Microcredit in the Caribbean: Experiences & Best Practice Dr. Jonathan G. Lashley SALISES, UWI, Barbados

Background Grameen Bank and Mohammed Yunus in the 1970s Microfinance Movement spread as a weapon in the fight against poverty Many failures due to a lack of appreciation of context (social, cultural and economic) Exclusion of the poor and scaling-up to reach ‘bankable’ clients

Objectives Identify main experiences of Microfinance Institutions (MFIs) and their clients Utilise these findings to recommend ‘Best Practice’ Reasons for success and failure? The EXIT RATE as an indicator of success Steps for increasing the productivity of microfinance

Countries & MFIs Examined Caribbean countries of Barbados, Dominica, and Trinidad and Tobago originally selected Trinidad & Tobago MFI declined during data gathering Charity- Barbados Youth Business Trust (Barbados) Community-Based- Pinelands Enterprise Facilitation Services (Barbados) Private Sector Initiative- National Development Foundation (Dominica)

Methodology Institutional Analysis Client surveys Case Studies of a selection of clients from each MFI

Main Findings Failures lie at several levels The EXIT RATE cannot be used as a measure of success Client histories absent due to lack of institutional capacity External environment constraints Loans are small, NOT micro Asset-based lending The poor are not benefiting Lack of networking among MFIs and other support organisations

POLICY RECOMENDATIONS Need to identify: Who are the poor- not a homogeneous group What their main needs are- very poor are risk averse, greater need to increase employability not entrepreneurship How to ensure that they benefit from microfinance provision- the poor are rural, female, young and under-educated

POLICY RECOMMENDATIONS: Problems & Solutions Small Size Inefficient MFIs Lack of Savings-led Approaches Bias towards small enterprises Heavy reliance on subsidies

Directions to follow? What are our goals in the provision of microfinance? Poverty Alleviation or Self-Sufficient MFIs? Decisions need to be made!

Future Research Issues What are the finance needs of the different groups within the ‘poor’? Is there sufficient demand that a tiered approach can be successful? Can an apex MFI survive in a Caribbean context?