SMEs in Saint Lucia ready to do their part to boost export growth, survey finds
Small businesses in Saint Lucia are eager to play an active role to fuel export growth in the small island nation, according to a new competitiveness survey by the International Trade Centre (ITC) and Saint Lucia’s Trade Export Promotion Agency (TEPA).
The study was launched today at the World Conference of Trade Promotion Organizations in Paris, France, where leaders from 86 countries are sharing ways to support small firms in reaching new markets through trade.
The survey of 200 small and medium-sized enterprises (SMEs) across Saint Lucia identifies the obstacles that companies face to compete internationally in four sectors: food and beverage, tourism, manufacturing and creative industries. The ITC SME Competitiveness Survey offers guidance on how to exploit opportunities in these sectors, which are among the most important to the Saint Lucian economy.
Saint Lucia relies primarily on income generated from tourism and to a lesser extent, small-scale manufacturing and agricultural production. The country’s goods imports are worth about five times as much as its exports, however. The government has prioritized efforts to support the export activities of SMEs to boost their competitiveness and to help Saint Lucia diversify its export base.
The benchmarking survey found that Saint Lucian SMEs generally benefit from strong electricity, water and information and communication technology infrastructure. They also enjoy quality support from trade and investment institutions. However, improvements are needed to support growth in all four sectors, including increased international certification of produce in the food and beverage industry, diversification in tourism and better access to finance and transport infrastructure in manufacturing.
Only a third of the 41 agriculture businesses that were surveyed hold an internationally recognized quality certificate – which is often a prerequisite to entering foreign markets. The difficulty of acquiring standards and the high cost of certification deters many SMEs from becoming certified, which may help explain why only 10% of the surveyed food and beverage companies export their products.
Although they have good access to broadband Internet, few Saint Lucian food and beverage companies have a website, the survey found. This means they lose out on an opportunity to attract foreign buyers and promote their brand. On the other hand, SMEs in the industry are efficient and they have excellent access to resources such as water and electricity.
SMEs struggle to obtain finance
Saint Lucia’s manufacturing sector is the largest and most diversified in the Windward Islands and its products are mainly destined for export. But the sector faces assorted challenges, including resource constraints and an inadequate transport infrastructure that often makes it difficult to meet delivery times.
The main hurdle for manufacturing companies is a lack of access to finance – one of the most cited obstacles to growth in developing countries. Although most of these firms understand the process involved in getting a loan, the survey found that 39% have only limited access to financial institutions. This is especially true of small and micro enterprises.
Tourism, a key source of jobs, income and foreign exchange, generates more than 60% of export earnings in Saint Lucia and accounts for 65% of gross domestic product. The survey found that tourism companies have strong links both with local trade support institutions – which help market the Eastern Caribbean country as an attractive destination – and with customers. Most of the tourism firms that were surveyed use social media to connect with potential clients and can draw from a good pool of skilled labour.
The majority also depend heavily on a single supplier, however, which can lessen their bargaining power when they negotiate contracts. This often means higher costs and lower profits.
Modern creative industries such as music production and voiceover services are connected to the global market through the Internet, but those in Saint Lucia struggle with the cost and quality of their connection. Furthermore, the survey found that only 21% hold a patent to protect their innovations, and many cite a lack of skilled workers.
Addressing these bottlenecks would help SMEs in Saint Lucia become more competitive, boosting exports, adding jobs and enriching the country’s economy.
Learn more about SME competitiveness surveys
Learn more about Promoting SME Competitiveness in Saint Lucia