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Friday, July 3, 2009

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Time for SMEs to enter Development Bank boardroom? By INDERIA SAUNDERS ~ Guardian Business Reporter ~ Inderia@nasguard.com: The head of the Bahamas Business Association is putting forth suggestions to help the country's Development Bank better meet its mandate, with a shake-up of its board absolutely key. It's a measure BBA Chairman Marvin Smith believes will lead to greater understanding of the organization's mission and stewardship for its customers. "The Development Bank has to be more responsive to the business community," he said yesterday. "As I understand it, the board does not meet on regular basis, maybe once or twice a month, and that's an unnecessary delay in getting projects approved." To have things managed more efficiently, Smith is suggesting more small to medium sized enterprise owners be offered seats at the board table. He argues a move like that will allow greater understanding of the BDB's task at hand. "You need to have more business people on the board that represent the people coming to borrow money," he said. "Because you could have a lot of professional persons working for someone on there but it's a complete difference from running and owning your own business." Guardian Business was unsuccessful in its attempts to reach BDB executives yesterday for a response to Smith's suggestions. Still, the businessman's advice follows indications from State Minister for Finance Zhivargo Laing that a sea-change is in order for the BDB, currently saddled with a 40-percent default rate. While Smith concedes one of the BDB's greatest challenges is getting persons to pay back loans, he asserts the defaults would be largely contained with better collaboration between the BDB and the Bahamas Agricultural and Industrial Corporation (BAIC). The latter company assists many entrepreneurs in the formation of their business proposals, which are then carried on to the BDB. More frequently, however, Smith is charging, plans approved by the BAIC are being denied. "It just makes no sense for persons to go to BAIC to help them and get refused by the development bank," he added. "There is a mix-up somewhere and whether they need to cooperate with each other or somewhere somebody isn't needed." The frequency of loan denials to SMEs is now prompting Smith to press for better preparation of SMEs. He argues the BDB needs to be more aggressive with the practical training programs so that entrepreneurs are better prepared going into business, which he says in itself can eliminate the high default rate at the bank. "We know most SMEs fail in areas of bookkeeping, records and accounting and in areas of not having the right management experience or capabilities for their project," he explained. "So let's make sure businesses have a good chance of success by getting them trained." These are changes he is certain will see small businesses flourish in a tight economy and ultimately reduce the rate of unemployed persons. Tuesday, June 23, 2009