from debt financing as a primary source of financing.”

Minister in the Ministry of Foreign Affairs and Foreign Trade Sandra Husbands expressed concern that too many Barbadian business owners continued to shy away from equity financing.

“One of the things that has been a tremendous challenge to Barbados is the fact that most businesses tend to avoid getting venture capital – they don’t like other people in their business – and this has created a problem,” added Husbands who indicated that debt financing has over the years resulted in some businesses being choked and going belly up.

She also expressed concern that Barbadians continued to keep their money in the bank despite receiving negligible interest on their savings, instead of “putting it to good use”.

“This is a problem because it means that we have millions and millions of dollars in savings by Barbadians that are not being put to good use, and the end result of that is that it limits the growth of the Barbadian economy,” said Husbands as she also stressed the need for continued financi