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A preliminary review of policy responses to enhance SME access to trade financing in the Caribbean

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Author: McLean, Sheldon - Charles, Don UN symbol.: LC/CAR/TS.2019/11 51 p. Editorial: ECLAC January 2020

Description

The economies of the Caribbean face several challenges, such as a lack of economies of scale in production of goods and services exacerbated by small populations, narrow internal markets and scarce capital, which limit the economic gains from self-sufficiency. For this reason, more emphasis should be placed on building export capacity and facilitating trade. If we examine the characteristics of firms in the subregion, the majority can be categorized as small and medium-sized enterprises (SMEs). Moreover, only about 13 per cent of these SMEs export. This suggests that on average the subregion is not utilising its potential to generate gains from international trade. Access to finance is a key factor that hinders the subregion’s small businesses from developing their export capacity. Given the importance of business finance, this study explores the factors that limit the subregion’s entrepreneurs from accessing finance and makes policy recommendations to address this challenge.

Table of contents

Abstract .-- Introduction .-- I. Characteristics of the SMEs in the Caribbean .-- II. Overview of the financial sector and financial institutions in the Caribbean .-- III. Rigidity in finance for the Caribbean SMEs .-- IV. Financing options for SMEs in Trinidad and Tobago, Barbados, Jamaica, and the Eastern Caribbean .-- V. A consideration of policy prescriptions to enhance SME access to trade finance .-- VI. The way forward.