NEW POLICIES WILL ENCOURAGE LENDING INSTITUTIONS TO BE LESS RISK-AVERSE WHEN ISSUING LOANS TO SMALL BUSINESSES.
The Department of Finance via the National Competitiveness and Productivity Council (NCPC) has been instrumental in coordinating two legislative reform projects: the Secure Transactions in Movable Properties Bill; and the Bankruptcy and Insolvency Bill—with technical assistance provided by the World Bank.
Consultant Lawyer for the Government of Saint Lucia, Bota McNamara, has been engaged in the implementation and harmonization of both pieces of legislation. He said the proposed reforms will aid in the movement of credit which allows businesses or individuals to move from a point of stagnation to economic drivers.
“When you hear bankruptcy, one may ask how does that help in credit? What the bankruptcy and insolvency act does is it permits users of the act to restructure their liabilities and in doing so release themselves from burdensome and bad debt, allow them to put those debts into better standing and allow the entity, be it themselves or their company, to become economic drivers again. So, bad debt becomes good debt, and companies that are now struggling move to become thriving companies again.”
Project Leader and Economist with the NCPC, Sharma Mathurin, referenced the importance of the Security Interest in Movable Properties legislation to the business sector when accessing finance from local banks. She said businesses and individuals can now utilize their movable assets such as vehicles, industrial equipment, accounts receivables, bank accounts among assets as collateral towards loans.
“This is a very significant project for the private sector because we know that access to finance has been a long-standing issue for the private sector and that is because the average small business owner, the average entrepreneur, the average person operating any business in Saint Lucia does not have assets in the form of land and building. So providing the opportunity to use their valuable assets within their business basically opens the opportunities for gaining access to finance so as to start a business, expand on their businesses, take up new projects within the businesses.”
Users of the Security Interest in Movable Properties Bill will have the added confidence that their interest will be registered in an online Collateral Registry within the high court.
“Before, lenders were always hesitant because there wasn’t a good registration system. The registry that is envisioned herein will allow for very clear and open recognition of security interest and therefore give lenders comfort that when they are giving money based on the security of a movable asset the world is aware of their interest and that means they can now collect on that interest if they need to. That will allow small businesses access to credit which they may not have had in the past,” she added.
Various stakeholder consultations were conducted by the consultant and the team from the World Bank with the Saint Lucia Bankers Association, the Saint Lucia Chamber of Commerce, sections of the legal profession, and accountants among others in refining all aspects of the proposed reforms.
“Throughout the process which has been almost seven months, there were at least three to four separate occasions where we met with these various stakeholder groups and made presentations as the Bills were being amended to suit their concerns,” Ms. Mathurin said. “As it currently stands the Bills that should be presented to Parliament are satisfactory to all stakeholders. They have given their comments, we have gone into the Act; the Bills I amended to suit and hopefully have a workable solution that now can benefit all stakeholders.”
The National Competitiveness and Productivity Council is optimistic that these two significant pieces of legislation which will directly benefit the business sector will be enacted before the first half of 2021.
