Several small business owners have given on up on trying to use the banking sector to obtain foreign exchange for their businesses. The recent publication of the EximBank’s foreign exchange allocations was eye opening for some, but ultimately not surprising for owners of retail clothing stores who spoke with the Business Guardian over the past week.
“The US dollar is not even a discussion,” said one Chaguanas businessman, who said he had applied for an allocation from several banks almost a decade ago with no success.
“The banks are more favouring the bigger companies, because when the bigger companies get the forex now, and they are leaving the smaller companies, like myself and others (with nothing to get). We don’t get any,” he said, “In other words, the rich getting richer, and then we, who are the middle class. It’s kind of practically impossible to grow.”
“The banks will ask you to go into a queue. I have been in a queue with a couple banks for like, maybe how long PNM power was, 10 years, maybe about eight years. I never get one phone call to say, well, you get something,” the businessman said.
Another business owner from the San Juan region, admitted that he stopped considering the banks as an option for some time. Instead he would attempt to secure his stock by having relatives based in the United States pay for some of the product, while using credit cards to cover the rest of his costs.
“Me, in particular, and a couple of other small businessmen that I know, we actually don’t get US dollars from the bank,” said the store owner, “What we have to do now is that we have to use for instance, with me a brethren they got a credit card for me. I’ll use my son’s mother’s credit card or my sister’s credit card.”
The businessman also noted that based on his own experience and various reports from others in retail business, the amount of foreign exchange given to SMEs who do try to access it from the banks is not really enough to sustain their businesses.
“I didn’t go to the Exim. I know couple people went, and it wasn’t really successful. I used my local banks and what they would give you cannot run a business. No way that might just pay for your the travel expenses. For instance, a year ago I got US$260. That’s literally nothing,” said the San Juan-based clothing store owner.
Both men admitted that when that the bank or credit card option is exhausted or they needed to travel to purchase stock in person, they had little choice but to risk the black market and its inflated price for foreign dollars. This the store owners admitted often lead to increased costs.
In an interview with the Business Guardian last month, business owner Kimberly Baptiste Norgriff, said she used a combination of credit cards and wire transfers to cover foreign exchange costs for her clothing line Honi Label.
She said then, “With the foreign currency situation, they would issue us US$500 (per credit card). So what we have to do is go into the bank and request to do a wire transfer. And it is not always guaranteed. Sometimes I have to go back three or four times to the bank. I have to be playing hide and seek with my suppliers, and (tell them), I don’t have the US dollars. So we’re paying piece, piece, piece, you understand, and really slowing down the business because the business is growing, but I don’t have the US to grow with the business.”
Central Bank Governor Larry Howai said earlier this month that forex sales via credit cards tripled from US$765.5 million in 2015 to US$2.3 billion in 2024.
Owners of J&K Signature Styles Joanna Hospedales-James and her husband Keron James also explained after moving their Port-of-Spain store that small retail businesses are being challenged to generate their own foreign exchange given the economic challenges facing local retailers.
This prompted them to invest in an online store which targeted other Caribbean countries. The couple also noted that the emergence of Chinese online retailer Temu as well as the propensity of local shoppers to order from Amazon and Shein also made it difficult in the current climate.
However, the Chaguanas businessman said he was not as threatened by these online stores as he was by having to use the black market as an alternative to the banks to get foreign exchange.
“When I see people buy from Amazon, and 85 per cent of the time, you hear people complain that they have to come to me actually to buy back a pair of shoes. They may buy from Amazon but when you reach it can’t fit them. They order size 10 because they just wear size 10. But the shoes size 10 on Amazon may actually be smaller,” he said, “So that didn’t really affect my business directly. What really affected me, and continues to affect me, is the black market, where we have to pay of the $8.50 on the black-market scale.”
The San Juan-based retailer however noted Temu in particular did have some advantages via a courier service deal, which made getting its products through Customs smoother and cheaper than the average local retailer.
However, he said very few local business owners could adopt those services to stock their business apart from the odd online-based business. He said the volume of goods that could go through these e-commerce sites were not sufficient to stock a brick-and-mortar stores sufficiently.
He felt the local businesses were more affected by additional costs incurred at domestic ports and Customs delays as well as the large amount of counterfeit or knock-off clothing that enters the market.
The latter he said has made shoppers weary of buying at some clothing stores due to concerns that they would paying premium prices for fake shoes or clothing. This, he said, had prompted more people to shop online.
Two weeks ago, DB Funstyles Clothing Limited a clothing retailer from Penal, was ordered by the High Court to have its shipment of over 8,000 imitation slippers destroyed after the company conceded a trademark infringement lawsuit brought by international sportswear manufacturers Nike Innovate CV and Puma SE.
