EDITORIAL: Looking forward to help for SMEs

IT is hoped that once Government follows through with its plans to assist small businesses with funding, this could be an improved year for that sector. 

 

It was last August that the Minister of Finance and Economic Affairs, the Honourable Christopher Sinckler, revealed plans to use some of the proceeds from the Industrial Credit Fund (ICF), which is under the management of the Central Bank of Barbados, to assist the small- and medium-sized enterprises (SME). In an environment where this country requires its SMEs to be flourishing it has reached a point where obtaining financing for business start-up is proving to be a real problem for entrepreneurs. There is no shortage of financing institutions in Barbados which could be tapped into for the financing of businesses and more so small businesses.

 

The Minister said in the Budget presentation that to strengthen the support to economic growth, access to seed funding and credit is very vital, and that this is one of the major challenges facing the small business person. This fact is highlighted in the recently concluded National Policy Framework for the Development of MSME in Barbados. That framework indicated the lack of participation of private enterprises in the business support framework in the area of finance.

 

In light of this, Government is to review and reconfigure the ICF with the intention of making some of its resources available through a new soft window financing mechanism for the SMEs. The ICF is one of at least three facilities which the Central Bank manages and is used to disburse funds to local business enterprises. The others are the Investment Fund and the Export Credit Scheme. Quite recently another facility was added thanks to the Inter-American Development Bank to onlend to the SME sector. The fact that a number of these facilities are available for assisting business development is an indication of the extent to which the country has gone to deal with the problem of making financing available to businesses, and especially the smaller ones. Many of the entrepreneurs have noted that they are not looking for handouts but rather genuine assistance.

 

A note from the Central Bank said that the ICF was established by the Government of Barbados in September 1993 to contribute to the development of the country by structuring growth of output, employment and foreign exchange earnings. It provides medium- and long-term credit to mainly private sector productive enterprises. The purchase of fixed assets (excluding real estate), the provision of working capital, refinancing existing debt and financing research and development are some of the areas for which the ICF resources are currently used. These fit nicely with the requirements of the SME sector. Such enterprises as those in agro-industry, manufacturing, fisheries, tourism, construction and retailing among others, are eligible for ICF financing. 

 

The last that was heard about the Budgetary proposal was that it would be coming on-stream early this year, although the indications from some in the sector was that they would have preferred it last November to prepare their operations for the increasing demands in December.

 

The SME sector makes a valid contribution to job creation, economic activity, growth and to Government finances. The gesture by the Minister is lauded and we believed that once in place it can help the sector.