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Helping the Needy: Factors Influencing the Development of Microfinance in Barbados

What are the challenges faced by the microfinance sector within the Caribbean?
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This article sheds light on how governments in the Caribbean region have incorporated microfinance in their economic development efforts. It examines challenges to the sector in the region, with an emphasis on the Barbadian context. Despite innate advantages, the microfinance industry in the Caribbean is characterized by poor marketing, weak financial performance, inadequate outreach to SMEs and disparate service expansion. Factors that limit the Caribbean microfinance sector include:

  • Small markets;
  • Poor repayment discipline;
  • Competition from the Caribbean financial sector;
  • Insufficient technical cooperation between business and support organizations;
  • Overemphasis on collateral;
  • Lack of clarity with regards to responsibilities and allocation of goals among key players;
  • High subsidization;
  • Strong government intervention. 

Several interventions are required for the development of the Caribbean and Barbadian microfinance sector. These include:

  • Change in repayment attitudes;
  • Revamping of programs that encourage default;
  • Development of MFI infrastructure technology and other operating infrastructure;
  • Provision of additional microfinance products such as leasing, crop insurance and deposits;
  • Reduced emphasis on fixed collateral by removing financial, regulatory and supervisory biases;
  • Greater advertising and marketing.