MICROCAPITAL BRIEF: $34m in Loans Provided by Development Bank of Jamaica to Micro-, Small and Medium-Sized Business Created 3,324 Jobs over 5 Years

Development Bank of Jamaica (DBJ), a Jamaican state-owned bank, reportedly has created 3,324 jobs over the past five years through its loan program for micro-, small and medium-sized enterprises (MSMEs). DBJ has loaned JMD 3.5 billion (USD 34 million) since the program began during fiscal year 2008/2009. The loans were distributed through retail banks, credit unions and microlenders.

According to an unnamed borrower, his loan has harmed the “viability of his business”. In Jamaica, interest payments reportedly are often required weekly and can reach up to 52 percent per year. According to a statement attributed to Professor Rosalea Hamilton, former president of the MSME Alliance, which is a network of business organizations representing micro-, small and medium-sized enterprises in Jamaica, such interest rates are driven by an increased demand for consumer loans, which “dominate” the microlending sector. According to Professor Hamilton, consumer loans are often used by recipients to purchase items such as cars and appliances that do not create returns on investment, making it difficult for borrowers to repay the loan and interest.

DBJ reported total assets of JMD 23 billion (USD 220 million) as of November 2012.

By Adrija Vaiciulionis, Research Associate

About Development Bank of Jamaica (DBJ):
Owned by the government of Jamaica, the Development Bank of Jamaica (DBJ) is mandated to foster the growth of “strategic” economic industries in the country with a special emphasis on developing the micro-, small and medium-sized enterprise (MSME) sector. DBJ was formed in 2000 as a result of the merger of the Agricultural Credit Bank of Jamaica and the National Development Bank of Jamaica Limited. DBJ does not lend funds directly to individuals or project promoters. Instead, funds are transferred through approved financial institutions including microfinance institutions that provide initial credit evaluation and loan supervision before lending to clients. In 2006, DBJ merged again with the National Investment Bank of Jamaica. DBJ reported total assets of JMD 23 billion (USD 220 million) as of November 2012.

Sources and Additional Resources:

Virtue, Erica. “Billions Pumped Into MSME Projects, But Few Jobs Created,” http://jamaica-gleaner.com/gleaner/20130901/lead/lead4.html

MicroCapital Article, June 17, 2013, “MICROCAPITAL BRIEF: Jamaica’s Ministry of Finance Delays Microfinance Institutions’ Exemptions from Money Lending Act, Blocking Wholesale Funding from Development Bank of Jamaica,” https://www.microcapital.org/microcapital-brief-jamaicas-ministry-of-finance-delays-microfinance-institutions-exemptions-from-money-lending-act-blocking-wholesale-funding-from-development-bank-of-jamaica/

MicroCapital Article, May 15, 2013, “MICROCAPITAL BRIEF: Development Bank of Jamaica Commits $20m to Micro-, Small Businesses,” https://www.microcapital.org/microcapital-brief-development-bank-of-jamaica-commits-2b-to-micro-small-businesses/

MicroCapital Universe Profile: Development Bank of Jamaica (DBJ)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Development+Bank+of+Jamaica+%28DBJ%29

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

Similar Posts: