"The Costa Rican Ministry of Economy, Industry and Trade (MEIC) together with the President's Competitiveness Council, the Economic Commission for Latin America (ECLAC) and the Banking System for Development are driving the creation of a “seed money” funding system in order to support Small and Medium Enterprises (SMEs)."
The press release by MEIC is a perfect example of the corporation of national and supranational government entities at work, justifying their salaries and the existence of their superfluous agencies.
“…efforts were coordinated so CEPAL could conduct a study on the conditions and necessary requirements to establish such an initiative in our country”.
Public officials once again prefer to diagnose than act, no matter how many diagnosis exist on a certain subject. It comes as no surprise, as it’s much easier to diagnose than to do something about it.
“…we foresee to provide technical assistance to government authorities to implement a pilot project, to create and operate it, within the framework of the Development Banking System.”
Technical assistance: euphemism meaning hiring highly paid consultants to implement pilot projects, the results of which are never analyzed nor released to the public. All this within the framework of the “Development Banking System”, a grandiose title for a system that simply does not work.
As stated by Emilio Zevallos of Elfinanciero, to boost SMEs we must look to reduce the involvement of public officials and government obstacles, cutting red tape and reducing the enormous number of public officials with a say in which company, project or idea lives or dies.
As for credit, the main problem for Small and Medium Enterprises, governments should focus on lowering the cost of money, instead of handling out crutches, something that is always done selectively, inciting corruption, an endemic evil in our nation’s state entities.
An expensive press conference was conducted to announce the crutch factory. Officials should conduct another to announce its failure, when –inevitably – it happens.
The proposal to finance small enterprises using venture capital remains stalled.
Since last year, authorities have been analyzing financial market regulations that support the creation of the framework and its use for small businesses.
The delay, they say, is because they want to analyze every aspect of it, especially with regard to the risks, believing it could its use could become popularised among investors that do not meet the profile.
The BCIE has granted a credit line to Cathay Bank to support MSME’s, as well as international trade and housing in Costa Rica.
A press release by the Central American Bank for Economic Integration (BCIE) reads:
The Central American Bank for Economic Integration (BCIE) has granted a loan to Banco Cathay allowing it to expand its global credit line to $10.5 million in order to support Micro, Small and Medium Enterprises (MSMEs) as well as international trade and housing Costa Rica.
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