Finance Minister Highlights Legislation to Assist Microbusinesses

The Government has given an undertaking to incorporate the proposed microcredit legislation as a structural benchmark in the pending standby successor agreement with the International Monetary Fund (IMF).

Finance and the Public Service Minister, Hon. Audley Shaw, says the legislation, which is being developed by the Ministry, proposes to facilitate access to credit by individuals and microentities, particularly those involved in the productive and export sectors.

Additionally, he said it also aims to establish a regulatory authority and environment for microfinance entities to ensure that they are licensed and provide safeguards for clients.

Mr. Shaw indicated that the administration is committed to tabling the Bill during the 2017 calendar year.

He was speaking at the Jamaica Micro Financing Association’s (JAMFA) conference at The Jamaica Pegasus hotel in New Kingston, on November 10.

Mr. Shaw said while the Bill is not yet available for public scrutiny, “discussions will be held on some aspects of the legislation that are of concern to the sector”.

He advised that industry stakeholders who were given initial opportunities to comment on the policy proposal will again be accommodated in deliberations, once the Bill is tabled in Parliament.

The proposed legislation makes provisions for, among other things, handling customer complaints, and an alternative dispute-resolution mechanism to legal intervention, which Mr. Shaw argued “can be lengthy, onerous and expensive”.

“The Bill (also) includes provisions to allow microfinance institutions the flexibility to set interest rates based on their risk assessment,” he added.

Mr. Shaw said that in providing a supporting environment, the adoption of the Credit Reporting Act and licensing of three credit bureaus, “should enable the sector to be better able to assess credit risk and hence offer lower interest rates”.

The Minister pointed out that the Bill provides for a six-month transition period within which microcredit companies are expected to institute necessary upgrades that will enable them to meet compliance stipulations, thereby facilitating their applications for licences.

“With these considerations in mind, I once again assure you of this Government’s commitment to establishing the appropriate economic and regulatory framework that will support the growth and development of the microfinance sector in an orderly and transparent fashion,” he added.

The conference, which was attended by a wide cross section of micro and small sector stakeholders, was held under the theme ‘MFIs: Preparing for the Challenges Ahead’.