The path to greater financial inclusion


Wednesday, May 03, 2017

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If I were to be asked what are the goals to be pursued toward putting Jamaica on a path to significant and sustained economic growth, these would be my top picks:(1) Reduce the homicide rate to at least half the current rate of 48 per 100,000 people in the populace.

(2) Revisit the National Industrial Policy. Specifically, earmark sports and music to be transformed into functioning industries on a global scale.

(3) Increase productivity level to at least that of our major trading partners.

(4) Reduce the size of the underground economy from an estimated 43 per cent of the formal economy; bring people at the base of the social and economic pyramid into the mainstream of the economy.

These may be considered the vital few goals which, if successfully pursued, would bring us maybe 80 per cent of the results we desire in terms of economic growth. The Economic Growth Council (EGC) has gone for what may be regarded the “useful many” goals, which make targeting, execution and tracking considerably more difficult. Nevertheless, the EGC has managed to identify a number of measurements and to create a dashboard which, for the first time, put those who have responsibility for economic planning in the position of the airline pilot who, knowing the altitude, speed, fuel and other important metrics, can accurately plot his course and estimate time of arrival at the desired destination. This facility was very evident in the EGC's second report to the nation on April 25, 2017, which was subsequently published in our two major daily newspapers.

Access to finance is a key performance area reported on by the EGC. Decoupled from the goal of greater financial inclusion (my goal #4 above), the recommended prescriptions and measurements do not, however, adequately reflect the seriousness of the situation or how attacking the problem can significantly improve the health of the economy. The limited treatment of this critical variable also overlooks some far-reaching developments in the Government's evolving policy framework.

The seriousness of the problem — lack of financial inclusion — is most vividly portrayed in a past publication of the Global Entrepreneurship Monitor (GEM) Report, which ranked Jamaican women and men too near the top in terms of prevalence of nascent and early start-up entrepreneurs, as a percentage of the populace, when compared to other countries. But, in the same issue of the GEM Report, Jamaica ranked at the very top in terms of those in the survey saying the main source of funding for their entrepreneurial ventures is personal and family resources. That is a serious inhibitor to economic growth. Estimates of the number of Jamaicans who are un-banked run as high as 30 per cent.

Colin Bullock, chairman of the Financial Services Commission, speaking at the Caribbean Group of Securities Regulators on April 22, 2017, said: “There is an unacceptable high ratio of adults in Jamaica without bank accounts, and by extension access to financial institutions.” Any wonder why many of our struggling micro and small entrepreneurs never rise above the level of hand-to-mouth or hustler?

Financial inclusion refers to access to affordable financial resources by persons, especially poor people without connections, to finance their projects. It is an accepted fact that financial inclusion leads to poverty reduction, growth of micro and small businesses, and ultimately wealth creation.

There are a number of important policy and legislative developments seeking to address the exclusion of large numbers of Jamaicans from the financial sector specifically, and the wider Jamaican economy generally, which is like a curse on the country's economic prospects. One that is worth noting is the Agent Banking Regulations, which was approved in the House of Representatives on November 1, 2016. The regulations, which were piloted by Minister of Finance and the Public Service Audley Shaw, are intended to widen access beyond deposit-taking institutions and their branch network by allowing authorised, third- party agents — eg supermarkets, gas stations, and various retail outlets — to offer specified, traditional banking services alongside their own products and services.

The Friday, March 31, 2017 publication by the Jamaica Observer carried a story in the Caribbean Business Report by Avia Collinder, titled '2020 goal: Jamaican Government sets financial inclusiveness', which started as follows: “Giving itself a mere three years to achieve its target of almost 100 per cent financial inclusion in Jamaica, the Government, on Wednesday, launched its National Financial Inclusion Strategy (NFIS).” The Observer further reported that: “At the launch in Kingston, governor of the Bank of Jamaica (BOJ) Brian Wynter outlined that the NFIS has 11 impact indicators which are to be achieved by 2020.

“These goals are to be centred on the enhanced use of retail payments and financial infrastructure, consumer protection and financial capability, MSME finance, agriculture finance, and housing finance.

“The rationale of the strategy — as outlined in the final draft of the NFIS, a publication of 53 pages — is that access to financial services such as payments, savings, credit, insurance, and retirement products can yield significant benefits for all segments of society.”

I recommend to social workers, social entrepreneurs, and community transformers who missed the launch that you access the document online and fully absorb the content.

I leave the best for last. A Social Enterprise Working Group and Policy Steering Committee convened by the Planning Institute of Jamaica (PIOJ), under the leadership of technical specialist, socio-economic development Charmaine Brimm and co-chaired by the Jamaica National Social Enterprise Boost Initiative, is making progress towards changing the socio-economic landscape of Jamaica. The work of this group will eventually lead to the establishment of a fourth sector — we have the public sector, the private sector and the not-for-profit sector — the so-called for-benefit sector, dominated by social entrepreneurs and social enterprises. Dream a little.

Within 24 months Jamaica could have social enterprises legally defined and a social stock exchange.

All of this would seem very daunting if we didn't have the likes of Professor Gladstone Fluney Hutchinson in our midst, a native of Jamaica and associate professor of economics and policy studies at Lafayette College in Easton, Pennsylvania. He distinguished himself on secondment to the PIOJ as director general (2010-2013) and through his paradigm-changing, community transformation work in far-flung places such as the Lower Ninth Ward of New Orleans, Honduras and Appalachia. He is back in Jamaica doing a stint out of the Ministry of Economic Growth and Job Creation and liberally shares his knowledge in asset-based community development, community enterprises, and giving a “first voice” to the voiceless. All of a sudden the things that seemed impossible are within grasp.

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




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