Experts highlight financing barriers faced by medium-sized businesses

Cartagena, Colombia, Sep 5 (EFE).- A panel of experts in the Colombian port city of Cartagena warned Tuesday about the “significant barriers” small and medium-sized enterprises (SMEs) face in Latin America and the Caribbean when seeking financing and access to capital.

Ana María Ibáñez, Vice President of Sectors and Knowledge at the Inter-American Development Bank (IDB), said during the panel titled “The Power of Financing: How Access to Financial Markets Can Transform SMEs in Latin America and the Caribbean” that “medium-sized businesses with high growth potential are crucial as they can foster innovation and shift towards a green transition.”

Taking place at the Finance in Common Summit (FiCS), the largest global gathering of development banks, the IDB expert highlighted that given the considerable fiscal restrictions in Latin America and the Caribbean, private investment will be “extremely important” for the region’s medium-sized businesses.

“Capital markets have proven to be flexible and can assist in financing,” Ibáñez said

ALARMING FIGURES

Sebastián Nieto, Head of the Latin America and Caribbean Unit at the Development Centre of the Organization for Economic Co-operation and Development (OECD), unveiled the results of a report jointly conducted with the IDB, showing troubling statistics.

According to the study, SMEs in the region “only receive 25% of financing, which is below the global average.”

Juan Carlos Mora, President of Bancolombia, stated that medium-sized enterprises in Latin America and the Caribbean are caught in a dilemma, “They’re neither small nor large,” thus finding themselves in a rather “uncomfortable situation.”

“When discussing elevating businesses to the next level our experience has been traumatic. We’ve assisted companies in going public, and the outcome wasn’t good.”

Mora elaborated on regulatory hurdles being particularly burdensome for these companies, saying, “All the regulatory burdens are imposed, but there isn’t enough liquidity to offset.”

Moreover, he advocated for corporate governance mechanisms for businesses and strategies to hedge risks.

ADDITIONAL INSIGHTS

Natalia Dias, Director of Capital Markets and Sustainable Finance at the Brazilian Development Bank (Bndes), suggested the region should focus on improving and “navigating the penetration of capital markets.”

“I believe we can look at capital markets in two dimensions: access to credit and access to capital,” she noted.

In a similar vein, Isabelle Bébéar, Director of International and European Affairs at Bpifrance, shared their institution’s model “We never operate alone.”

We always work collaboratively with partners, co-financing with private banks. If private bank financing isn’t available, there’s no need to step in,” she said.

Meanwhile, Brigitt Bencich, Chair of the Board of the Financial Corporation for Development of Peru (Cofide), said she believed entities like hers should bridge “the private and public sectors.”

Also participating in the panel were Alexis Cruz, Deputy Minister of Economic and Social Analysis of the Dominican Republic, and Ismael Villanueva, Head of Emissions and International Relations at Nacional Financiera of Mexico (Nafin). EFE.

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