Bank Report: Small firms in five Caribbean economies surveyed - reported high financing costs as a more significant barrier to business than larger firms

IDB Report: Better Access to Financing for Firms Could Drive Growth and Jobs in Caribbean

A new report from the Inter-American Development Bank (IDB) and IDB Invest recommends Caribbean countries focus on overcoming obstacles to financial access and inclusion for businesses, because having more developed and inclusive financial systems could increase growth and reduce poverty and income inequality.

The report Finance for Firms: Options for Improving Access and Inclusion emphasizes the important link between deeper and more accessible financial systems, and faster and more inclusive economic development.  The publication compares financial systems of six Caribbean countries—The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago—to others from across the world.  It also assesses results of enterprise surveys in 2014 and 2020 to identify key financing challenges faced by firms, including small enterprises, and those that are owned or operated by women.

The report finds that firms across the Caribbean face outsized challenges, particularly when compared to global peers.  It also finds that the COVID-19 crisis appears to have further constrained access to financing, that smaller firms seem to face more significant hurdles than larger ones, and that businesses owned and/or operated by women face more severe challenges than others.  These challenges companies encounter include high borrowing costs, burdensome collateral requirements, inadequate funding mechanisms, and complex application procedures.

In 2020, 76% of firms in Suriname and 72% of firms Barbados reported that issues such as significant collateral requirements posed major or very severe obstacles to their performance and ability to do business, up from 22% and 35%, respectively, in 2014.

Meanwhile, in 2020, small firms in five of the six economies surveyed reported high financing costs as a more significant barrier to business than larger firms.

Surveys also suggest that women-owned or -operated firms (WOFs) face more significant financial constraints than other firms, with an average of about two-thirds of these enterprises reporting access to financing as a major or severe obstacle.

“It is key for the public and private sector in Caribbean countries to collaborate so entrepreneurs can better finance their ambitions to grow their businesses,” said David Rosenblatt, Regional Economic Advisor for the IDB’s Caribbean Department.  “This is important for strengthening the ongoing economic recovery, in the near-term, and improving growth prospects for the future.

The authors proposed several priorities, including ensuring macroeconomic stability and policy prudence, improving the availability of credit information, and promoting credit sector competition, among others.

Finance for Firms: Options for Improving Access and Inclusion is part of the IDB’s Caribbean Economics Quarterly series. In addition, it has country-specific sections for The Bahamas, Barbados, Guyana, Jamaica Suriname, Trinidad and Tobago.

This report is in line with the SMEs, gender and inclusion pillars of Vision 2025 – Reinvesting in the Americas the IDB’s roadmap to economic recovery and inclusive growth in Latin America and the Caribbean.

Source

High Bahamian youth unemployment, and resulting poverty and social inequality breed high crime levels in The Bahamas

Poverty Breeds 35% ‘No Graduate’ Rate

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

More than one-third of the poorest Bahamians fail to complete secondary education, helping to create what a former Cabinet minister yesterday described as a “stubbornly high” youth unemployment rate that must be reduced urgently .

James Smith, ex-state finance minister, told Tribune Business that the high jobless rate among Bahamians aged between 15-24 years-old, which hit 31 per cent in November 2014, was “structural” in nature.

He said the high rate epitomised the large gap between jobs that were available and the skill sets required by employers, with many young Bahamians not equipped to meet these requirements.

Apart from the “social fallout” caused by high youth unemployment, the former Central Bank governor warned that it also held back economic growth, because unemployed persons lacked the incomes to give them spending power.

The consequences are spelled out in a recent Inter-American Development Bank (IDB) report obtained by Tribune Business, which identified high unemployment among young Bahamians, and resulting poverty and social inequality, as key factors behind the high crime levels.

The IDB report, on a proposed ‘Citizen Security and Justice Programme’, found that 35 per cent of 20-24 year-old Bahamians drawn from the poorest segment of society had failed to complete secondary school, compared to just 6 per cent of the rest of the population in the same age group.

Highlighting the startling inequalities in Bahamian society, the IDB report said: “The fact that most students complete secondary education but only half of them graduate (pass a final examination) is a worrying indicator of poor system performance.

“Available data shows that 35 per cent of 20-24 year olds from the poorest decile have not completed secondary education, compared to 6 per cent of the rest of the population of that age.”

While unemployment in the 15-24 year-old age group was slightly down in November 2014 compared to the 32.3 per cent peak hit in 2013, the IDB report left no doubt as to the consequences for Bahamian society.

“Research and evidence, show that a wide variety of risk factors contribute to the prevalence of youth violence, one of them being lack of attachment to school and the workplace during adolescence and adulthood,” its report said.

“In the Bahamas, youth unemployment has doubled from 14.9 per cent in 2001 to 32.3 per cent in 2013 for job seekers aged 15 to 24)”, a rate double that of the overall nation’s.

