KINGSTON, Jamaica — Small Business Association of Jamaica (SBAJ) president Hugh Johnson says that while the sector appreciates Bank of Jamaica’s (BOJ) efforts to reduce interest rates and encourage low inflation, it is concerned about the effect on its vulnerability.

Johnson told a press briefing at the SBAJ’s Trafalgar Road head office in Kingston, yesterday, that while inflation is necessary to produce growth, and the current four to six per cent band is tolerable, the association is concerned that it could eventually rise to double digit figures.

He said that the BOJ’s efforts to reduce interest rates on loans from the financial sector to the business sector was a step in the right direction, but insisted that BOJ’s manipulation of monetary policy was not enough.

“We think that these interventions are worthwhile, but they are not enough,” he told journalists attending the briefing which was called to address the major concerns of the small business sector, namely: rising petrol costs; depreciation of the Jamaican dollar; and, the fees and interest rates charged by commercial banks.

“We don’t have a business friendly banking environment that whenever these challenges come upon you, they accede and give you aid. All we are seeing is more predatory operation to squeeze us even more,” he said.

“Right now our members are saying that they are unable to take the pressure any longer, so they are calling for government intervention,” he added.

He noted that the situation would get worse than the FINSAC meltdown in the 1990s, as the effects could spread beyond businesses owing bank credit, to those business only suffering from increasing bank fees and petrol prices.

“Our margins are close to non-existent, so we cannot accommodate any significant inflationary pressures at this time,” Johnson added.

Asked what changes the SBAJ has proposed to address the problems, he explained that he was not a fan of economic policies pursued by the International Monetary Fund (IMF), and suggested that it would be useful to open up competition between the banks

“Probably the answer is to open up to competition, because right now you can’t just get up and open a bank. I have known external banks who would love to operate in Jamaica, and they can’t get a licence…so why are we protecting this group of persons when they are not mindful of the productivity of the country and enabling the sector that is the bedrock of the economy to thrive and grow,” he stated.

Balford Henry