This presentation summarizes the Bank of Saint Lucia's experience and initiatives in developing the SME market. Key points include: - SMEs represent an estimated $700 million market but face challenges accessing financing. - BOSL has built an $95 million SME portfolio serving over 1,300 customers. - Initiatives like staff training, streamlined assessments, and a dedicated SME unit have helped improve portfolio quality and outreach. - Continued efforts involve product development, technical assistance, and partnerships with government and private organizations.

1. Presented by
Joanna Charles
Assistant General Manager Bank Of Saint Lucia (BOSL)

2. This presentation will focus mainly on the Bank of Saint Lucia’s
(BOSL) experience and development within the SME market in
St.Lucia.
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Market Overview
Eligibility of SMEs to access finance
Overview of BOSL SME lending portfolio
BOSL’d response to meeting market demands for finance
BOSL Future initiatives to improve Access to Finance
Market Efforts to Improve Access to SME Finance

3. 
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1. The total number of SMEs in Saint Lucia is estimated at
around 7,300.
2. The total potential market volume is estimated at EC$
700 million (approx USD 268 million), which corresponds
to 70% of the sectors’ total estimated assets.
3. 77% of the total number of SMEs (or slightly more than
5,600) is assumed eligible for a small business lending
facility, with an estimated 4,100 businesses qualifying for
a small business facility (exposure up to EC$ 200
thousand) and another 1,500 businesses qualifying for a
medium-sized lending facility (between EC$ 200 thousand
and EC$ 1 million)
4. Average demand is estimated at EC$ 63,000 for small
loan facilities and EC$ 460,000 for medium-sized loans.
Source: New Business Concept for Small Business Lending (LFS market research 2008)

4. 
5. There is a large degree of financial interrelation between household
and business units of entrepreneurs as well as multiple sources of
income to the household unit.
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6. More than half of the surveyed enterprises did not receive a bank loan
3 years prior to 2008
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15% report having had loans from BOSL, followed by 10% from
ScotiaBank.
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7. 87% of all enterprises are located in the Northern and Western
Regions of the island, with the Castries and Gros-Islet districts
accounting for 55% alone.
8. A large majority of the surveyed enterprises are operated as soleproprietorships (65%). Less than 10% are limited liability companies.
Only a low 18% SMEs in Saint Lucia are not registered.
Source: New Business Concept for Small Business Lending (LFS market research 2008)

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9. Around 70% of the businesses in the sample employ less than 5
people. 25% of the unregistered businesses do not employ any workers.
10. 60% of the surveyed entrepreneurs are female. 20% of the female
respondents feel that it is more difficult for them to access credit from
banks.
11. The role of non-bank finance providers in St. Lucia is limited for the
SME sector. Performance of dedicated microfinance operators is often
poor and their operations limited to the microfinance market (i.e.
maximum loan amounts below EC$ 20 thousand).
12. The Government of Saint Lucia has set up a new development bank
in an effort to take up some of the shortfall
Source: New Business Concept for Small Business Lending (LFS market research 2008)

6. 2%
Types of Enterprises
3%
12%
Micro
Small
Medium
83%
Large

7. Sector Distribution
◦ Trade (retail and wholesale) and Services are the
most represented enterprises representing 44%
and 40% of all enterprises respectively.

8. Sector Distribution of Enterprises
Trade
Services
3%
Agriculture
13%
44%
40%
Production

9. Despite the great potential of this market segment access to
finance, that is, the ability to quality for available
credit, remains a challenge for many SMEs.
Based on an LFS research conducted in 2008 under the joint
partnership of IFC and BOSL, more than half of the surveyed
enterprises did not receive a bank loan over 3 years prior to
2008. This results from a generally low risk appetite for this
business segment attributed mainly to the following:

10. 
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Insufficient equity
Insufficient collateral
Poor Credit History
Under-developed business idea/Little or no
understanding of the market
Lack of business management skills
High level of competition resulting in low
margins

11. 
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Poor Financial Management practices leading to poor
performance and ability to service debts
Poor Quality Financial Statements or lack of records
Inadequate marketing- Leading to loss of market
share or no growth
Poor Saving habit- SMEs rely heavily on debt finance for
growth
Lack of innovation and keeping up with customer
demand- Impacts on competitiveness
Excessive drawings from the business
High production costs/cost of inputs

