Barbados’ financial services sector needs to offer more creative services to enterprises of all sizes if the island’s economy is to return to a growth path.
According to Dr Justin Robinson, dean of the Faculty of Social Sciences at the University of the West Indies, Cave Hill Campus, funding continued to be a problem for large, small and medium-sized enterprises (SMEs).
Although SMEs are expected to be a major part of any sustained economic recovery, Robinson said developing economies found it challenging to finance them.
Robinson’s comments came last week during a breakfast presentation at The Mount Restaurant, UWI, where Dr Jonathan Lashley, a research fellow of the Sir Arthur Lewis Institute of Social and Economic Studies, presented the findings of a study entitled Joining The Second Revolution: From Micro-Credit To Micro-Financial Services In The Caribbean.
“One of the most difficult projects to finance in Barbados is the construction of a hotel. How do you have a tourism-driven economy, of which the hotels are an integral part, but the financial sector finds it difficult to finance hotels?
“There’s clearly an issue of tremendous need for creativity,” he said.
Robinson said part of Barbados’ fiscal problem was due to “the fact that for a long time, one of our main risk-management devices has been a Government guarantee”.
“Over successive generations, that debt is also building up on us.
“I was recently involved in a transaction where the creditor basically said, ‘Well, we don’t want a Government guarantee. We want the borrower to purchase something they call a credit wrap’ – which is essentially where the borrower was required to purchase insurance against defaulting on the loan.
“That’s the kind of innovation and development I think we’re going to need to see in our financial services sector if we are to move out of this recession and back to a growth path,” he said.
Robinson said Lashley’s study helped to fill the gap in microeconomic research in Barbados.
“We have a lot of discussion, a lot of fora, a lot of information on our macro-economic issues, but quite often what we don’t discuss really is the nuts and bolts of the economy,” he said. (NB)
