WASHINGTON, USA – A new report from the Inter-American Development Bank (IDB) and IDB Invest recommends that Caribbean countries focus on overcoming obstacles to financial access and business inclusion, because having more developed and inclusive financial systems could increase growth and reduce poverty and income inequality. .
The report titled “Finance for Business: Options for Improving Access and Inclusion” highlights the important link between deeper and more accessible financial systems and faster and more inclusive economic development. The publication compares the financial systems of six Caribbean countries, the Bahamas, Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago, with others around the world. It also assesses the results of business surveys in 2014 and 2020 to identify the main financing challenges facing businesses, including small businesses, and those that are owned or managed by women.
The report finds that companies across the Caribbean face enormous challenges, especially when compared to global companies. It also finds that the COVID-19 crisis appears to have further restricted access to finance, that smaller businesses appear to face greater obstacles than larger ones, and that women-owned and/or managed businesses are ‘face more serious challenges than others. These challenges companies face include high borrowing costs, onerous collateral requirements, inadequate financing mechanisms and complex application procedures.
In 2020, 76% of Suriname and 72% of Barbados companies reported that issues such as significant collateral requirements posed significant or very serious obstacles to their performance and ability to do business, compared to 22 and 35%, respectively. , in 2014.
“It is key that the public and private sectors of the Caribbean countries work together so that entrepreneurs can better finance their ambitions to grow their businesses,” said David Rosenblatt, regional economic advisor in the IDB’s Caribbean department. “This is important to strengthen the ongoing economic recovery, in the short term, and improve growth prospects for the future.
The authors proposed several priorities, including ensuring macroeconomic stability and policy prudence, improving the availability of credit information, and promoting credit sector competition, among others.
Finance for Firms: Options for Improving Access and Inclusion is part of the IDB’s Caribbean Economics Quarterly series. It also has country-specific sections for the Bahamas, Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago.
This report is aligned with the small and medium-sized enterprises (SMEs), gender and inclusion pillars of Vision 2025 – Reinvesting in the Americas, the IDB’s road map for economic recovery and inclusive growth in the Americas Latin and the Caribbean.