MICROCAPITAL BRIEF: Jamaican Government to Provide $8m in Loans to Support Microenterprises

The government of Jamaica has announced it will provide JMD 750 million (USD 8.3 million) in loans to support microenterprises, which would bring the total funds available to micro-, small and medium-sized enterprises (MSMEs), through both the public and private sector, to JMD 6.7 billion (USD 75 million), according to Jamaican Commerce Minister, Karl Samuda.

The government funds have been made available and disbursed through a number of institutions including the Micro Investment Development Agency (MIDA), a Jamaica-based for-profit organization that lends to the microenterprise sector. MIDA aims to distribute JMD 171 million (USD 1.9 million) this year. Another organization that has received funds is Development Options Limited (DOL), a Jamaica-based for-profit consulting firm that sources lines of credit and grants for the micro- and small enterprise sector, which aims to distribute JMD 186 million (USD 2.1 million). Pan Caribbean Bank, a Jamaica-based investment bank, was also given government funds, and it intends to distribute JMD 151 million (USD 1.7 million). Another JMD 45 million (USD 500,000) is available through the Self Start Fund (SSF), a Jamaican government-managed enterprise that provides financing to small and medium-sized enterprises (SMEs).

Last year the government of Jamaica contributed JMD 200 million (USD 2.2 million) as a grant to the Jamaica National Micro Lending program, which is a program that lends to microenterprises. Mr Samuda remarked that the default rate on those loans has been “less than five percent”. He said, “When you consider that those loans were made without the reliance on traditional collateral, we must conclude that this is a highly successful program and that honest small people repay their loans.”

Mr Samuda added that the government alone would be unable to meet the financing needs of MSMEs and said, “That is why we welcome the increasing involvement of the private financial institutions… 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 institutionalized sharing of information and risk, as a means of reducing the risk and heavy reliance on collateral.” Mr Samuda commented that because of these efforts, organizations such as the MSME credit bureau and the Junior Stock Exchange have been established. No details on the MSME credit bureau are available.

By: Christine Chang, Research Associate

Additional Resources:

Jamaica Observer website: $750m more for micro lending, May 12, 2010: http://www.jamaicaobserver.com/business/750m-more-for-micro-lending_7604640

Micro Investment Development Agency (MIDA) website: About Us: http://www.jamaica-mida.com/website/Aboutus/aboutusmain.htm

Development Options Limited (DOL) website: Our Practices: http://www.developmentoptionsjm.com/our-practices/mse-sectors/2-1.do

Pan Carribean Bank website: About Us: http://www.gopancaribbean.com/dynaweb.dti?dynasection=aboutus&dynapage=about&dynawebSID=86a1b15af

Ministry of Industry and Tourism website: Self Start Fund (SSF): http://tourism.gov.jm/agencies/ssf.html

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