Bridget Campbell
Small and medium-sized enterprises (SMEs) are essential to global economies, driving job creation and economic diversification.
In the Caribbean, these enterprises are pivotal for fostering innovation and enhancing competitiveness in a region that seeks to diversify beyond traditional sectors.
SMEs, however, face significant financing gaps that hinder their growth.
In this week's column, we examine how emerging trends such as embedded finance, blockchain technology and sustainability-focused financing, are transforming how SMEs access capital and overcome barriers to funding.
Economies around the globe are supported by robust networks of SMEs.
In the US, SMEs have created over 70 per cent of net new jobs since 2019, while in the UK, there were 5.5 million SMEs in 2023, representing over 99 per cent of the business population.
In TT and throughout the Caribbean, SMEs drive economic activity – contributing to GDP, creating jobs and lowering unemployment.
In the post-oil boom era, they have become critical to economic diversification and sustainable development.
Funding the future: Closing the Gap for TT’s SMEs
Despite their contributions, SMEs face a significant financing gap – the difference between the financing they need and what is available.
A 2017 World Bank study covering 128 countries estimates the finance gap at US$5.2 trillion – 40 per cent of all enterprises and 19 per cent of GDP.
In response, TT's public and private sectors developed a range of loan facilities.
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In partnership with the local banking industry, the government has made financing available to SMEs through initiatives such as the SME Development Financing Facility and Nedco's Small Business Financing.
Additional support was also provided after the covid19 pandemic through the Small and Medium Enterprises Stimulus Loan Programme.
Regional bodies have also made funds available. Caribbean Export recognises the crucial need for funding to access export markets and provides several grants that aid capital investment and project financing. Similarly, the Caribbean Development Bank supports its borrowing member countries by offering loans to local financial institutions – strengthening the capacity of SMEs to thrive and expand.
Emerging trends reshaping SME financing
Barriers to financing are prevalent globally, but emerging trends are bridging the finance gap.
Embedded finance, blockchain and FinTech technology, and sustainability-focused financing are a few of the new solutions meeting the evolving needs of SMEs.
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Traditional financing is being disrupted by emerging technologies, moving towards sustainable practices and increased environmental awareness.
As businesses adapt, embedded finance emerges as a critical solution. It is defined by PwC as the seamless integrat
