Approximately 500 St Lucian micro, small and medium-sized enterprises (MSMEs) are now eligible to access capital to grow and jump-start their business ventures post-COVID-19 from a new MSME Loan Grant Facility.
The over EC$10 million in new funding was secured by the Government of St Lucia from the Caribbean Development Bank's (CDB) Special Development Fund 10th Cycle Loan Facility. Conceptualised by Prime Minister Philip J Pierre back in 2021, the MSME facility was officially launched this month.
"I said to my colleagues we have to do something for small businesses and we articulated a clear policy position in our 2021-26 manifesto, to implement a series of measures to revitalise the business sector and to provide partial government guarantees to financial institutions for financing the working capital requirements of affected businesses during the recovery process," Pierre said.
"We must have wealth creators, we can't have people working for people only, we need to have innovators, we need entrepreneurs so we need small businesses to develop," he added.
As per the conditions of the facility, up to 70 per cent of the funding for approved applicants will take the form of grant with the next 30 per cent offered as loan at an interest rate of 3 per cent with minimum collateral requirements. Qualified entrepreneurs and new business owners can access up to EC$10,000 while eligible businesses less than two years old can apply for up to EC$20,000 with those over two years eligible to receive up to EC$25,000. Priority areas include manufacturing (eg agro-processing), agriculture, agro-tourism and services (beauty and wellness, creative industries, ICT and professional services).
MSMEs that account for a large proportion of all private enterprises, employment, and contributions to gross domestic product (GDP) are said to be the backbone of the St Lucian economy. Anecdotal data suggests that the sector contribute close to 40 per cent of GDP employing close to 40,000 persons or about 49 per cent of the labour force. There are over 6,000 registered MSMEs of which over 2,000 are owned by persons aged 18-35 years.
The CDB, which has been pushing to support a rebound of the MSME space across countries of the region, said that its intervention is to be a catalyst for helping the sector to de-risk and unlock financing which traditionally has been unavailable.
Head of CDB's Private Sector Division Lisa Harding, in performance assessment and outlook for the MSMEs this year, said that she was pleased with the expanding contributions that MSMEs have been adding to employment generation, poverty reduction and overall economic activity and social stability in the region. She was also more pleased with the growing evidence that financial institutions are rewarding that contribution.
"We think this year is going to be a much better year for improved access to affordable credit for MSMEs. We've also seen more financial institutions recognising this sector is playing a significant role in the economic recovery and are now looking at new and innovative financial instruments to offer financing being introduced," she said.
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