KINGSTON — The National Export-Import Bank of Jamaica Limited (EXIM Bank) pumped some $6 billion in the economy during the 2010/2011 fiscal year, financing a wide range of projects within the productive sectors.
The bank has also set an ambitious loan utilisation target of $7 billion for the 2011/12 financial year, Managing Director of the EXIM Bank, Lisa Bell tells JIS News in an interview.
"With an asset base of $7.8 billion, we are in a new dispensation to increase loan utilisation to $7 billion in the current year, identify cheaper funds and grow our capital base, so that our rates can be made even lower," she says.
The Managing Director points out that the loans in 2010/2011 went toward financing projects in mainly small and medium enterprises (SMEs) in several sectors, including agro-processing, tourism, mining, manufacturing, distribution and services.
Mrs. Bell informs that in 2010, the Bank embarked on a very aggressive target of $6 billion in loan utilisation, a target which was met and even surpassed in some areas.
"The organisation took a very aggressive stance by lowering its rates and bringing to market some very innovative products, in an effort to stimulate the economy," she says.
She explains that the Ministry of Finance has set a standard for the organisation to reposition itself to be more effective, informing that in 2010, the Bank went through a strategic period, revising its Vision and Mission, in order to reflect this new paradigm, "which we think was very important to catalysing the Jamaican economy and to service mainly the small and medium size sector."
Meanwhile, Manager of the Trade Financing and Risk Management Division, EXIM Bank, Valerie Crawford, says the loans were allocated directly through the EXIM Bank, as well as through its network of Approved Financial Intermediaries (AFIs).
The AFIs include the National Commercial Bank (NCB), Bank of Nova Scotia (BNS), Capital and Credit Merchant Bank (CCMB), PanCaribbean Bank, First Global Bank, First Caribbean International Bank, Jamaica Money Market Brokers (JMMB), Money Masters Limited, Mayberry Investments Limited, Development Bank of Jamaica, and Jamaica National Fund Managers Limited.
Mrs. Crawford informs that the Bank's approval rate remains very high. "Our approval rate is much higher than those we have to decline. But, even those that we don't approve, we have developed a strong relationship with institutions like JAMPRO and Corporate Finance Brokers where we can refer them to see a business consultant, who can help them refine their financials," she tells JIS News.
She further notes that while the organisation aims to make the loan application and approval processes flexible and stress-free, the company takes a very keen interest in effective credit management and due diligence.
"Our criteria are similar to that of the commercial banks. They (applicants) have to provide their up-to-date audit accounts and these audit accounts have to be International Financial Reporting Standards (IFRS) compliant," she says.
Companies interested in receiving a loan through the Bank must also provide information on their management structure, markets, and production cycles.
Mrs. Crawford says what sets the EXIM Bank apart from other financial entities is that it is more flexible with collateral, allowing more companies to be able to access financing. "We recognise that small and medium enterprises may have some constraints, particularly given the environment that we're operating in, so the Bank is a little more flexible with the collateral requirements," she adds.
The EXIM Bank generally finances projects contributing to Jamaica's economic development, specifically those with export potential. Some of the loan products include the Small and Medium Enterprise (SME) Growth Initiative, the Jamaica Exporters Association/Jamaica Manufacturers Association (JEA/JMA) Loan Programme, Cuban Line of Credit, and the recent Special Energy Loan.
Under the SME Growth Initiative, business owners can borrow up to the Jamaican equivalent of US$500,000 to purchase equipment and to improve and upgrade their existing facilities. They can also use the funds for working capital, market research and a portion may even be used for debt financing.
Additionally, EXIM Bank has partnered with the JEA and the JMA to offer loan facilities on a revolving basis to exporters and manufacturers. Exporters can borrow up to $2 million, and manufacturers up to $1.5 million.
Through the Cuban Line of Credit, the Bank has made available a line of credit of CAN$12 million through Banco Nacional de Cuba to facilitate the importation of Jamaican goods into Cuba. The Bank, however, stipulates that the goods must be of a Jamaican origin and not merely re-packaged for export.
The EXIM Bank is also encouraging commercial and industrial users, energy service companies, and manufacturers of energy efficiency equipment and devices to access 'energy loans' of up to $15 million. The loans are geared toward developing renewable energy systems, such as solar, wind and biogas, for electricity conservation.
Mrs. Crawford also informs that as a trade financing institution, primarily about 60 to 70 per cent of the EXIM Bank's loan portfolio represents short to medium term financing, which means borrowers can have up to anywhere between 12 and 60 months to repay.
She tells JIS News that the bank also has a commendable compliance rate, with the organisation managing to keep its bad debt ratio way below industry average.
"The EXIM Bank is very proud that it has a bad debt ratio that is below one per cent and that is a testimony to how we manage our portfolio," she says.
At the same time, Mrs. Bell notes that this success rate is also based on the bank's continued commitment to its clients. "We recognise that times are difficult and we are seeing more need for refinancing and we have taken the approach that we will work with a company and hold its hand through the difficult times," says the Managing Director.
"Our relationship is one of deep commitment, so we've had to refinance some facilities during this last 12 months, but it is a part of the whole business cycle," she adds.
The Managing Director informs that the Bank has stepped forward with an innovative and 'game-changing' programme, known as Champions Assist, which aims not only to provide financing to viable SMEs, but also relevant and practical assistance to ensure the growth and success of the companies.
"The Champions Assist programme really looks at the financial needs of our clients holistically, recognising that loan financing is not necessarily the only need that a company may have. It looks at the provision of equity financing, and in fact, we are looking to partner with other financial institutions to see if we can marry equity financing with loan financing, and additionally to look at providing them with technical assistance," she explains.
Mrs. Bell said the bank is hoping to bring to the market a cadre of mentors who can provide effective advice and assistance to existing small businesses.
"We recognise that a small and medium enterprise has more needs than loan financing so even though we're in the business of lending, we can't ignore the other needs of the entity," she says.
The organisation is celebrating its 25th anniversary this year, and Mrs. Bell notes that while the EXIM Bank has good coverage of the business landscape, there are still companies with which the bank needs to interface in order to take their business to the next level.
"We encourage these entrepreneurs to envision the possibilities, and access the help they need. Our country needs to maximise its productive potential and we stand ready to help businesses to see just how far they can go," the Managing Director points out.
Mrs. Bell informs that the Bank recognises that the competitive landscape is changing and that as a financial institution it needs to remain creative when it comes to service delivery in order to remain viable.
"In that regard the use of technology is going to become a key component in how we do business. We're only one branch, so we're relying on our partners in one regard, but also using technology to become more efficient," she says.
The EXIM Bank therefore will be utilising the new media to communicate with its client base, as well as using mobile telephony in terms of SMS messaging to get real time information out to its clients.
The organisation is also working to develop a Business Advisory Unit, with the main purpose of bridging the communication gap between the bank and its clients. "Its purpose will be to get information and provide references that a small business may need, looking at partnerships with other organizations, so we can meet our clients' needs in a more efficient manner," she says.
Since its establishment in May 1986, the EXIM Bank has lent a total of $70 billion to more than 1,500 clients in a wide range of sectors.
By Athaliah Reynolds, JIS Reporter