Micro and small business owners and aspirants across the Caribbean, not least here in Guyana, are likely to proffer mixed responses to this week’s announcement that the Bridgetown- based Caribbean Development Bank (CDB) has approved US$160,000 to fund a feasibility study for the establishment for a Regional Credit Enhancement Facility (RCEF) for Micro, Small and Medium-sized Enterprises (MSMEs).
While the Bank’s disclosure will be seen as representing an initiative designed to explore viable solutions to the recurring challenges MSMEs face in accessing financing for small business growth, it is, as well, likely to be regarded as a ‘baby step’ in what has been a ponderous journey towards the growth of the micro and small business sectors in the region.
The disclosure alluding to the CDB’s intervention quotes the Bank’s Acting Director of Projects, L. O’Reilly Lewis as saying that the study comes against the backdrop of “funding gaps” – which he attributes to “underdeveloped financial systems” notwithstanding what he says have been “extensive investments in loans and equity” in regional micro and small enterprises. Lewis is also quoted as saying that the study will enable a better assessment of the “market needs and design a facility that could effectively address these gaps if the demand is validated.”
The disclosure regarding the CDB’s intervention comes against the backdrop of what it concedes is the need for improved financial support for MSME’s. Here, in Guyana, micro small business owners and aspirants continue to face a thicket of hurdles from lending institutions, not least commercial banks, arising out of concerns over the credentials of potential borrowers. O’Reilly himself noted that “even with extensive investments in loans and equity many Caribbean MSMEs continue to face substantial funding gaps because of underdeveloped financial systems.”
The CDB study, he says, “will help us better understand the market needs and design a facility that could effectively address these gaps if the demand is validated.” Thereafter MSME’s can anticipate “access to various financial products and support services, including guarantees that enhance their bankability, the CDB says.
It is envisioned that the facility will also expand credit access, provide training to enhance the capabilities of financial institutions, guarantee schemes and MSMEs, and streamline processes for all involved. Additionally, the solutions will focus on the inclusion of traditionally underserved groups such as women, youth, and those in the creative industries. The CDB has taken the position that “recognizing that MSMEs are pivotal to the region’s economy… it has revised its approach to focus on enhancing financial accessibility and supporting sustainable business practices.”
Reflecting on the Bank’s commitment to empowering MSMEs, CDB’s Acting Head of the Private Sector Division, Lisa Harding has said that the Bank is “constantly looking for ways to support these enterprises, which are the backbone of many Caribbean economies. The results of the study will lead to practical solutions that can help our MSMEs overcome finance-related obstacles and drive their growth.”
