DBJ disbursed $1.2 billion in loans last fiscal year

KINGSTON — The Development Bank of Jamaica (DBJ) has disbursed just under $1.2 billion in concessionary loans to finance a wide range of projects within the local productive sectors, during the period April 2010 to March 2011.

General Manager for the DBJ’s AFI Relationships Division, Yvonne Lewars, tells JIS News that the sum came from a $2.5 billion facility comprised of DBJ funds and a combination of loans from the PetroCaribe Fund and the Caribbean Development Bank (CDB). 

She points out that the loans, which were allocated through 12 approved financial institutions (AFI), went towards financing projects in small and medium-sized enterprises (SME) and micro and large projects in several sectors including agriculture, energy, manufacturing, mining and quarrying, services, and tourism.

Mrs. Lewars informs that since April 2010, more than 4,450 loans, inclusive of those allocated for micro financing, were disbursed from the three available funding portfolios. These, she notes, saw some $705 million disbursed from the PetroCaribe Fund, and over $413 million from the other funding sources, for an overall total of

$1.19 billion. She adds that projects totaling just over $1.6 billion in loans were approved for funding projects during the year.

According to Mrs. Lewars, the DBJ generally finances projects contributing to Jamaica’s economic development.   “These are projects, which provide new employment as well as maintain jobs, facilitate foreign exchange earnings and savings, and projects that seek to rehabilitate and expand productive businesses,” she says.

She notes that the PetroCaribe Fund generally supports SME projects in all sectors, pointing out that a portion was specifically set aside to finance ventures focusing on energy efficiency and conservation, and alternative energy.   A maximum of $15 million is loaned for any SME project as stipulated in the PetroCaribe agreement.

Funds borrowed from the CDB are specifically earmarked for agriculture and agro-processing, and small farmers are targeted in this regard, Mrs. Lewars informs. A maximum of $7.2 million is disbursed for agricultural projects based on the agreement with CDB. 

DBJ funding, she tells JIS News, support activities in all sectors, “up to an amount of $100 million”.  The applicable interest rates range between 9.5 and 11 per cent to clients, usually referred to as the “end users” or sub-borrowers, with whom the Bank’s AFIs, seven micro finance institutions (MFI), and one agent, negotiate loan arrangements.

The AFIs are: the National Commercial Bank (NCB); Bank of Nova Scotia (BNS); Capital and Credit Merchant Bank (CCMB); PanCaribbean Bank; First Global Bank; FirstCaribbean International Bank, Jamaica Money Market Brokers (JMMB); Jamaica Cooperative Credit Union League (JCCUL), incorporating all credit unions; the National Export-Import (EXIM) Bank; and the National People’s Cooperative Bank.

The list of MFIs comprise Access Financial Services Limited; Jamaica National Small Business Loans Limited; NationGrowth Microfinance Limited; Micro Credit Limited; and Churches, St. Elizabeth, and St. Thomas Cooperative Credit Unions.

In explaining the rationale for having three of the JCCUL members on a separate list of MFIs, Mrs. Lewars says while credit unions can go through the parent body to secure and retail regular (AFI) loans, some of the league’s members currently engage in micro lending, for which they need to qualify separately.

“With the approval of the league, we have analysed their financial statements and accredited the individual credit unions to come directly to us for micro loans,” she says, adding that this list is expected to increase.

As an agency of the Ministry of Industry, Investment and Commerce, the JBDC provides business and technical support services to guide start-up of business operations; consultancy advice for established businesses; and small loans for these operations.

Mrs. Lewars says end users of DBJ funds are required to take project proposals to their bank or financial institution, which will assess these for technical viability, then negotiate funding.  If the proposal is approved by the AFI, an application is made to the DBJ for funds for that project.

She points out that the DBJ’s Board gave approval for AFIs to access blocks of funds for retailing to clients which, she says, will facilitate faster turnaround in the processing time. Some institutions have accessed these blocks of funds, which they on-lend to a number of projects without having to refer to DBJ for individual project approvals, she informs, adding that post audits of the activities of these projects are undertaken.

Mrs. Lewars says the DBJ knows that many individuals and organisations are not aware of how simple the process of accessing a loan from the institution is, and the Bank has moved to address this.

“Potential borrowers may not be aware that the turnaround time may take as little as five days, and a maximum 30 days, depending on the amount of the loan and whether or not it needs to go to our Board of Directors,” she points out.

Against this background, Mrs. Lewars says the DBJ has been meeting and interfacing with AFIs, and various private and public sector stakeholders, with a view to improve the marketing of the loan facilities and options available.

“We have a very close relationship with our commercial banks and we have interfaced and interacted with over 610 managers and loans officers since January last year. We will continue to do these sessions with the commercial banks because we believe that the AFIs play a crucial role in making productive loans available to the business sector,” she says.

She adds that “we also continue to market the loan facilities and explain how these loans may be accessed through AFIs, by participating in trade shows and making presentations to interested groups across the island."

In addition to having constant dialogue with its AFIs, the DBJ has been implementing innovative ways to increase the take-up of these loans for the productive sector. These include the engagement of umbrella organisations such as the Private Sector Organization of Jamaica (PSOJ), Jamaica Manufacturers’ Association (JMA), and Jamaica Exporters’ Association (JEA), to inform their members and, by extension, the wider public, about the DBJ’s products and how they may be accessed.

By DOUGLAS McINTOSH, JIS Reporter