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Trust Loans programme to increase entrepreneurial activity

Entrepreneurship plays a huge part in the growing economy of many countries across the world, and the island paradise known as Barbados is no different. The island while preparing to celebrate its 52nd year of Independence on November 30th, is also giving more financial opportunities to local start-ups, small businesses and entrepreneurs, through the recently launched ‘Trust Loans’.

Recently, Government launched a $10 million trust loan programme, under which starting on Monday, Barbadians can begin to apply for collateral loans to further their business visions.

“We recognize that people need a start; if you recognize, this Government has started a Trust Loan Fund for small businesses . . . . Most persons are finding it difficult to obtain loans from the commercial banks. So, we have set the policy framework so that small businesses can come and start $5,000 trust loans and that gives you a start,” said Minister of Small Business, Entrepreneurship, and Commerce Dwight Sutherland.

Under this new and progressive programme, entrepreneurs can access loans of up to $5,000 at a minimal interest rate of 1.5 to 2%. Clients will be able to also borrow this amount once they have successfully repaid their initial loan.

Acting Prime Minister George Payne Minister of Small Business,  as he explained how the ‘Trust Loans’ programme would proceed, said that Government was seeking to provide ‘comprehensive entrepreneurial framework for small business development’.

He also announced that there would be a number of support mechanisms which included an alternative and user friendly website, a financial literacy bureau to assist entrepreneurs in becoming more financially savvy and a mobile phone app that help entrepreneurs complete loan applications and make payments among other features.

The ‘Trust Loans’ programme is set to provide in total $10 million dollars per year for the next five years that it will take to  seed a Trust Loans Fund.

“The revolving nature of these loans encourages successful recipients to abide by the repayment requirements, which in turn will continually permit the fund to be replenished so other entrepreneurs can benefit and prudent borrowers can reapply for additional financing,” said Minister of Youth and Community Empowerment Adrian Forde, as he spoke during the launch of the Global Entrepreneurship Week (GEW) 2018.

“Increased entrepreneurial activity will go a long way in building more entrepreneurial citizens and excite our young people about getting involved in business, a borderless world where the technology opens new opportunities that were unavailable to previous generations,” he said.

Not only is it possible that the ‘Trust Loans’ will yield increased entrepreneurial activity, but the Minister also assured that there would be initiatives geared towards the encouragement of an entrepreneur in every Barbadian household, in an effort to maximize income earning potential, stimulate economic activity and increase the focus and spotlight of the Barbadian brand in both the Caribbean and International markets.

Two such initiatives are the Prime Minister’s Innovation Award worth $250,000 and the Youth Innovation Award worth $150,000 of prize money which are intended to spark new ideas, innovations and new business, leading to the generation of new wealth, jobs and bringing foreign exchange into the economy.

Blockchain provides opportunities for Barbados

The world is moving further and further into the digital age and of course with that definitive move, there will be a need for financial transactions to be faster, safer as well as easily processed by different countries. That is where Blockchain comes into play.

Blockchain is being touted as the technology to revolutionize how financial transactions are done and is already becoming very significant to how banks will carry out international settlements, transfers and trade finance to name a few.

Blockchain is able to simplify complex processes and acts as a turning point for cross-border transactions with its verification and record keeping.

So it is easy to see why many financial markets will no doubt be looking to embrace blockchain as early as they can, and according to reports coming out of Barbados the island is ready to explore blockchain opportunities, as they push for more fintech companies.

Speaking to the media at the launch of the International Business Week Julia Hope, President of the Barbados International Business Association (BIBA) explained that Barbados was looking to embrace financial technology ‘fintech’ push more fully.

As the association currently works towards meeting the deadlines imposed by the Organization for Economic Co-operation and Development (OECD) through its Base Erosion and Profit Shifting programme (BEPS), Hope assured that the sector officials would continue to examine new markets and opportunities for attracting diversified product offerings as well as the jurisdiction needed for those products and services to be marketed.

“We have some good companies in Barbados already operating – the likes of Polymath and AION, to name a couple,” she said.

“They are here; they are operating and this isn’t just digital currency, this is blockchain. We need to get the regulatory framework in place to enable these companies and others to thrive here, but we could very much become the Silicon Valley of the Caribbean and that is something to aspire to.”

In a joint statement issued by the Central Bank of Barbados with the Financial Services Commission (FSC), both institutions have recognized that fintech innovation could play a critical role in safely lowering the costs of financial transactions, while offering more efficient services to consumers without undermining the financial system.

To that end they have established a framework for a regulatory sandbox, which could last between eight to 12 weeks, to give the regulators an idea of how it will work as well as provide the clarity necessary for businesses offering innovative fintech services, solutions and products.

“One outcome is that having tested it, we don’t like what we see and there are too many risks for consumers, we regulate those activities. We regulate them in such a way that either the likelihood of loss is less or we regulate who can access it,” explained Economist and Chairman of the FSC, Avinash Persaud.

He said it could also attract new investors “that may want to try out a new product in Barbados and if it is successful they might want to try it out elsewhere,”  adding that within a year or so, the country would be in a position to go a joint sandbox with a regular in another country for firms who may be doing cross-border transaction.

Latest layoffs in Barbados too rushed

Like a storm brewing in the ocean just about to hit land, the latest layoffs in Barbados have caused its own disaster with dangerously swirling emotions of anger and confusion.

On October 14, Prime Minster Mia Mottley made the announcement that the government was seeking to send home around 1,500 public servants during her national address from the official prime minister’s residence, Ilaro Court.

The retrenchment exercise, as explained by Mottley was in an attempt to cut government spending, in line with the objectives outlined in the Barbados Economic Recovery and Transformation (BERT) program, which has received backing from the International Monetary Fund (IMF).

News of the impending layoffs were not met with any great enthusiasm, despite the Prime Minister’s attempts to lessen the blow, by utilizing the last in, first out policy, saying that more than 80 percent of the people who would be affected by the lay-offs were those holding temporary positions.

However, even as she explained that those being handed their notices would not be leaving empty-handed, the lay-offs were met by resistance nonetheless.

Mottley said it was regrettable to have to lay off so many, and explained that to her it was important that those who were terminated, left with a cheque dealing with the severance-type payments as well as the notice and the termination.

“None of us would feel good having to go home without knowing where money is coming from and who is going to help us tomorrow or to come back next week or next month and be begging for money,” she said.

The Trade Unions, most notably the National Union of Public Workers (NUPW) were not impressed by the news or how government has ‘rushed’ the layoff process and ‘kept them in the dark’.

On Tuesday it was revealed that most of the 955 central government workers who were to be laid off were female, and the largest public sector trade union described this move as ‘an attack against women’.

NUPW General Secretary Roslyn Smith told the media she was ‘a little bit disappointed in the way that things went’.

“Yes, we recognized that there will be layoffs, but at the same time, we believe that we should have had more time for consultation on such a sensitive issue . . . and when we look, we recognize females . . . as the householders. They are the single parents, they have to look after their children, they have mortgages and rents to pay,” she said.

Giving some credence to her words, many workers received their walking papers on Friday, October 19, less than a week after news broke about the layoffs, creating an atmosphere of anger and confusion.

Confusion because some of the workers were unsure of their employment status as they were terminated by word of mouth and then urged to continue to turn up for work by trade unionist Caswell Franklyn, furthering a very messy situation.

While Mottley said Government would be establishing a household mitigation unit to assist those now on the breadline to ensure that none of them fell below the minimal standard of living, the Unions are calling the exercise a ‘rush job’ and stating that they themselves were not given enough or proper notice of what was going to really happen or how to proceed.