Banks need to ‘support innovation’
Commercial banks in Barbados need to redirect funds to finance start-ups and innovation instead of largely satisfying the need for the latest consumer electronics.
Former Prime Minister Owen Arthur made the suggestion as one of two major changes that must take place if Barbados seeks to become competitive in a highly technological world.
During his featured presentation on Thursday at the Lloyd Erskine Sandiford Centre, during Innovate Barbados 2017, Arthur said some of the excess liquidity in the financial sector needed to be diverted towards other investments.
“Barbados’ financial system is very liquid but functions in a highly risk-averse manner largely devoted to underwriting consumption,” the former Minister of Finance pointed out.
“There is need for financial innovation to enable more resources to go towards the underwriting of reasonable risk to finance the start-up operations and other legitimate activities by entrepreneurs and other technological agents.”
The Financial Stability Report 2016 indicated commercial banks held 55 per cent of the domestic financial assets, with almost $1.4 billion in excess liquidity.
Arthur also called for the liberalisation of the business environment, the second change which needed to be made so Barbadians could continue to enjoy the range of services provided by the state.
He said Barbados followed a modified version of the Nordic model, but our social services and entitlements were “paid for by a plethora of taxes”, while businesses generated the wealth and revenue to do so in countries like Norway and Sweden.
Those countries, Arthur said, were at the top of all of the global competitive indices, but not by chance, as they had some most “technologically dynamic business systems to be found anywhere in the world”.
“The nexus between a stable welfare system, a dynamic technological culture and a liberalised business environment has to be established for the kind of civilised development that Barbados has today enjoyed to become capable of being sustained in the future,” he explained.
He warned the current welfare system could not continue without changing the business culture.
“The development of our nation will take place for the future in a world characterised by complex and rapid technological change. We cannot afford to be passive in the face of such developments,” Arthur added.
During his presentation, the former prime minister suggested Barbados develop the Warrens to UWI [University of the West Indies] corridor into the country’s first smart community with emphasis on innovation, technology and entrepreneurship. (SAT)
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