Youth Economy Agency
Supporting Youth-Led MSMEs
According to the World Bank (2019), small and medium enterprises (SMEs) play a major role in most economies, particularly in developing countries.
SMEs account for the majority of businesses worldwide and are important contributors to job creation and global economic development. They represent
about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income in emerging economies. These
numbers are significantly higher when informal SMEs are included.
Role of SMEs in Economic Growth
The World Bank estimates that 600 million jobs will be needed by 2030 to absorb the growing global workforce, which makes SME development a high priority for many governments around the world.
Challenges Faced by SMEs
Access to finance is a key constraint to SME growth, it is the second most cited obstacle hindering SMEs to grow their businesses in emerging markets and developing countries. According to the WB, SMEs are less likely to obtain bank loans than large firms. There are a wide range of non-financial barriers that disproportionally affect Small and Medium Enterprises (SMEs).
In addition to the economic environment, SMEs face several non-financial barriers related to the capacities of SMEs themselves, they are unable to exploit economies of scale. The small size of these firms implies that managers (or owners) of SMEs often need to perform a wider range of tasks than those in larger firms, since there is less room for specialization. There may be the need for diverse skills that the SMEs may not possess, this is further compounded by time constraints as the owner is usually the key person involved in the business.
Evidence suggests that levels of financial literacy are often low among small businesses which can present challenges for the effective management of these businesses. Low levels of financial literacy can prevent SMEs from navigating complex loan applications and adequately assessing and understanding different options (WB 2010).
The financial statements of MSMEs are usually unaudited and may lack transparency; they are therefore seen as risky borrowers and therefore less attractive to lenders. The matter is further compounded in the Saint Lucian context given the fact that non-productive loan ratios for banks are often higher within their commercial or non-personal portfolio.
Building Financial & Business Capacity
Capacity building to MSMEs in the preparation of financial statements, business plans in addition to training in financial literacy and management has been shown to have a positive impact on the development of SMEs (WB 2010).Vertical linkages with larger firms and strengthening the horizontal linkages with other SMEs can assist in improving market access.
YEA Achievements (As of January 2025)
- 1,194 youth-led MSMEs have received direct financial support from YEA, amounting to over $4.7 million
- 957 persons have benefited from training programs, resulting in a direct investment of over $1.08 million
- 81 youth have benefited from the mentorship program
Government & Stakeholder Support
The Youth Economy Agency seeks to support the continuation of capital investment and capacity development in youth-led enterprises within the MSME sector in Saint Lucia to reduce youth unemployment and increase social resilience. According to the Caribbean Development Bank (2023), the provision of concessionary financing to youth-led MSMEs supports entrepreneurship, the creation of employment, expanding the productive sector, and positioning MSMEs to contribute to long-term growth, reduce youth disengagement and the correlation to crime/violence, and promote gender equality.
CDB further stated that intentional strategies are necessary to address the economic participation of the growing youthful population to build on the progress already made. The government of Saint Lucia understands the critical role that the youth perform in the development of any nation and that the youth must be included as active participants in the development of our nation.
YEA, with the support of the government of Saint Lucia and other key stakeholders, continues in its effort to build capacity within the sector and increase access to finance.