The document summarizes a study on micro, small and medium enterprises (MSMEs) in 8 Caribbean countries. It finds significant challenges for MSMEs in accessing financing due to lack of capital sources. There are also substantial gaps in regulatory frameworks, as many countries lack MSME policies or have outdated ones. MSMEs receive inadequate technical support. It recommends improving access to financing through credit guarantee schemes and training. Countries should strengthen regulatory frameworks, entrepreneurship education, and business support organizations. Developing national innovation systems that support MSMEs and prioritize innovative service sectors could also help address weaknesses in regional innovation.

1. Micro, Small and Medium Enterprise
Development in the Caribbean:
Towards a New Frontier
Justin A. Ram
Director, Economics Department
46th Annual General Meeting
May 2016, Montego Bay, Jamaica

2. Structure of presentation
– Why study MSMEs
– Summary of Main Findings
– Recommendations

3. PURPOSE OF STUDY
Assessment of the Status of the Micro, Small and Medium
Enterprise Sector in 8 Caribbean Development Bank (CDB)
Borrowing Member Countries (BMCs)
 Antigua and Barbuda
 Barbados
 Belize
 Guyana
 Jamaica
 Trinidad And Tobago
 St. Lucia
 Suriname

4. PURPOSE OF STUDY (Cont’d)
To highlight critical challenges
and to propose structured
approaches to addressing them

5. MAIN FINDINGS
• significant challenges in access to financing
• substantial gaps in the regulatory and policy frameworks
• inadequate technical support to MSMEs
• weaknesses in regional innovation systems

6. Finance coverage over MSME Lifecycle

7. Gaps in Policy Measures to Improve MSME Access
to Credit – OECD vs. BMCs

8. Interest rate trends

9. SIGNIFICANT CHALLENGES IN ACCESS TO
FINANCING
 lack of venture capital, crowd angel financing and other forms of financing for start-
ups
 high levels of collateral and fees demanded by banks
 significant weaknesses in financial information provided by MSMES
 Insufficient financial support from non-bank sources of finance, for example, credit
unions, microfinance institutions etc.
 underdeveloped capital/stock markets for MSME financing
 inadequate institutional support for access to finance, for example, credit
guarantees from public and/or private sector institutions

10. SUBSTANTIAL GAPS IN POLICY AND
REGULATORY FRAMEWORKS
BMCs WITHOUT MSME POLICIES OR OUTDATED POLICIES, SOME MORE THAN 10-
YEARS OLD SIGNIFICANT POLICY AND REGULATORY GAPS, FOR EXAMPLE:
 voluntary rather than compulsory registration of businesses
 lack of fiscal incentives unlike case of large domestic/foreign
enterprises
 product quality enforcement weak or non-existent
 no links to strengthening national productivity
 no time bound development plans and targets for MSME sector
 lack of key progress indicators

11. INADEQUATE TECHNICAL SUPPORT TO
MSME SECTOR
 public and private sector business support and business service
organisations for MSMEs significantly under-resourced in terms
of finance and personnel
 very small percentages of MSME sector benefit from existing
programmes
 Schools’ curricula exclude entrepreneurism
 MSME sector generally unorganised
 advocacy for MSME sector interests generally weak

12. Capacity for innovation in six countries

13. SIGNIFICANT WEAKNESSES IN NATIONAL
INNOVATION SYSTEMS
• National Innovations Systems (NIS) not integrated
• unable to exploit synergies available in integrated systems
• MSMEs generally not a focus of national innovation initiatives
• NIS tend to focus on industry/manufacturing sector even though economies
are largely service-based
• weak MSME support for productivity and competitiveness enhancements
in globalised economic environment

14. RECOMMENDATIONS - ACCESS TO
FINANCING
 development of training programmes to help MSMEs to improve
financial management and to provide financial information required by
potential financiers
 establishment of credit guarantee schemes for MSMEs
 upgrade legislation to enable faster resolution of bankruptcies
 strengthen capacity of non-banks to enable greater capacity to offer
loans and other financial products to MSMEs (through, for example,
deposit taking, credit guarantees, technical assistance (TA) in risk
management etc.)

15. RECOMMENDATIONS – STRENGHTENING OF
POLICY AND REGULATORY FRAMEWORKS
 upgrade policy and regulatory frameworks to make them much more
comprehensive in terms of the requirements of/incentive framework
for MSME sector development
 refocus the policy and regulatory frameworks on enhancing service
excellence, sustainability, productivity and competitiveness of the
MSME sector for example: develop strategies to increase ICT usage
by MSMEs
 REPLICATE THE JAMAICA “SUPERFORM” & ONLINE
REGISTRATION

16. RECOMMENDATIONS – STRENGHTENING OF
POLICY AND REGULATORY FRAMEWORKS cont…
 support other initiatives to enhance labour productivity (for example,
increased access to business management and other training)
 grow enterpreneurship culture through education reform

17. RECOMMENDATIONS – INCREASED TECHNICAL
SUPPORT TO MSMES
 pursue public/private cooperation in business service
organisations (BSOs) to enable increased institutional capacity
to serve MSMEs
 develop partnerships between BSOs and financing institutions to
enable greater access to credit and a greater degree of success
in funded business ventures
 develop online training programmes for MSMEs

18. RECOMMENDATIONS – NURTURING INNOVATION
• complete establishment of NIS
• provide greater support to innovation by MSMEs in NIS,
especially in export sector
• pay greater attention to innovation opportunities in the services
sector since regional economies are largely service-based

19. RECOMMENDATIONS – INCREASED TECHNICAL
SUPPORT TO MSMES
• focus innovation efforts on sectors with significant opportunities
for export development – creative industries, outsourcing of
business services by developed countries, health and education
services exports, development of ICT products etc.

20. Thank you.
END