Exporters, small businesses endorse mega financing agency
Published:Wednesday | September 1, 2010 | 12:00 AM
Dionne Rose, Business Reporter
A merged entity which could be responsible for doling out more than J$8.4 billion a year in financing to micro, small, medium and large businesses is getting the thumbs up from exporters and small entrepreneurs.
The Public Sector Transformation Unit has recommended that Development Bank of Jamaica (DBJ), National Export-Import Bank of Jamaica (EXIM) and the Micro Investment Development Agency (MIDA) be rolled into one efficient funding agency.
But while the Jamaica Exporters Association (JEA) and the Small Business Association of Jamaica (SBAJ) are welcoming the suggestion, the possible cost savings or efficiency gains from such a move is yet to be disclosed.
The public sector unit, a team of private and public sector individuals with banker Peter Moses named as chairman, was set up by the Government to recommend ways of slashing the State's wage bill through a range of measures including staff redeployment and retrenchment as well as the merger of some public entities.
Recommendation
The recommendation for rolling the Government's funding agencies into one was among several proposals made by the transformation unit in a report tabled in Parliament as a green paper last month
President of the JEA, Vitus Evans has said he is in support of any recommendation that enhances efficiency in the public sector.
But he made it clear that based on the track record of the respective institutions, the EX-IM Bank should take the lead in service delivery by the new State entity.
"We are certainly happy with the way in which the EXIM Bank has operated so far (and) with the merger of the two institutions, we would hope that the EXIM's approach to financing would be the preferred approach," Evans said.
The small business sector too, has thrown its weight behind the proposal, in the process stressing the importance of proper management.
"I think merging them would be a good thing, all you would need to do is put in the management structure in place." Dalma James, the SBAJ president told Wednesday Business.
"I would support it for the mere fact that we don't have the resources (now) to manage all three," he said.
James is also dismissing the suggestion that the particular focus of each organisation could get lost in a merger.
"I don't buy that," he said.
"In a big organisation, you will have different departments. I don't think that there will be a loss of focus if you merged them. In fact, I think that we tend to splinter too much."
Among the key roles of the DBJ is the provision of affordable financing to key productive sectors such as tourism, agriculture and agro-processing with special emphasis on micro, small and medium businesses.
Loan approval
According to the Jamaica Public Bodies Report 2010-2011, the DBJ is expected to approve a total J$2.42 billion in loans to the productive sectors this financial year.
Of this amount, J$800 million should be in the form of micro business financing with larger enterprises in the manufacturing, services and agriculture sectors receiving J$537.41 million, J$524.24 million and J$400.07 million, respectively.
The EX-IM Bank, which focuses on financing the exports and imports needs of businesses, is forecasting to reach J$6 billion in loan utilisation for the current financial year. This amount includes US$41.81 million and J$2.25 billion in financing, which is some 10 per cent more than the estimated J$5.5 billion available under both facilities last year.
The smallest of the three outfits, MIDA, was established in 1990 as a wholesaler of credit to micro enterprise to support the growth of that sector.
The entity is expecting to increase disbursement to its target enterprises by J$59 million to reach J$222 million this year, compared to the J$163 million its lent during the 2009-2010 financial year.
The three operations together employ fewer than 200 people.