Minister of Finance Audley Shaw, has committed to waive 1.5 per cent of Government interest on loans from Development Bank of Jamaica (DBJ) in an effort to facilitate single-digit interest rates to entrepreneurs seeking finance.

Shaw, who was speaking at the launch of DBJ’s, promoting financial inclusion in Jamaica project yesterday, noted that his mission is to seek to get money to the financial sector at the most competitive rates possible.

“One example is the World Bank’s credit enhancement programme with the DBJ, where I found that my ministry — at the time it was marked up by 0.5 per cent — was marking it up by another 3.5 per cent. And then the DBJ was marking it up by another 1.5 per cent and the approved financial institutions (AFIs) again marked it up by around four per cent, so the loan reached double digits by the time entrepreneurs received it,” Shaw said.

“Guess what — I’m cutting the 3.5 per cent markup to about 2 per cent, then the DBJ will have to cut theirs to one per cent and we will ask the AFIs to live with a three per cent mark-up instead of four or five — and it can work,” he reasoned.

According to Shaw, the approach will allow entrepreneurs to benefit from loans between five to seven per cent, which are vital for improving growth levels of the economy.

Shaw recently criticised the local financial institutions for continuing to offer loans at a 15 per cent interest rate, which he insisted was too expensive and a disincentive for small business investors and even Jamaicans seeking mortgage loans.

“We can tell Metry Seaga publicly from this platform, that his dream of five per cent money for loans to the manufacturing sector can happen and I’m going to work towards it,” Shaw stated.

The DBJ, through its promotion of financial inclusion in Jamaica project, will seek to develop mobile wallets and electronic retail payment services in Jamaica by September 2018.

Under the brand name Financial Empowerment and Technological Awareness (FETA), the DBJ in partnership with the Inter-American Development Bank is also seeking to improve financial education and training for microfinance institutions and micro-entrepreneurs.

Managing director of DBJ, Milverton Reynolds noted that the project is in support of the Government of Jamaica’s 2015-2020 National Financial Inclusion Strategy, which seeks to enable people outside the formal banking sector to better undertake and grow business activities, save safely in the financial sector, manage risks, and build financial security.

The FETA project will include a total of 16 workshops and 12 seminars on money management, along with an impact assessment to determine the effectiveness of financial training on micro-entrepreneurs.

DBJ says it is targeting 2,500 micro-entrepreneurs across the island, particularly those who may be ‘unbanked’ and ‘underbanked’.

Other activities under the programme include the Voucher for Technical Assistance (VTA), which will be used to strengthen the capacity of MSMEs that can become active agents within the mobile financial services network.

The VTA programme is an arrangement between the DBJ’s approved financial institutions, the DBJ, and selected business development organisations that will expand the project’s impact on financial inclusion by improving the MSMEs’ ability to access credit.