Business

DBJ and Sagicor sign new agreement for redesigned Credit Enhancement Facility

Wednesday, October 23, 2019

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The Development Bank of Jamaica (DBJ) and Sagicor Bank last week signed a partnership agreement for DBJ's redesigned Credit Enhancement Facility (CEF).

The signing, which took place at Sagicor Bank's head office in Kingston, was executed by DBJ's Managing Director Milverton Reynolds and Sagicor Bank's Chief Executive Officer (CEO) Chorvelle Johnson Cunningham, making Sagicor Bank the first financial institution to participate in the improved CEF.

The CEF is a partial loan guarantee that helps micro, small and medium-sized enterprises (MSMEs) without enough collateral to access loans from financial institutions.

“I would really like to commend and congratulate Sagicor for being the very first of the DBJ's approved financial institutions (AFIs) to sign up. This is a clear demonstration, in a very tangible way, of their commitment and support in making financing accessible to the MSME sector,” said Reynolds.

“We truly believe that the new, improved Credit Enhancement Facility will be a game changer in making credit available to MSMEs, so I am encouraging all our AFIs to come on board and sign up,” he added.

In a release sent, it was said that the DBJ redesigned the CEF to better support its lending partners – the AFIs and micro finance institutions (MFIs) – in serving the MSME sector.

The CEF is available to viable enterprises and projects in the productive sector that earn less than $425 million in revenue per annum, are tax- compliant, and have good credit history. It supplements existing collateral, allows MSMEs to access credit for expansion, and reduces the risk for the AFIs and MFIs who are lending.

Sagicor Bank's Vice-President of Corporate, Retail and SME Banking Michael Willacy, in referring to the new CEF as a dream come true, said that, “Banks will much more readily extend credit knowing very well that the DBJ is there to support and lend a hand. I congratulate the DBJ which, I think, is extremely forward-thinking.”

Since its inception in 2009, the CEF has facilitated loans for 568 MSMEs, totalling $7.82 billion, with 2,266 new jobs created to date. The improved facility enables AFIs and MFIs to accept non-traditional collateral and grant coverage based on the borrower's character and the future cash flow of the business. The fund will be administered through an automated, electronic management information system to facilitate real-time approvals, speedy claims settlements, as well as simplify administration and reporting by lending institutions.

The CEF is part of DBJ's holistic business ecosystem to support economic growth and development in Jamaica, which also includes vouchers for technical assistance, a venture capital programme, and loans to MSMEs for start up and expansion.

Matthieu Beckford, legal officer at DBJ, also said that the CEF marks a first for Jamaica and it is going to put DBJ [in a position to become] the leading development bank, not only in the Caribbean, but also in Latin America.

The DBJ, an agency which falls under the Ministry of Economic Growth and Job Creation, is said to be the lead development financing organisation in the country, with a core focus of providing financing options to entrepreneurs through all phases of development and the business life cycle.


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