“Further analysis within the 15-24 age group shows that unemployment is particularly high among 15-19 year-olds seeking jobs (42 per cent versus 24 per cent for those 20-24),” the IDB added, highlighting the problems secondary school leavers face in finding immediate employment.

“Searching for jobs can be a discouraging process given that more than 50 per cent of youth remain unemployed for more than a year,” the Bank’s report said. “Idle young people (not in employment, education, or training) are particularly vulnerable to continued labour detachment, which may contribute to violent or anti-social behaviour.

“The employability of youth hinges critically on the level of education and skills attained to match demands from employers. Even though most students complete secondary education, only half of them actually graduate.

“Although there are not available measures of skill levels of unemployed youth, most employers report difficulties in recruiting job candidates because of insufficient specific skills (66 per cent), soft skills (24 per cent) and numeracy skills (12 per cent).”

Responding to the Department of Statistics’ Labour Force Survey, Mr Smith described youth unemployment as “stubbornly high” and “an area that really needs to be addressed”.

He identified the cause as “the gap between available jobs and the skill sets to meet those jobs”, and said: “Jobs being advertised are calling for skills a lot of young people don’t have, plus experience, because a lot of them have never worked before.

“The quick solution to that is really to identify and train the people, if they can, to reach the level of aptitude for jobs that is required.”

Besides the social impact, Mr Smith told Tribune Business: “It’s a restraint to economic growth. Young people joining the labour force at a sufficiently large rate, that keeps an economy going.

“I’m optimistic that over time most of these things will work themselves out.”

The Bahamas Chamber of Commerce and Employers Confederation (BCCEC), too, in a statement issued yesterday called for “more emphasis” to be placed on training and skills development in the Bahamian workforce.

“In the excessively fast pace world in which the Bahamas competes, things are moving at the speed of light and if individuals do not take the time to tool and retool themselves, they will get left behind,” the BCCEC said.

“Businesses are looking for people with drive and ambition who are able to produce quality work at an accelerated pace. Loyalty in the workplace experienced in years gone by is a thing of the past, and individuals who are high achievers are always looking for something that is more challenging and more gratifying.

“Therefore, it is also important for private sector businesses and the public service to be on the cutting edge of innovation and technology to ensure that they are also keeping pace with new developments and that they are able to attract quality employees in their businesses.”

The BCCEC added that industrial peace would also aid hiring, and called on employers and trade unions to negotiate reasonable settlements to outstanding issues.

Describing the Bahamian economy as “very fragile”, the Chamber said: “Trade unions, particularly in this environment, should remain cognisant of the vulnerability of workers and should ensure that their members remain employed through balanced demands tied with worker performance and the financial position of employers.

“Employee benefits will come, but the first rule should be that of survival in this current economic environment.”

January 16, 2015

Tribune 242

The poverty rate in The Bahamas increases

Poverty rises 3.5 percent

43,000 living below poverty line

By ROYSTON JONES JR.
Guardian Staff Reporter
royston@nasguard.com

Forty-three thousand people were living in poverty in The Bahamas at the time of a survey conducted in the first half of 2013, the Department of Statistics revealed yesterday.

The results of the Household Expenditure Survey showed that 12.8 percent of the population lived in poverty, an increase of 3.5 percent over the 9.3 percent of the population who lived in poverty at the time of the Living Conditions Survey in 2001.

The absolute poverty line — the minimum required for an individual to meet his or her basic needs — stands at $4,247 annually.

In 2001, the absolute poverty line stood at $2,863.

The latest survey was conducted between February and June 2013.

The results showed that Haitian nationals had the highest prevalence of poverty at 37.69 percent.

But Haitians represent 7.48 percent of the population, according to the survey.

While the rate of poverty among Bahamians stood at 11.14 percent, Bahamians represent 87.68 percent of the population.

The rate of poverty among people from the United States, United Kingdom and Canada stood at 3.36 percent.

Those nationalities represent 1.62 percent of the population.

Other nationalities in The Bahamas have a poverty rate of 3.69 percent.

Almost three quarters of the poor resided in New Providence, where the poverty rate stood at 12.68 percent.

The rate of poverty in Grand Bahama was 9.69 percent.

The survey notes the rate of poverty among the Family Islands collectively stood at 17.16 percent.

Director of Statistics Kelsie Dorsett said the downturn in the Bahamian economy in conjunction with the rate of unemployment contributed to the increase in poverty levels.

Unemployment was recorded at 16.2 percent in May 2013.

That figure dropped to 15.4 percent, according to the latest Labour Force Survey results, which were released earlier this year.

Although the rate of poverty among women was lower than men, women represented a slightly larger percentage of the poor, according to the survey.

Men represented 48.17 percent of the poor, while women represented 51.83 percent of the poor.

