The Development Bank of Jamaica (DBJ) has been on a drive to get entrepreneurs to access its services as part of its mandate to help grow the economy. As part of this thrust, it has been setting up lending facilities to lower the cost of capital, and has hosted numerous workshops across the island.

But entrepreneurs still are not utilising the full depth of its services.

Edison Galbraith, general manager for Loan Origination and Portfolio Management at the DBJ, explained in an interview with the Jamaica Observer what is happening in the entrepreneurial sector of the country.

Dennise Williams (DW): Why do you say there is more than enough money in Jamaica, yet access to capital is a problem?

Edison Galbraith (EG): Three reasons 1) Jamaica’s banking sector has assets of over $1.3 trillion of which less than 50% is in loans 2) Regular Jamaicans spend over $40 billion each year on lottery games and betting 3) New listings on the Jamaica Stock Exchange are routinely oversubscribed. This indicates that money is looking for opportunities to invest with a reasonable assurance they will get back their principal and make a return.

DW: What has caused the shift towards pushing an entrepreneurship agenda? Is the death of the repo market for investors that has caused persons with access to money to get into the productive sector?

EG: Jamaicans have always been entrepreneurial and over the years there have been several programmes to support entrepreneurs. More recently, with the support of our international partners, successive governments have focused on macroeconomic stability, reduced debt and making it easier to do business.

Altogether, this has forced money to seek out other opportunities to get returns. With the support being provided by DBJ and other agencies, businesses at all levels are improving themselves and positioning themselves to grow and for loans and investment. Interest rates have fallen, significantly reducing the hurdle rate for projects and also forcing money to seek returns from business investments.

DW: Tell us how the DBJ defines the micro, small & medium-sized enterprises (MSME) sector in Jamaica? Where are the opportunities for growth and what can be done to improve the capacity of business owners in Jamaica? And what could members of the MSME sector do to improve their rate of success and longevity?

EG: There are various definitions of micro, small and medium-sized enterprises (MSMEs) currently used in Jamaica. The DBJ is part of an initiative led by the Ministry of Industry, Commerce, Agriculture and Fisheries to establish a single measure for Jamaica.

DBJ currently uses annual revenue as the primary measure for making MSME benefits available to enterprises. As such, enterprises with sales from $0.00 to $425 million are eligible for DBJ’s MSME products. A microenterprise has sales of up to $10 million, a small enterprise up to $50 million and a medium-sized enterprise up to $425 million. DBJ provides support to businesses of all sizes and at all stages of the business life cycle.

DW: What is the Credit Enhancement Facility?

EG: The CEF is a fund operated by the DBJ that provides partial loan guarantees to DBJ-approved lenders to support loans they make to viable MSMEs that don’t have enough traditional collateral to secure a loan. As such DBJ will guarantee up to 80 per cent or $5 million of small loans below $6.25 million, up to 50 per cent or $15 million of general MSME loans, and up to 80 per cent or $15 million of energy loans to MSMEs.

The fund recognises that, while the majority of MSMEs don’t own real estate, they can be successful in business and can be trusted to repay their loans.

Since 2009 the CEF has provided guarantees of over $1.8 billion allowing MSMEs to access loans of $4.3 billion through 15 lenders. The facility has been endorsed by both the World Bank and the Inter-American Development Bank that are together providing support of US$25 million to improve and expand the fund.

DW: I understand that DBJ will be introducing Factoring. How will that work?

EG: Factoring is a product which will enable small suppliers of goods, such as farmers, to receive payment for their goods within seven days, instead of the usual 30- to 60-day period offered by large purchasers. The DBJ is currently considering the launch of an online platform that can facilitate this exchange. This will be very beneficial to small suppliers because it will provide them with the cash flow needed to reinvest in their operations quickly so that additional orders can be met.

The DBJ is inviting interested people to speak to their financial institution about the options available to them or reach out directly to the organisation for information on how to get training or funding for businesses.