All hands on deck for financial inclusion

BY ABBION ROBINSON
Business reporter

Wednesday, July 17, 2019

Print this page Email A Friend!


Global economic expert and former International Monetary Fund (IMF) executive, David Marston says financial inclusion is a national imperative to drive growth.

Speaking at the Private Sector Organisation of Jamaica (PSOJ) and Jamaica Money Market Brokers (JMMB) Group Annual Economic Forum yesterday, Marston indicated that according to extensive literature, countries which have deeper financial systems and are more inclusive reap the highest growth returns.

“Financial institutions need to diversify their loan portfolio,” Marston stated. “I get the point that banks are liquid and they need to lend, but in lending they need to lend to more people than lending more to the same people.

“Collectively as a system, we have been aggressive in devising options and solutions for firms that fit with our conventional metric of assessments,” he stated

He added that the paradigm of financial inclusion is not just an initiative, but instead fundamental to any modern economy.

In shifting the paradigm of financial exclusion, Marston suggested establishing partnerships between the Government of Jamaica, the financial sector, and entrepreneurs. He added that while considerably a “disruptive concept”, everybody stands to benefit from a partnership.

According to him, these potential partnerships include the Bank of Jamaica – which has to provide the right infrastructure for inclusion, innovative start-ups — who should have the mindset that they are not only gaining finance but are providing a solution for the banks to reach more customers, and the Government.

Marston noted that despite 78 per cent of Jamaicans owning bank accounts, only 11 per cent have borrowed in the last year, and only 25 per cent of small and medium-sized enterprises (SME) and 10 per cent of farmers have access to credit, which he describes as a “social equity issue”.

However, he later explained that while that social equity issue is a good motivator for solving financial inclusion in Jamaica, the most obvious solution, according to him, is the recognition of the role of the SMEs in the economic growth.

Marston added that 45 per cent of SMEs access loans, not from the bank or any other financial institutions, but within the informal system.

“We often in mind make the mistake in viewing informality as the problem,” he continued. “As opposed to viewing this as a failure of the formal system to provide what I call calibrated solutions to meet the needs of those who have had to adapt.”

Marston added that while he acknowledges current frameworks and reforms implemented to facilitate financial inclusion and credit flows, and as Jamaica celebrates the breadth of institutions in the financial sector, the country's financial systems' contribution to the economy is still low when compared with international standards.

When asked how profitable financial inclusion is, Marston noted that while he could not give the exact figure he assumes that it is, as most globally active financial institutions have already implemented financial inclusion frameworks.

The forum, jointly staged by PSOJ and the JMMB Group, was hosted under the theme 'Financial Inclusion: The key to a sustainable development- Creating an SME-Friendly Environment' at Spanish Court Hotel. Also speaking at the forum was PSOJ vice- president and JMMB Group Chief Executive Officer Keith Duncan.


Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive


ADVERTISEMENT




POST A COMMENT

HOUSE RULES

1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: advertising@jamaicaobserver.com.

6. If readers wish to report offensive comments, suggest a correction or share a story then please email: community@jamaicaobserver.com.

7. Lastly, read our Terms and Conditions and Privacy Policy



comments powered by Disqus
ADVERTISEMENT

Poll

ADVERTISEMENT
ADVERTISEMENT

Today's Cartoon

Click image to view full size editorial cartoon
ADVERTISEMENT