The survey indicated the number of households considered below the poverty line increased from 5.3 percent in 2001 to 8.7 percent in 2013, an increase of 3.4 percent.

Households headed by women, which accounted for 47 percent of all poor households, had a higher rate of poverty than households headed by men, according to the survey.

The poverty rate among households headed by men stood at 7.9 percent compared to 9.7 percent poverty rate among households headed by women.

Dorsett said the survey provides a comprehensive and accurate profile of the poor and the data is critical to the formation of policy to address the needs of the poor.

“It will also be used, I am sure you have heard Social Services talk about their conditional cash transfer program system, which they are soon to implement,” she said.

“This will guide that system, assess it and help to monitor that system.”

The release of the survey’s results comes amid national discussion over the likely impact value-added tax (VAT) will have on the poor after it is implemented on January 1, 2015.

Minister of State for Finance Michael Halkitis has said the cost of living is expected to rise by four percent.

Asked whether the poor can sustain this increase in the cost of living, Dorsett said the government has made presentations on how it expects the poor to be impacted. She did not want to comment beyond that.

Social Services Minister Melanie Griffin has said the government can “handle whatever fallout” may come from the new tax.

She said if the government finds that its efforts to protect the poor are insufficient, additional funding would be requested.

The government is in the process of implementing a new social safety net program, which is expected to streamline the assistance process.

In 2012, Griffin revealed that the number of people receiving some form of help from the government ballooned to around 10,000 people from 3,000 people in 2004.

The Department of Statistics interviewed the occupants of 2,123 households as a part of the survey.

Dorsett said her department hopes to conduct a Household Expenditure Survey every five to six years.

June 11, 2014

thenassauguardian

Poverty in The Bahamas ...is on the march

Poverty on the March

The Bahama Journal



Even as some of this nation’s elite classes now bemoan the fact that things are not as good as they once were, there are very many other Bahamians who are – for the first time in their lives – being introduced to poverty’s harsh lash.

There are those among us who could be categorized as ‘the working poor’ who are being troubled and beset by rising prices for practically everything they must consume.

Poverty is on the march.

This phenomenon is nothing more and nothing less than a type of social death on the installment plan where day by dreadful day more and more of our people find themselves reduced, diminished and humiliated.

It is perhaps this factor – among others such – that might explain some of the rage that currently saturates social life in not only today’s Bahamas; but that of any number of other societies in our region.

While most Bahamians are fixated on the extent to which enraged Bahamians are turning their pent-up wrath on each other; there are other Bahamians – ourselves included – who are focused on other matters that seem more germane to the lives of the vast majority of their fellow-Bahamians.

While some of these matters are not usually discussed when reference is made to crime and violence; we do believe that there is space in that dialogue for a closer look at the violence done practically everyone by the rising cost of living.

Put otherwise, there is currently at work a macabre kind of backward-strutting dance where tens of thousands of hard-working Bahamians know that the harder they work, the less money they will have.

This is due to the fact that – even as they toil and labour – the cost of everything that matters goes ever upward.

Today very many Bahamians who now find themselves crushed underfoot now cry out to high heaven for relief.

Just a few short weeks ago, some of these people dared think that their cast votes could – at long last – make the difference they thought would matter for them.

Just a few short weeks ago, this nation’s streets were festooned with the eager faces of politicians on the make; and did they lavish praise on themselves?!

Of course, they did.

This is the way politicians always do what they believe they must in their perfervid effort to get as many to follow their lead.

This kind of hyperbole is the kind of stuff, these types always do.

Things always have a way of returning to reality on the morning after.

In a sense, then, we are now all living on the morning after.

It is therefore as clear as ever that the current administration has in their possession no magic bullet; that very many of this nation’s children are being abused; that unemployment is still far too high – and that far too many rapists are up and doing the things they always do; they are out there raping.

The killers are still doing their thing.

Far too many of this nation’s children are schooled and educated in comfort while others are left to fend for themselves in places where gun-fire is heard regularly.

These children deserve better.

Sadly, they may be in for worse piled upon even more of the same.

Information reaching us speaks a story of horror, neglect and indecisiveness as regards the current state of affairs in any number of public schools which are bulging to the point of bursting their banks with students.

Today we have schools where classrooms are chock-full of students – many of them at the primary level – where only so many can ever really benefit; and so the beat continues for hundreds upon untold hundreds of this nation’s youth.

This is no basis upon which we can ever even hope to build a thriving Bahamian Nation.

Scarier than this is this sad fact of life: – This nation’s children deserve far better than they are presently getting from their parents, their pastors and their parents’ representatives in parliament.

As for these hard-working people, lowering the cost of living could and should be one of this new administration’s highest priorities.

To this point in their ruler-ship, we are yet to be convinced that they are up to this challenge. But yet, we live in hope.

October 04, 2012

Jones Bahamas

Caribbean Blog International