More than just a financial partner with SMEs

In most economies, particularly in developing nations, small and medium enterprises (SMEs) are referred to as engines of growth. This is also true for the Caribbean region, as SMEs encourage innovation, create employment, as well as significantly contribute to economic growth and development. According to the Caribbean Development Bank, micro, small and medium enterprises (MSMEs) make up between 70 and 85 percent of Caribbean firms and contribute between 60 and 70 percent of the region's GDP. Critically, they represent an estimated 50% of all employment.

However, due to the limited coalition on statistics, attempting to quantify SMEs' export earnings is improbable. But, a 2013 study by Suominen and Martincus estimated that only 13.4 percent of the Caribbean subregion’s SMEs engage in export activity.

Like any country, the region earns foreign exchange from a variety of sources, including remittances sent from overseas, from investments (private and public sectors) abroad, from tourism and other services we export, and from foreigners who invest in our country (FDI), for example. Nevertheless, a lack of foreign exchange capacity in the Caribbean is one of the most pressing issues troubling economies.

But, by enhancing the earning potential of the business community in foreign exchange (FX), we seek to help reduce demand and make foreign exchange more available to the region. With the right support, small and medium-sized enterprises could significantly boost their exports and contribute to GDP.

Republic Financial Holdings Limited and Caribbean Export Development Agency signed a Memorandum of Understanding (MOU) in 2022 to officially mark a partnership which puts in place a referral system to ensure businesses across the region receive the assistance needed to develop, grow and create jobs. Through the Caribbean Export-Republic Bank Referral System, businesses will be able to receive individualized assistance in utilizing the variety of services provided by Caribbean Export. This entails having unique access to some of the Agency's most popular programs, including ProNET¹ and Services Go Global, as well as technical programs with a focus on intellectual property and energy management, among other things.

Specifically, the partnership will provide three training sessions with the aim of building the export potential of SMEs in the region² to become net foreign exchange earners by expanding into regional and global markets, as well as supporting sustainable development of the private sector and regional integration efforts in the Caribbean. And, in light of COVID-19 and the globalization of services, it will concentrate on export marketing, cost control, and financial management.

A partnership like this is needed now more than ever as our inherently vulnerable Caribbean economies remain on the path to recovery to stay the course toward sustainable development and long-term economic growth in a "post-pandemic" world.

This agreement also further cements our commitment to the Principles of Responsible Banking and helps the region work towards achieving its Sustainable Development Goals. For example:

• SDG 8: Decent work and economic growth
• SDG 9: Industry, Innovation, and Infrastructure
• SDG 12: Responsible building and consumption

We are aware that SMEs are critical for future economic growth, market innovation, and competitiveness since they assist the poor and disadvantaged, particularly women and youth, by reducing poverty, increasing income, and having a positive impact on household investments in education and health over time.

This is why we are changing the way banks support and work with small businesses, moving from just a financial partner to a much more holistic, business partner. And if done right, we will have deeper and more rewarding relationships with small businesses – vital to helping Caribbean economies as they respond to COVID-19.

¹ In May, the 3-day ProNet workshop led by ProNET trainer Ms. Maxine Harris, focused on preparing the participants’ businesses for export, increasing knowledge in market research, marketing & promotion and the development of export plans.

² Businesses should be registered in one of the 15 CARIFORUM member states i.e., Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago.