The Caribbean Development Bank (CDB/the Bank) has approved USD 160,000 to fund a feasibility study for the establishment for a Regional Credit Enhancement Facility (RCEF) for Micro, Small and Medium-sized Enterprises (MSMEs). This initiative will explore viable solutions to the recurring challenges MSMEs face accessing financing and potentially pave the way for enhanced financial support structures in the future.  

Highlighting the need for improved financial support for MSMEs, CDB’s Acting Director of Projects, L. O’Reilly Lewis says, “Even with extensive investments in loans and equity, many Caribbean MSMEs continue to face substantial funding gaps because of underdeveloped financial systems. This study will help us better understand the market needs and design a facility that could effectively address these gaps if the demand is validated.”

Once the demand is validated, the RCEF is expected to offer MSMEs access to various financial products and support services, including guarantees, that enhance their bankability. It is envisioned that the facility will also support financial institutions in expanding credit access, provide training to enhance the capabilities of financial institutions, guarantee schemes and MSMEs, and streamline processes for all involved. Additionally, the solutions will focus on the inclusion of traditionally underserved groups such as women, youth, and those in the creative industries.

Recognising that MSMEs are pivotal to the region's economy, CDB has revised its approach to focus on enhancing financial accessibility and supporting sustainable business practices. Reflecting on the Bank’s commitment to empowering MSMEs, CDB’s Acting Head of the Private Sector Division, Lisa Harding, says “We are constantly looking for ways to support these enterprises, which are the backbone of many Caribbean economies. The results of the study will lead to practical solutions that can help our MSMEs overcome finance-related obstacles and drive their growth.”

In addition to assessing demand, the investment will help CDB establish a framework and operating guidelines for a functioning RCEF. It will also support CDB’s efforts to secure additional funding from international development partners to boost MSME financing. These steps are crucial for positioning the Bank to transform the financial landscape for MSMEs in the Caribbean, fostering a more innovative, inclusive and resilient private sector.