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The Inter-American Development Bank (IDB) and the Private Sector Organisation of Jamaica (PSOJ) yesterday (May 21) signed a financing agreement for a US$738,250 project, aimed at improving the general competitiveness and sustainability of family controlled micro small and medium-sized enterprises (MSME) in Jamaica.
Titled: ‘Improving the competitiveness of Jamaican family businesses through corporate governance,’ the project will “encourage the use of corporate governance and family protocol tools, while awakening interest in these businesses to embark on a process to update their family business strategies and governance systems,” explained PSOJ President, Christopher Zacca.
At the signing held at the PSOJ’s Hope Road office, Mr. Zacca informed that a series of promotional events will be held in Kingston, Portmore, Mandeville, Ocho Rios, and Montego Bay, where family business governance concepts will be shared, with about 100 businesses coming together to discuss issues that could jeopardise the sustainability of these operations.
From among this initial group of 100, 30 family businesses will be selected to participate in a hands-on weekend training workshop, which will focus on issues such as: establishing family protocol and financial and dividend policies; regulating the transfer of shares; information access to non-family business groups; and the formation of a family council.
The workshop will also include the development of clear and definitive succession plans by each of the participating businesses. “At the end of this phase, for those family businesses that are interested in expanding their operations through equity participation by external investors, for example, listing on the Junior Stock Exchange, a component of the project will provide in-firm technical assistance on how to adapt and implement specific corporate governance frameworks. About 10 businesses are expected to participate in this component,” Mr. Zacca indicated.
The project outcomes will be documented and published in order to raise awareness about how to promote the corporate growth and development of family businesses in Jamaica.
In his remarks, IDB representative in Jamaica, Gerard Johnson, endorsed the move to provide support for these operations, noting that “a family business that is more robust and has a more professional management system is more capable of putting together projects and (will have) more credibility.”
He pointed out that if the project is successful, family- owned businesses will be able to attract venture capital.
To be eligible for participation in this project, the family business must be a legally established business operating in Jamaica; owners/operators must be capable of participating in the project and committing time to project activities; the business must be a small or medium enterprise with an annual turnover of less than US$3 million; the business must have less than 100 employees and must have been in operation for a minimum of two years.
The family business must also have minimum levels of communication mechanisms available such as electronic mail, fax, and or telephone to ensure fluid communication; and the enterprise must share the project’s objective of increasing the competitiveness and sustainability of family-controlled small and medium enterprises in Jamaica.
The PSOJ will, in the next few months, begin the implementation of the project, starting with the recruitment of a project manager. The IDB will contribute US$526,050 of the project cost, with counterpart funding of US$212,200 by the PSOJ, at least half of which will be provided in cash. The project is expected to be implemented in 30 months with a disbursement period of 36 months.