The Development Bank of Jamaica (DBJ) will commit $2 billion to the micro and small business sector this year, to ensure that some 12,250 enterprises can gain access to credit through its network of intermediaries.
This is a significant increase over the $650 million that was disbursed in 850 loans in the last financial year.
Making the announcement as he opened the 2013/14 Budget Debate in the House of Representatives, on Wednesday, April 18, Minister of Finance and Planning, Dr. the Hon. Peter Phillips, said the small business sector is a critical part of the economy and must receive special attention to help drive the country forward.
He noted that small businesses account for 88 per cent of all firms that file General Consumption Tax (GCT), and represent half of the country’s Gross Domestic Product (GDP). They also account for 53 per cent of the employed labour force.
Meanwhile, Dr. Phillips said the DBJ will also help to increase the number of institutions that are extending credit to micro and small enterprises.
“It is aware that the increase in the pool of funds will only be effective if there is increased access to entrepreneurs,” he said.
The Bank will therefore: Reach out to several credit unions across Jamaica, to review their needs and bring them into the sector; work with current lenders to research and launch new and innovative loan products designed for different sectors of the economy; work with lenders to ensure that new technology is applied, thus reducing the cost of lending; and work with all lenders to identify new products and services that are demanded by borrowers, but are not now being supported.
Dr. Phillips said the Bank is also supporting the National People’s Co-operative Banks entry into the micro credit sector. This Capacity Building Project is funded by the Inter-American Development Bank, the European Union, the Caribbean Development Bank and Citi Foundation.
“Together, they have already designed a loan product, start-up staff have been trained, and a roll out in an initial ten branches is expected in May, 2013,” the Minister said.
The DBJ will support micro entrepreneurs to maximize the available credit and financial help, by introducing a creative approach to ensure that entrepreneurs have business development support services.
This include the means that will increase the efficiency of the borrower, as well as using a voucher system to access business development support from certified private sector, non-governmental and government service providers. This system will enable entrepreneurs to ‘cash’ their voucher and access the technical assistance they need.
“So, if a farmer wants training on how to use a solar dryer to sun dry and market tomatoes, he or she can use their vouchers to purchase technical assistance in drying and how to prepare packages. If a dressmaker needs a business plan to expand her business, she can use her voucher to receive support for preparing her business plan. The Bank will reimburse the service providers,” Minister Phillips explained.
The DBJ will also be investing in increased financial literacy for entrepreneurs to ensure improved business management.
By Alphea Saunders, JIS Reporter