CDB to finance study on MSMEs

The Barbados-based Caribbean Development Bank, CDB, is funding a feasibility study for the establishment of a credit facility for micro, small and medium-sized enterprises.

The US$160,000 study will explore viable solutions to the recurring challenges MSMEs face accessing financing and potentially pave the way for enhanced financial support structures in the future.

“Even with extensive investments in loans and equity, many Caribbean MSMEs continue to face substantial funding gaps because of underdeveloped financial systems. This study will help us better understand the market needs and design a facility that could effectively address these gaps if the demand is validated,” said CDB’s Acting Director of Projects, L. O’Reilly Lewis.

The CDB said that once the demand is validated, the so-called Regional Credit Enhancement Facility, or RCEF, is expected to offer MSMEs access to various financial products and support services, including guarantees, that enhance their bankability.

“It is envisioned that the facility will also support financial institutions in expanding credit access, provide training to enhance the capabilities of financial institutions, guarantee schemes and MSMEs, and streamline processes for all involved. Additionally, the solutions will focus on the inclusion of traditionally underserved groups such as women, youth, and those in the creative industries,” the bank said.

Recognising that MSMEs are pivotal to the region’s economy, CDB added, it has revised its approach to focus on enhancing financial accessibility and supporting sustainable business practices.

“We are constantly looking for ways to support these enterprises, which are the backbone of many Caribbean economies. The results of the study will lead to practical solutions that can help our MSMEs overcome finance-related obstacles and drive their growth,” said the CDB’s Acting Head of the Private Sector Division, Lisa Harding.

In addition to assessing demand, the investment will help CDB establish a framework and operating guidelines for a functioning RCEF.

It will also support CDB’s efforts to secure additional funding from international development partners to boost MSME financing. These steps, the development bank said, are crucial for positioning it to transform the financial landscape for MSMEs in the Caribbean, with the aim of fostering a more innovative, inclusive and resilient private sector.

CMC