12. 
While the number of SME Finance Institutions is widespread in
St. Lucia, many SMEs are unable to access SME finance due to
the above challenges. Many Financial Institutions, in particular
commercial banks, adopt more stringent credit risk
regulations towards SMEs. These include:
 Shorter-term credit
 Higher interest rates
 Smaller loan amounts
 Increased collateral
 Other stringent credit risk regulations

13. These prevailing credit risk regulations regarding
SMEs either eliminate a significant portion of the
market or result in high cost of financing for
qualifying SMEs. This results in:
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An underserved SME market
(evidenced by LFS study)
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Undercapitalization (inadequate financing)
Stifled growth
Business failure

14. In spite of the many challenges dealing with the SME
sector there are significant benefits. Recognizing
this, many Financial Institutions have begun to
position themselves to better serve this sector while
at the same time guarding against the inherent
risks.
Government and the private sector have also
contributed to the development of this sector in an
effort to enhance their attractiveness for financing.

15. Key Statistics:
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As at today’s date BOSL is operating a total
SME portfolio of approximately EC$95M, or
US$34M distributed among 1,383 customers.
These
customers
represents
18%
of
registered SMEs in St. Lucia
 SME Loans represent $85.8M
 SME overdrafts represent $9M

16. 
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The SME lending portfolio represents 8% of
the Bank’s total credit portfolio.
Average demand is estimated at EC$ 63,000
for small loan facilities and EC$ 460,000 for
medium-sized loans.

17. 25
20
15
10
5
0
21.9
11.3
7.3
2.3
5.4
14.3
4
4.4
1.2
Amount Outstanding ($M)

18. Key Statistics:
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SME Portfolio Quality:
◦ Productive SME loans: $79M (83% of SME portfolio)
◦ Non-productive SME loans: $16M (17% of
portfolio)
◦ An improvement from 30% in 2008

19. 
Maintain vs Grow
 high delinquency
◦ In 2008 it was highly questionable whether the current
lending operations with the SME sector was financially
viable.
◦ Delinquency rates of 30% called for a new initiative
characterized by a much stronger focus on quality of
transactions rather than increase of outreach as a primary
goal.
 Monitor trends
 Improvements in all business practices of SMEs
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Focus on improving loan quality
◦ Development of more risk-based policies

20. Further training and development for staff
Understanding cash flow
Understanding the Business
World economic crisis
Services sector/tourism
Grow portfolio internally through cross selling and
upselling

21. In 2008 Bank of St. Lucia collaborated with IFC (International
Finance Corporation) to introduce a new business concept for
Small Business Lending to BOSL. The consultation resulted in
the implementation of the following initiatives:
1.
Fewer
documentation
Assessment
required
for
credit
The SME assessment tool was developed out of the need to
make lending more accessible to SMEs that do not keep
financial records or are unable to provide a business plan.

22. 2.
Enhanced Credit Assessment Skills
All SME Lending officers, Credit Risk staff and
Management were trained in areas such as cash flow
assessment, risk analysis, data gathering , interviewing
MSMEs and portfolio management.
3.
New Credit Policies for SMEs
SME lending is now primarily cash flow based. Ability to
repay based on past performance forms the key basis for
advancing credit.

23. 4.
A Dedicated SME Unit has been
established
This team consists of Business Relationship Officers
responsible solely for the needs of SME clients.
This service is decentralized at all BOSL branches but
oversight is provided by the Main branch.

24. 
Government of Saint Lucia
◦ Establishment of SLDB
◦ OPSR initiatives
◦ Chamber of Commerce
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The Private Sector
◦ ECCB/ East Caribbean Enterprise Fund
◦ RG Gen X fund

25. 1. SME Coordinator
2. Product Development
3. Centralized Assessment and approval teams
4. Technical Assistance

26. Technical Assistance
The Bank has recently signed an agreement with CDE (Centre
for the Development of Enterprise) through its SAFFC
programme, to offer Technical Assistance to SMEs of Bank of
Saint Lucia. This TA programme involves at 67%:33% cost
sharing arrangement between CDE and BOSL. The budget is
$250,000 euros.
As a result of this initiative SMEs are expected to improve
efficiency and profitability and become more attractive for
SME financing.