Despite considerable interest from entrepreneurs, government has no plans to enact another low-interest loan programme for small businesses after the previous programme collapsed following Hurricane Irma, according to Karia Christopher, director of the Department of Trade, Investment Promotion and Consumer Affairs.
She provided the update to legislators during the closed-door hearings of the Standing Finance Committee late last year, according to a report on the proceedings released last week.
The previous loan guarantee programme was established in 2013 under the National Democratic Party government’s National Business Bureau in partnership with the National Bank of the Virgin Islands.
It set aside $5.1 million to provide start-up funds to small businesses. Under the arrangement, the bank lent the funds, but they were guaranteed by government.
The programme distributed $365,000 in 2013 and $898,000 in 2014, then-Premier Dr. Orlando Smith announced in a press conference in July 2014. Fifteen loans were approved in 2014, he said at the time, though he did not provide the number for 2013.
However, the programme collapsed after Hurricane Irma, Ms. Christopher said during the SFC hearings, calling it “not successful.”
To date, she said, only two of the recipients have repaid their loans. The SFC report does not state whether she said if others had repaid in part.
Campaign promises
While campaigning in 2019, then-NDP party leader Myron Walwyn promised to pump an additional $10 million into the programme if re-elected. Around the same time, the Virgin Islands Party — which would go on to win the election that year — proposed a similar programme to the tune of $20 million.
“The challenge with the programme was recipients did not have to have any surety or collateral,” Ms. Christopher said during the SFC hearings, according to the report. “Basically, it was free money of $75,000 and the government was the collateral, as there [was] no enforcement and the policies were very weak. So the programme just fell apart very quickly.”
After the 2017 hurricane, she explained, “persons practically had nothing to their names [and] this made it difficult for government to recoup the money, as there was no collateral guarantees or anything.”
Trade Commission
The director also told the SFC that a trade commissioner would be appointed “shortly.”
The Trade Commission Act was passed in the House of Assembly in June 2020 along with the Consumer Protection Act, requiring the establishment of a new statutory agency that will eventually consist of a seven-person board.
The commission was “launched” during an event in February of last year. However, no one has been appointed to the board.
At the time of the launch, Premier Andrew Fahie said the commission will evolve into a functioning statutory body over three to five years.
In March, Junior Minister for Trade and Economic Development Shereen Flax-Charles said that for now, the focus of the implementation strategy is to pass further legislative frameworks laying the foundation for the commission, including the Business Licensing and Investment acts, which are before the House of Assembly.
Fee collection
Ms. Christopher also gave the SFC an update on dormant trade licences, which she said are set to become the focus of the department’s effort to raise revenue, according to the SFC report.
Natural Resources, Labour and Immigration Minister Vincent Wheatley said during the hearings that there was “a lot of revenue to be collected” from business owners who hold multiple trade licences but “only pay for the few that they use,” the report added. Although Mr. Wheatley enquired whether the department planned to increase the cost of active licences or strike delinquent licensees from the books, the SFC report suggests that Ms. Christopher did not directly respond.
“The department has to assess the issue of collecting the late fees, which were not being enforced,” she said, according to the report. “However, of recent, the department was able to collect some of the late fees.”
She called the concept of an “umbrella licence” a “thing of the past” as of last year. Under an umbrella licence, a business would have several arms that fell under one licence.
Now “these licenses are divided up and are now coded with specific names,” the report paraphrased.
She explained that this way the department was able to expand on the fees and increase revenue for last year.
In response to a question from Ms. Flax-Charles, Ms. Christopher said she had written “over 30 times” to Premier’s Office Permanent Secretary Dr. Carolyn O’Neal Morton and others complaining of staffing issues.
She explained that she needed to fill 21 positions, including a deputy director, which the department had not had for 11 months. She was paraphrased as stating that “at this point she was willing to get anyone.”
She added that based on her last conversation with the government’s Department of Human Resources, only five of the positions out of the 21 were approved, though they had not yet been filled.
’Health issues’
She also made reference to “health issues” in the department, though the report did not name the health issues specifically.
Mr. Wheatley applauded the director for the work that she was doing “while working in very deplorable conditions,” and called on the HR department to fix it immediately.
According to the report, Ms. Flax-Charles said she and others would continue to lobby for change in the department.