JaMFA urges micro-financiers to lend to MSMEs

JaMFA urges micro-financiers to lend to MSMEs

Monday, April 28, 2014

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CHAIRMAN of the Jamaica Micro Financing Association (JaMFA) Hurshel Cyrus has challenged his colleagues to increase funding to the micro, small and medium-sized (MSME) sector.

"The greatest potential for growth and development lies with the MSME sector," said Cyrus, CEO of WorldNet Investment Limited, one of Jamaica's leading microfinance institutions (MFIs).

He urged the microfinanciers to make best use of the opportunities created by the passage of the Security Interests in Personal Property Act (SIPP), and the establishment of the National Collateral Registry which is designed to improve commerce by expanding access to domestic credit while minimising the risks of loan default.

Cyrus was speaking at a forum for microfinance companies on Tuesday at the Hotel Four Seasons in Kingston, at which the Companies Office of Jamaica which is operating the registry, gave a live presentation and answered questions on the workings of the registry.

Cyrus said that JaMFA has been lobbying for a long time for more emphasis to be placed on the MSME sector, and saw the establishment of the registry as "a step in the right direction".

Noting that there is a tendency among MSMEs to take out of the business for personal consumption "way too early", Cyrus urged investors to refocus their energies and creative abilities toward improving
their businesses.

"This is far too prevalent among micro and small business operators. We need to foster a culture of ploughing back into our business. Growth through retained earnings and re-investment must become the new culture among micro and small business operators," he said.

Executive director of JaMFA Raymond Gabbidon said that the registry is an important tool in facilitating increased funding for the MSME sector.

"MFIs can now feel far more comfortable in increasing lending to the MSME sector. The registry will address the risk of using personal items and household furniture as collateral on loans, which was a major concern of micro financiers," he told the Jamaica Observer.

"This has been very risky for the MFIs, as many times when a loan goes bad, as they sometimes do, it is only when the loan companies attempt to seize the items that they learn of several other interests in the items," he said.

He added that the advent of the national registry will change all of that, and the MFIs can now feel far more comfortable in increasing lending to the MSME sector, as the registry will address this major concern of micro-financiers.

The presentation/live demonstration of the registry was done by Lori -Ann Green, legal affairs officer from the COJ. She was accompanied by Donald Kelly, acting customer service manager;

Simeon Craig, Web administrator/technical support officer; and Shellie Leon, deputy CEO.

Approximately 14 MFIs and five MSMEs, members of JaMFA, participated in the forum.

The SIPP registry will be a repository of information on non-real estate assets tendered as collateral for securing loans under the SIPP Act. These assets include motor vehicles, stocks and securities, agricultural products, crops and other agricultural yields, machinery and equipment, accounts receivable and futures, future acquisition of security interests and unborn livestock.

Financial institutions will register notices of loans granted and the associated assets used as collateral. The availability of this information in a central database will enable the institutions to verify any previous use of the potential collateral, and establish priority with regard to other claimants on the same asset.

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