Micro, Small And Medium Enterprises (MSMEs) remain central to Barbados’ economy, but they are operating under persistent constraints that have changed little over the last ten years.
Furthermore, unless MSMEs receive targeted financing support to build resilience while maintaining operational viability, existing vulnerabilities at the firm level may translate into broader systemic risks for the economy.
These are findings of The State Of Small Business In Barbados, a national survey of the MSME sector, which was commissioned by the Small Business Association (SBA), funded by the Inter-American Development Bank (IDB), with Professor Dwayne Devonish of the University of the West Indies (UWI) the lead researcher.
The research, which is the first of its kind carried out since 2016, and is based on a 2025 survey and insights from MSME operators, concluded that “the current configuration of the sector does not yet position the country for sustained expansion, export competitiveness, or economic resilience”.
The findings of the study included:
Without targeted and coordinated policy intervention, the MSME sector will continue to function as a survival-based ecosystem rather than a growth-oriented engine of development.
Services’ relatively low export intensity constrains foreign exchange earnings and limits the sector’s contribution to external balance.
While female participation has increased and aggregate revenue has grown, scaling, productivity, export depth, and resilience remain limited.
Agriculture and manufacturing remain under represented in both employment and enterprise scale.
Improving access to finance, specifically for working capital and early-stage expansion, is essential to enable firms to scale.
Financial constraints within the MSME sector pose a significant risk to climate resilience, as firms lack the resources to invest in adaptation and risk mitigation measures.
“Addressing all aforementioned challenges will require coordinated, size- and sector-sensitive policies that go beyond entry support to actively enable firm growth, resilience, and long-term competitiveness,” the report stated.
Devonish, who is director of The School for Graduate Studies and Research at UWI’s Cave Hill Campus, said in the publication that “the findings highlight a sector that is both vital and resilient but severely constrained”.
“While MSMEs continue to demonstrate adaptability, particularly in the aftermath of COVID-19, persistent structural challenges remain,” he reported.
“These include limited scaling beyond the micro level, low export participation, concentration in domestically oriented services, and ongoing barriers related to finance, labour, and technology.
As a result, the sector is not yet fully positioned to drive sustained economic growth, export expansion, or long-term resilience.”
Devonish added: “At the same time, the report underscores significant opportunities for transformation. Expanding participation in agriculture and manufacturing, strengthening export-oriented enterprises, improving access to finance, and aligning skills development with sectoral needs are all critical pathways for enhancing the contribution of MSMEs to national development.”
SBA chief executive officer Dr Lynette Holder explained in the report that “during the past decade much has transpired to affect the business community, most notably were the COVID-19 pandemic, global supply chain disruptions on account of wars in the middle East and and Europe, and several climatic events”.
“It was therefore imperative that we assessed the state of small businesses today, with a view to identifying what effect those exogenous shocks had on the sector and what are the policy and programmatic responses needed to assist MSMEs to pivot to a position of growth,” she noted.
“This 2026 research featured an assessment on variables including inter alia, the sector’s size, age and gender distribution, contribution to exports and employment, and the revenue generation of firms.
“However, the disruptions in the last decade necessitated a review on the COVID-19 impact on the business community, the preparedness of the sector for digitalisation and the level of resilience of MSMEs to climate change.”
Michael Hall, financial sector senior specialist at the IDB, said in the publication that the research findings were “intended to inform policy dialogue and action by grounding decision-making in empirical evidence”.
“Such analysis is particularly valuable for the IDB as it advances operations aimed at improving the lives of the people of Barbados. Addressing the challenges identified will require coordinated, multi-stakeholder interventions to foster a sustainably productive MSME sector,” he stated.
“In this context, the continued efforts of organisations such as the SBA remain essential in promoting entrepreneurial development, representing MSME interests, and supporting firms along the pathway to scale and resilience.”
