Earth Today | Policy brief urges support for small entities with ‘green’ agenda
Published:Thursday | August 11, 2022 | 12:07 AM
THERE IS a call for customised financial products to support local green-blue enterprises (LGEs) in Trinidad and Tobago, as elsewhere in the Caribbean, as the region looks to build back better after the COVID-19 pandemic.
The call has come from the Caribbean Natural Resources Institute (CANARI), which recently did a policy paper on the subject, informed by its technical report, Enhancing Financing for Local Green-blue Enterprises in Trinidad and Tobago: Challenges and opportunities.
It noted that LGEs, which consist of informal and formal micro, small and medium enterprises (MSMEs) and social enterprises that use green business models, develop green products or green their business practices, “face many specific challenges in accessing financing”.
“They have a higher probability of being credit-constrained due to their small size. Their indebtedness may be above the 33-40 per cent level required by commercial banks. Where financing may be available, LGEs lack the types of ‘business-ready’ documentation and traditional assets required by banks,” the policy paper said.
“They also may not have persons with the capacity to prepare and communicate financial statements and business plans for approval by banks. Some LGEs may be among the population of women, youth, the elderly and residents in rural communities who traditionally have difficulty accessing financing. LGEs with green/social enterprise business models may require new modes of financing, for example, venture capital and angel investing,” it added.
With LGEs, a type of micro, small and medium enterprises that comprise a reported 70-80 per cent of Caribbean businesses, and which positively impact not only the economic, but also the environmental and social, CANARI said they should be supported.
In addition to customised financial products, the policy brief noted, LGEs should be given special legal status and a one-stop shop for business development services (BDS).
“Trinidad and Tobago has a variety of organisations providing BDS services for MSMEs, which include business training, coaching, mentoring, networking, microfinancing and physical workspace facilities for businesses at varying levels of maturity,” the policy brief said.
“Unfortunately, few BDS providers respond to the unique needs of LGEs. LGEs already face the many challenges common to all micro and small enterprises and the informal sector. But due to their unique blend of for-profit/non-profit status, and focus on environmental and/or social objectives, LGEs face additional challenges in areas such as legal business registration and access to land and natural resources. For those located in rural communities, access to infrastructure, services and markets are additional challenges,” it explained.
CANARI’s efforts form part of a global project led by the Green Economy Coalition (GEC) and funded by the European Union. CANARI is leading the implementation of the “civil society participation for sustainable finance reforms: global coverage” in Trinidad and Tobago, with other GEC partners implementing the project in India, Mongolia, Peru, South Africa, Senegal, and Uganda.