Prime Minister Calls for More Support of MSMEs

Prime Minister, the Most Hon. Andrew Holness, says private financial institutions should provide more support for business development, particularly micro, small and medium-size enterprises (MSMEs).

Mr. Holness’ comments come against the background of what he says is the seeming reluctance by some banks to provide access to credit and other resources for businesses which “are good (entities) in and of themselves.”

“There is great liquidity in the system to invest. But sometimes it is also lack of information… about the quality (and) value of, for example, working capital. They do, however, have more information and well developed polices and regulations around motor vehicle ownership, which may explain why banks are more willing to take the risk on the consumer asset than on a commercial asset, such as working capital,” the Prime Minister said.

He was speaking at Friday’s (April 27) closing ceremony for the Development Bank of Jamaica (DBJ) Innovation Grant from New Ideas to Entrepreneurship (IGNITE) Programme pilot, at the Spanish Court Hotel, in New Kingston.

Mr. Holness pointed out that as a result of Government polices now in place, there has been an increase in financial institutions’ support for business development.

“We are seeing a greater trend of banks supporting businesses. Commercial and industrial lending is increasing at a noticeably significant rate, and I am very happy for that,” he said, citing this as pivotal to spurring economic growth.

The Prime Minister contended, however, that for sustainable growth to occur, “lending has to (further) increase to the medium-size, small and micro enterprises, in particular.”

“One of the things that we have to do is to support informal businesses in becoming formalized (by helping them) to develop business plans and getting regularized with, for example, the tax authorities,” he said.

Mr. Holness said doing so will bridge the information gap on businesses encountered by financial institutions in several instances, “because for banks to take the risk on your business, they need to know about you.”

“When you are formalized, when you are registered and compliant, then banks are able to better assess the risk that they are taking,” he said.

Mr. Holness emphasised that the key to generating economic growth is channelling support for the private sector.

“The engine of growth is the private sector. But when we say private sector, we tend to believe that the private sector is only (the) big businesses. The truth is that the private sector is really the micro, small and medium-sized enterprises. They drive growth,” he added.

The DBJ, through IGNITE, enables Jamaican entrepreneurs, particularly MSMEs with innovative business ideas, to access grant funds to develop and commercialize their products and services.

The bank provided funding of between $1 million and $4 million to 27 entrepreneurs under IGNITE’s 18-month pilot phase, for which $75 million was budgeted.

Phase two was also launched at the ceremony.