The Social Economic Council SER had advised against a Development Bank for St. Maarten (see Tuesday paper). The main reason is that a Government-owned lending institution isn’t sustainable due to the small-scale economy and wouldn’t benefit small- and medium-size business as intended.
There is little room for big loans in an already crowded banking market, which makes covering operational cost a challenge. Limited availability of human resources with risk management increases the chance of such a bank becoming more of a burden than a tool for sustainable development.
Instead, SER suggests a so-called microcredit system that is not only about financing but also gives guidance and builds a relationship with the client. What’s more, an organisation called Qredits has been successful providing this service elsewhere in the Dutch Caribbean and plans to expand to all the islands.
It is argued that commercial banks should cater better to small entrepreneurs’ needs, which can be very profitable. The latter may be considered a challenge for local financial institutions to be more accommodating towards business ventures yet avoid the kind of irresponsible banking policies that led to major problems in many countries.
The trick is to remain careful, prudent and somewhat conservative, but also open to new ideas and of a mind-set that simulates private initiative. In other words; pursue a balanced yet tailor-made and above all sensible approach.
