Today the Jamaica Observer publishes the fourth story on the nominees for this year’s Business Leader Award. All nominees for the award are non-private sector entities that facilitate the growth and development of private companies in Jamaica.

The Development Bank of Jamaica (DBJ) uses a three-pronged channel to infuse the private sector with vital economic lifeblood.

It breathes life into developmental projects and offbeat business ideas, many of which may otherwise wither in files stacked on the desks of loans officers at commercial banks.

Its role as Government’s principal divestment agent places it in direct contact with many of the country’s prodigious private sector investors.

The lesser-known, if more modest, duty is strengthening the infrastructure and capacities of the PC banks and other intermediary financial agencies with which it does business. These networks are important facilitators of private sector initiatives within the market segment that they target.

The DBJ was officially launched in 2000 from the merger of the Agricultural Credit Bank and the National Development Bank. It took its current shape six years later when it assumed the assets of another State-owned entity — the National Investment Bank of Jamaica (NIBJ), and with it, the privatisation responsibility.

That the DBJ has had measurable success in improving the livelihood of thousands of Jamaicans and the fortunes of the companies that employ them is without doubt.

Over the course of three-and-a-half years beginning April 1, 2010, the bank approved nearly 24,000 loans valued $17.5 billion; as at March 31, this year, it carried on its books $10.4 billion in outstanding credit.

These loans enable many companies to spring into operation, some to stay afloat and others to flourish — from agriculture and agri-processing enterprises to manufacturers and mining companies. Information technology outfits, investors in tourism as well as entrepreneurs who have approached the bank with initiatives in the field of energy have been among the biggest beneficiaries of the lending programmes.

Some 10,000 jobs are estimated to have been created by the companies that are now standing because of the access that they have been provided to loans at favourable terms.

The Development Bank can rightly take some of the credit for helping to advance the Jamaican Government’s most urgent policy agenda: job creation.

The rate at which individuals are being employed has slowed since April this year, but the DBJ projects, based on investments that are at various stages of ripening, that another 6,000 will find jobs by the end of the first quarter next year.

The funds that the DBJ pumps into private corporations are leveraged so that, as was the case during the 2012/13 financial year, loans of $6 billion supported investments with a collective price tag of $12 billion. Not only did these activities generate over 7,000 new jobs that year alone, but they also helped client companies maintain more than 13,000 workers on their payrolls.

Many loans are channelled through the 12 approved financial institutions which directly interface with borrowers and process their applications on behalf of the DBJ. Others reach customers through the networks of micro-finance institutions and PC banks for which the DBJ, as part of this symbiotic partnership, provides broad institutional support.

The bank does a few direct transactions itself, usually big ones like funding the information technology centre at the Mona campus of the University of the West Indies.

The managers of this organisation regularly meet with borrowers and potential clients to learn more about their needs and to gain valuable insights into how the lending programmes can be shaped to better serve them.

The Credit Enhancement Facility is a good example of an innovation that was tailor-made to respond to a growing challenge that confronted many small businesses.

Many of these firms, primarily because of their capital inadequacy, struggled to scale the stringent credit risk barrier that commercial banks used to filter their loan applications, and were therefore left with very limited funding options. In 2009, the DBJ created a $250-million funding pool and made it available to commercial banks as partial credit guarantee to help entrepreneurs meet their risk threshold.

The Credit Enhancement Facility was reconstituted and relaunched in 2012 with increased limit, and has since seen a flood of applications. Since October last year, the DBJ has committed $178 million in guarantees for more than a hundred loans with face value of over $300 million.

The lending agency maintains a steadfast focus on Jamaica’s long-term developmental needs, and is constantly on the lookout for opportunities to meet this policy objective. Its partnership with the Inter-American Development Bank on a US$807,000 experimental energy-saving project that targeted a range of industries is a good example of this philosophy in motion.

This initiative has been an effective marketing tool to drive private capital towards energy-saving solutions. So far investors have borrowed $1.4 billion to match their own equity in energy-saving systems that they have installed at their workplaces.

The DBJ lends directly from its capital resources of $11 billion, but much of that reserve is not available for lending. So to underwrite the transformative vision that it has for the Jamaican companies that heavily depend on its support, it taps into funding available at a wide range of institutions that private companies are themselves unable to access. Among them:

* PetroCaribe Development Fund;

* Caribbean Development Bank;

* China Development Bank;

* The World Bank; and

* OPEC Fund for International Development

Another initiative being pursued by the DBJ, and which it believes holds significant promise to be an industry game-changer, is the mobile money project by which Jamaicans will be able to execute remittances with the use of their cellphones.

But DBJ’s success to date in returning government-controlled assets into private hands remains its most direct role in facilitating private capital formation. US$95 million has been raised since 2006 from these sales.

Some of Jamaica’s iconic and recognisable corporate brands that had for years languished under State control are now in private hands.

The Jamaica Pegasus Hotel in Kingston tops this list. There are also the Grand Lido Hotel, Mavis Bank Coffee Factory and Wallenford Coffee Company. A huge swath of the country’s sugar industry has also been offloaded to private investors: Bernard Lodge, Monymusk, Frome, Hampden, Long Pond, and St Thomas sugar estates.

On the divestment front, significant work remains to be done; major assets that would be better served as privately run corporations remain under Government’s often unwilling control. Some are targeted for sale within the next year to three, among them Kingston Container Terminal Ltd, which manages the container Port of Kingston, and the Norman Manley International Airport.

Caymanas Track Limited, Petroleum Company of Jamaica and the Government’s interest in Kingston Industrial Works are also on the sale block.

In 2012/13, the DBJ invested $89 million to strengthen issues of governance, business management, strategy and operational efficiency at small and medium-sized institutions with which it does business, and has committed $100 million more for the next financial year.

The bank believes that strengthening these intermediaries can only redound to the benefit of their private sector borrowers.

moseshbsjackson@yahoo.com