Government Earmarks $750 Million for Micro Sector

The Government has earmarked some $750 million to provide business loans to entities in the micro sector for the 2010/11 financial year, Minister of Industry, Investment and Commerce, Hon. Karl Samuda has informed.
Mr. Samuda told the House of Representatives during his contribution to the 2010/11 Sectoral Debate, today (May 11), that in all, approximately $6.7 billion is available for lending to micro, small and medium sized enterprises (MSMEs), through both the private and public sectors.
This, he said, represented the largest allocation of funds to this segment of the economy.
“This means that institutions that lend to the MSME sector, such as the Jamaica National (Building Society), Nation Growth (MicroFinance Limited) and Access Financial Services will be able to access more funds and provide hope for thousands,” he remarked.
Mr. Samuda said funds have been available and disbursed through a number of institutions, including the Micro Investment Development Agency (MIDA), which aims to disburse some $171 million for the 2010/11 financial year.
MIDA disbursed some $172.11 million or 877 loans for the period of March 2009 to March 2010. A total of 1,173 jobs were created or retained, the Minister informed.
Some $45 million is also available through the Self Start Fund (SSF) to the small and medium sized enterprises (SMEs), for the 2010/2011 fiscal year.
During the financial year 2009/2010, the SSF disbursed 113 loans totalling approximately $27 million. The Fund created or preserved approximately 441 jobs.
Financing will also be made available through Development Options Limited (DOL) and Pan Caribbean, which aims to disburse $186 million and $151 million, respectively, for the 2010/11 financial period.
During the 2009/10 period, DOL disbursed 3,500 loans valued at $186 million, creating and retaining a total of 3,427 jobs, while Pan Caribbean distributed $115.4 million, with a total of 2,599 loans.
Minister Samuda also noted that the government provided the Jamaica National Micro Lending programme with some $200 million last year for its micro lending programme.
“That money was disbursed in two months. I am advised that the arrears rate is less than 5 per cent,” the Minister informed. “When you consider that those loans were made without the reliance on traditional collateral, we must conclude that this is a highly successful programme and that honest small people repay their loans,” he added.
He also noted that the Development Bank of Jamaica (DBJ) and the Jamaica Business Development Corporation (JBDC) Lending Programme both contributed a total of $2.667 billion and $150 million to the SME sector, respectively, during the period March 2009 to March 2010.
This involved 2,460 loans and the creation or retention of some 16,903 jobs on the part of the DBJ, and 212 loans, creating 534 new jobs through the JBDC lending programme. The arrears level was approximately four per cent, he informed.
The Minister, however, noted that despite the availability of loans in the sector, many individuals are still finding it difficult to qualify for financing because of credibility issues or the absence of suitable collateral.
He said a number of potential borrowers are unable to readily provide the necessary documentation, such as Tax Registration Number (TRN), taxpayer compliance certificate (TCC), financial information and formal business registration, in order to access loans.
“The government has neither the financial resources nor the expertise to single-handedly fill the financing gap facing MSMEs,” Mr. Samuda said.
“That is why we welcome the increasing involvement of the private financial institutions, including Jamaica National, National Commercial Bank (NCB), Scotia Bank and others. That is why we continue to support the creation of new financial products suited to the financing of MSMEs, and that is why we have been introducing mechanisms to facilitate the institutionalised sharing of information and risk, as a means of reducing the risk and heavy reliance on collateral,” he added.
The Minister said that it is against this background, that the MSME credit bureau and the Junior Stock Exchange have been introduced.