Microfinance Sector Driving Jamaica’s Employment

KINGSTON, Jamaica – The economic crisis may have dislocated the local job market; however, microfinance institutions have been quietly providing the financial resources to drive employment—one small business at a time.

A recent study by the Private Sector Development Programme (PSDP) indicated that micro, small and medium enterprises are providing close to 80 per cent of the island’s new employment opportunities. While the Planning Institute of Jamaica (PIOJ) indicates that sole traders, who make up the vast majority of MSEs, employ some 399,675 of the labour force.

And, according to the Small Business Association of Jamaica (SBAJ) small and medium enterprises continue to generate employment.

“Most small businesses are re-aligning themselves; and, many are moving into new areas and are re-employing persons who have lost their jobs since the start of the economic crunch,” Edward Chin-Mook, Immediate Past President of the SBAJ points out.

He explained that small businesses often demonstrate a high capacity to adapt to change, and noted that close to 40 per cent of businesses surveyed by the PSDP said strongly that they could handle changes in the global environment; and an even greater 52 per cent strongly indicated that they can weather changes on the local front.

“Small Businesses are the ones holding the economy together. We have nowhere else to go, therefore, we have to stay and fight,” Mr. Chin-Mook maintains.

Although access to credit remains a major issue for small businesses, financing available to the sector has increased substantially, the PIOJ states, in its 2008 Economic and Social Survey. Major sources of financing, at both the Government and private sector levels, allocated more funds to on lend to the sector. The PIOJ says up to the end of 2008, some $3.66 billion in loans were distributed to the sector, 14% above 2007. The funding resulted in the creation of more than 30,000 jobs at the end of 2008.

JN Small Business Loans (JNSBL), Access Financial Services Limited and Micro Credit Limited are among MFIs that continued to increase financing to the sector with funds provided by the State, through agencies such as the Development Bank of Jamaica (DBJ).

And, the records show that Government’s funding support for small enterprises continues to increase, with the December 2008 earmarking of approximately $650 million, as part of an initial stimulus package, for the sector; and the allocation of approximately $2.25 billion in the 2009/2010 Budget for lending to micro and small enterprises. That sum includes $200 million which was designated to fund a special project, the Young Entrepreneurship Programme for school leavers.

Frank Whylie, General Manager of JN Small Business Loans Limited (JNSBL). Small businesses funded by JNSBL have created some 24,000 jobs to date, Mr. Whylie says.

Frank Whylie, General Manager of JN Small Business Loans Limited (JNSBL), states that small and micro business entrepreneurs funded by JNSBL have created some 24,000 jobs to date some of which it supported with the funds provided by the State. His company is the largest private micro finance provider in the English-speaking Caribbean.

“Many of the businesses that have benefited from JNSBL loans have been performing successfully and are stimulating significant economic growth in their immediate communities and at the parish levels,” he says. “These small companies have been creating employment for their owners and a growing number of employees, in jobs that are sustainable even in these challenging times.”

However, there is still a significant portion of the small business market that has not been reached, he points out. A 2008 survey by Johnson Research Limited, on behalf of JNSBL, showed that there is a potential market of 164,000 small businesses that would like to borrow $100,000 or less to expand their enterprises and some 264,000 persons would like to access loans to start up their own businesses.

“There is still a vast segment of the market waiting to experience the benefits of low interest credit; and, in 2010 we will be increasing our efforts to reach more businesses.

Cedric and Beverley Linton, owners of BCNS Printers attest to the benefits of JNSBL loans, and the ability of small enterprises to drive employment.

Their small operation which started with five employees in 1992 benefited from a JNSBL BizBoost loan which helped to expand and improve the company’s efficiency. Today, BCNS employs 25 people permanently; and, from time to time, offers training to young people who access the facility through the HEART Trust/ NTA.

“We were always seeking a loan to purchase our equipment; but we could not afford it. We could not find an institution with the kind of programme that would meet our needs!” Mrs. Linton exclaims, “Therefore, when we approached JNSBL it was like a new moon.”

The additional investment enabled BCNS to acquire enough funds to purchase more equipment to become the proud owner of a computer to plate machine (CTP) which enabled the company to produce customers’ jobs faster; with more accuracy & colour precision; enhance the quality of print output; print larger volumes and employ more people.

Mr. Whylie maintains that, even in these difficult times, with increased funding for small enterprises; and improved management skills for operators, the microfinance sector can drive employment.

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