Financial Inclusion of Small and Medium Enterprises (SME) in the Eastern Caribbean Currency Union – a project financed by the German Ministry of Economic Cooperation and Development (BMZ)

Financial inclusion of Small and Medium Enterprises project Enlarge image (© Sparkassenstiftung)

The German Savings Banks Foundation for international Cooperation (SBFIC)  Bonn, is implementing an East Caribbean Central Bank (ECCB) endorsed project to support the strengthening of the financial sector and improvement of access to financial services in the Eastern Caribbean Currency Union (ECCU) by Small and Medium Enterprises (SME).

The main focus of the project include inter alia:

  • Widening of lending services supply to private SME by local financial institutions through strengthening the sustainability, know-how and the product range.
  • Strengthening of business literacy, the financial education for individuals, and entrepreneurs of private SME.

SBFIC’s  objectives are to:

  • Improve SME’s access to financial services by strengthening the sustainability, know-how and the product range of selected financial institutions.
  • Increase the financial literacy of SME by providing business training and business coaching.
  • Increase synergies among indigenous banks by establishing a joint service provider for the financial sector as a potential cooperation model.

The project started some months ago and will be rolled out by financial markets development specialist, Dr. Jürgen Engel, who will act as on-site long-term expert on behalf of the Savings Banks Foundation. Additional technical support shall be provided by an assistant recruited locally and by international experts, who will be assigned on short-term basis.

Based on 200 years of Savings Banks experience, its origin and social mandate the foundation is involved in development work. Since its start in 1992 the German Savings Banks Foundation has managed over 200 projects in 80 countries. Presently a staff of 208 colleagues is working on 34 development projects in 37 countries. This year’s project volume totals 14.4 million Euro. Like in most projects the foundation works closely together with colleagues and practitioners from partner Savings Banks.

Sparkasse zu Lübeck could be attracted to become partner Savings Bank in this important project in the East Caribbean. Colleagues from Lübeck will share their practical banking experience, especially in SME lending, which is the focus of the German Savings Banks business model.

Mid October Dr. Engel and his colleague from Sparkasse zu Lübeck, Mr. Thomas Timm ( Head of Corporate Credit), were invited by the ECCB to perform a video conference and workshop within the framework of ECCB’s annual Financial Information Month, October 2016. Both spoke on the subject “How to better assess the viability of new business ventures”. Together with more than 70 participants from all the islands, partly present in ECCB’s training facilities in St.Kitts, partly connected by video, a number of case studies were discussed. The subject of SME finance, especially finance for young entrepreneurs, is at the heart of the ECCB. While it is one of the keys for economic development, it carries risk and local banks are quite reluctant to lend the financial support the economy is needed.

After this kick-off event SBFIC and its colleagues from Lübeck are planning further steps in their joint commitment. Mid of December they will facilitate a study tour to Lübeck, Hamburg and Bremen as a means to share information and experience. Visits to a number of local Sparkassen, the Savings Bank Academy and last not least meetings with some of their SME clients are planned. Sure, there will also be a visit to the Lübecker Weihnachtsmarkt and a tasting at Lübeck’s famous Marzipan factory, Niederegger, on the program.

The project is designed as a long-term project, with an initial orientation phase of 2 years. Initially the project will start in St. Lucia, which represents the largest overall population as well as largest SME sector in the region. The initial project phase will have a pilot function and will show its positive and exemplary effects for the entire region. To this end, it is anticipated the project will be replicated in other targeted OECS territories. The St Lucia Chamber of Commerce, Industry and Agriculture and the Bank of St. Lucia will be the first local project partners for the coming months.