Better financing for small and micro business sector in Jamaica

Published on Friday, May 16, 2008

KINGSTON, Jamaica (JIS): Minister of Industry, Investment and Commerce, Karl Samuda, has said that the small and micro business sector in Jamaica will be aided with the provision of better financing options in order to ensure the sustainable development of the sector.

Industry, Commerce & Investment Minister,
Karl Samuda. JIS Photo
Making his presentation to the 2008/09 Sectoral Debate in the House of Representatives on Tuesday, Samuda said that "this year will mark a turning point in the sustainable development of this vital sector."

He informed that $5.5 billion will be made available for development and expansion projects and that the assistance includes contributions from the private sector.

The Development Bank of Jamaica (DBJ) will be making available, a $1 billion line of credit, which will be targeted at businesses engaged in agricultural production and processing, retooling and re-engineering, manufacturing operations, tourism, non-metallic mining, and information technology, among others. The funds will be made available through approved financial institutions.

Loans will range between $50,000 and $15 million and security and the repayment period will vary with the size of the loan.

A further $1 billion will be provided through the DBJ Petrocaribe small and medium enterprises energy fund to be used for retrofitting businesses to achieve energy efficiency and conservation and for alternative energy projects, with specific emphasis on electricity conservation and the production of solar energy.

The Industry Minister also informed that $100 million had been committed to the disabled community for businesses. "That is a guaranteed facility and it does not limit the amount that the disabled community can access, but it will not be less than $100 million, but they may go beyond that, depending on the projects," he pointed out.

In addition, the Jamaica Business Development Centre (JBDC) will be introducing a new financial product to provide financial assistance to a special group of 'un-banked' micro and small businesses.

"This product must be seen as improving 'financial incubation' for a targeted group of micro and small businesses," Samuda told the House, noting that under this programme, financial assistance should be provided only to clients, who have been provided with business development services such as training and business assessment through the JBDC's island-wide network of business centres.

He informed that the target group comprises micro and small business entities and business groups or clusters in the productive sector, primarily. The JBDC, he noted, will apply creative lending methodologies and will not use traditional collateral as a basis on which to give the loans.

The interest rate on the loans will be 10 per cent and it is expected that approximately 2,500 previously un-banked enterprises will be served during the first year of operation.

In the meantime, Samuda informed that the JBDC has applied to the DBJ to be accredited as an approved financial institution. The company will also apply to the National Insurance Fund (NIF) for accreditation in order to access funds from the NIF. "In other words, the JBDC will be facilitating entities that are now unable to have any form of access to financing," Mr. Samuda stated.

The Minister commended the Jamaica National Micro Credit Programme, through which 35,000 loans averaging $23,000 per loan, was made available in 2007/2008, to persons without collateral.

He also expressed gratitude for the support received from the European Union through the Private Sector Development Programme (PSDP), which is a five-year technical assistance programme, initiated in 2004.

The programme is geared towards enhancing the competitiveness of the private sector in response to the challenges of increased globalization and liberalization of markets. The PSDP has also funded important research work at the University of the West Indies, which will inform the preparation of a small business policy.

Source:http://www.caribbeannetnews.com/news-7854--9-9--.html