Minister of Small Business, Entrepreneurship and Commerce, Dwight Sutherland, is urging the local commercial banks to ease up on the fees charged to Barbadians, and especially the micro, small and medium enterprises (MSME) sector.
He made the appeal recently during the debate on Estimates of Revenue and Expenditure as he urged them to follow the lead of the Trust Loan Unit and “trust your people”.
“Help build that financial literacy element where the asymmetric information becomes more symmetric, whereby the risks then and your interest rates would be lower. Because for the banks, they see going out and doing research on the small business, having a high transaction cost associated with it, so that is why the interest cost goes up,” he said.
Sutherland added, “But we as a Government and as a Ministry, we are charged with educating our people, to help them make better financial decisions. We are also charged with coming up with other policy initiatives, driving our digital payment systems that would allow our people to enhance their credit rating and their credit profile.”
Adding to his comments, Chairman of the Trust Loan Fund, Ambassador Dr. Clyde Mascoll explained that because of a dampening of the demand for loans, commercial banks found other ways to make money and in turn put pressure on the public.
“As a result of people not borrowing because of the circumstances, the banks found other ways to make money and they went the route of transaction costs. Every little thing that you did in the banking system you then paid... In this environment, though, we are not about doing excessive things in order to regulate cause you end up not getting what you want from an economic system when you overregulate the system,” he said.
Dr. Mascoll said while the fees being charged by the banks are putting pressure on the people, Government has done its part as far as the MSME sector is concerned to aid them in accessing the financing they require. This is being done through the Trust Loan Unit, the Enterprise Growth Fund and FundAccess.
“So in three different institutions the government has played its part to deal with the whole problem of the imperfections in the system, where you are not guaranteed a loan even if you qualify for it. And we have therefore to be careful in believing that we can then decide to force the hand of the commercial banks in this case,” he said.
Mascoll added, “However, it is fair to say that the government, having gone the route it has gone in offering all kinds of Barbadians access to finance, whether it is $5000 or less from the Trust Fund, or $150,000 or less at FundAccess or more than $150,000 at the Enterprise Growth Fund, that the Government itself has played a major role in making such funds available.”
(JRT)