MICROCAPITAL BRIEF: Jamaica Microfinancing Association (JamFA) Executive Director Raymond Gabbidon Says “Loan Shark” Accusation is “Unfair”

According to statements attributed to Mr Raymond Gabbidon, Executive Director of the eleven-member Jamaica Microfinancing Association (JamFA), the recent characterization [1] of the country’s microfinance sector as being afflicted by “loan sharks” by former Commerce Secretary Dr Chris Tufton is “unfair.” Dr Tufton reportedly cautioned small business owners who accept microfinance loans to fully understand the terms and conditions of the loans, citing concerns such as onerous contractual terms, excessive interest rates and over-indebtedness.

While Mr Gabbidon conceded that “…there are some loan sharks, undoubtedly…” he argued that this is not unique to the Jamaican microfinance sector, and “As you’d find in any other sector, you’d have people who probably deviate from the norm.” Mr Gabbidon explained that when it was founded in 2008, one of the key goals of JamFA was to address this perception problem, as well as to “…formulate and streamline the operations [of microfinance institutions] to conform with international norms and best practices.”

Mr Gabbidon reportedly acknowledged Dr Tufton’s call for regulatory oversight of the industry and pointed out that JamFA supports the proposed Micro Credit Act, which calls for the creation of a regulatory authority to oversee the approximately 100 firms operating in the microlending sector.

As of 2012, the members of JamFA had a combined loan portfolio of approximately JMD 6 billion (USD 60.5 million). The number of active borrowers served by these institutions has not been released.

By A’kos Szebeni, Research Associate

About the Jamaica Microfinancing Association (JamFA)

The Jamaica Microfinancing Association (JamFA) was formed in 2008 by microfinance companies Worldnet Investments Limited, Kris Ann Charles Investments Limited and First Union Finance Limited. As of March 2014, JamFA has 11 members. The members of the organization reported loan portfolios totaling approximately JMD 6 billion (USD 60.5 million) in 2012. More recent financial data on the firm are not available.

Sources and Additional Resources

[1] Jamaica Gleaner, “Beware of loan sharks – Tufton,” http://jamaica-gleaner.com/gleaner/20140303/lead/lead8.html

[2] Jamaica Observer, “Loan shark label unfair, says Microfinance Association,” http://www.jamaicaobserver.com/news/Loan-shark-label-unfair–says-Microfinance-Association_16332543

MicroCapital, March 20, 2014, “Government of Jamaica Introduces SIPP Registry of Collateral, “Super Form” for Business Registration to Support Micro-, Small, Medium-Sized Enterprises (MSMEs),” https://www.microcapital.org/microcapital-brief-government-of-jamaica-introduces-sipp-registry-of-collateral-super-form-for-business-registration-to-support-micro-small-medium-sized-enterprises-msmes/

MicroCapital, December 24, 2013, “Jamaican Ministry of Finance May Regulate Microfinance Institutions, Cap Interest Rate at 40%,” https://www.microcapital.org/microcapital-brief-jamaican-ministry-of-finance-may-regulate-microfinance-institutions-cap-interest-rate-at-40/

MicroCapital, September 11, 2013, “$34m in Loans Provided by Development Bank of Jamaica to Micro-, Small and Medium-Sized Business Created 3,324 Jobs over 5 Years,” https://www.microcapital.org/microcapital-brief-34m-in-loans-provided-by-development-bank-of-jamaica-to-micro-small-and-medium-sized-business-created-3324-jobs-over-5-years/

MicroCapital, June 17, 2013, “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 Universe Profile: Jamaica Microfinancing Association (JamFA), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Jamaica+Microfinancing+Association+%28JamFA%29

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