With just about four months to go for the Bank of Jamaica (BOJ) to assume regulatory authority over the island’s micro credit institutions (MCIs), concerns have been raised about the slow progress towards the target.

Speaking to the Jamaica Observer following their recent webinar, executive director of the Jamaica Micro Financing Association (JaMFA), Raymond Gabbidon, noted that, with 16 weeks to prepare the sector for the considerable changes to meet the deadline, there is increasing anxiety as to whether the process will be timely.

“We are working as assiduously as possible to assist our members to meet the deadline, in terms of the time frame and the required documentation. But, we are finding a lot of the documentation to be very, very onerous. In some cases we think they are excessive,” Gabbidon said.

He noted examples, including the introduction of a requirement for “fit and proper” information about parents and other relatives of the operator, and other things which he thinks have nothing to do with the operating of the businesses.

“It is possibly a red flag, because the ‘fit and proper’ requirement should be centred around the owners and others who are actively involved in the operation of the business. Our understanding is that people in the cambio, for example, are not required to be so,” he pointed out, noting that the banks are not subjected either, even though they are deposit-taking institutions.

“So there is no generic risk, of such, in terms of contamination of the money supply, or what have you. And if one is caught doing anything that is off-handed, then you deal with that company and that individual,” he suggested.

He said that apart from the sensitisation process which was started in March, nothing else has visibly been done, which he described as “very tardy” on the part of the BOJ.

“Because you have a July deadline and it is in March that you start sensitisation,” he noted.

The Micro Credit Act (the Act) was passed in January, 2021, with the aim of licensing and regulating microcredit institutions (MCIs) that provide financing to individuals as well as, micro, small and medium-sized enterprises.

The legislation names the BOJ as the regulatory authority, with responsibility for (i) general administration of the Act and (ii) supervision of microcredit institutions. It also names the Consumer Affairs Commission (CAC) as the body with responsibility for (i) making and issuing a code of conduct for licensees on consumer-related matters, and (ii) the investigation of any complaint brought to it by a consumer of a microcredit service.

But, the JaMFA executive said that there has been no meeting with the Government body, and there is no evidence of the code of conduct from the CAC, and no evidence that they are prepared.

Minister without portfolio in the Ministry of Economic Growth and Job Creation (MEGJC), Senator Aubyn Hill, had confirmed that there is a planned merger of the CAC and the Fair Trading Commission (FTC) and a timeline in keeping with his instructions had been set.

Senator Hill, who is in charge of the industry, investment and commerce portfolios in the mega-ministry, said in February that the merger is in keeping with the public sector transformation programme.

He said then that he was optimistic that the executive directors of the CAC and FTC and their teams are committed to the process, “and will work fervently to ensure that the six-month deadline is met”.

But Gabbidon insisted that he believes there will be “significant fallouts” in the sector, if the deadline is missed.

“I believe there is a clear and present danger that several microfinance companies are going to go underground, because of the process,” he said.

However, he noted that JaMFA and its correlative partner, Jamaica Association of Micro Financing Limited (JAMFIN), have been working together on a joint committee, which is seeking audience, “even at this 11th hour”, with the BOJ and the Ministry of Finance and the Public Service (MFPS).

In the meantime, however, chairman of JaMFA Andrew Mais told last Thursday’s virtual webinar that the association is committed to remaining “a leading advocacy body for MCIs in Jamaica”.

“With a mandate to be an avid campaigner for the interests of its members, as well as providing support to enable sustainable growth and development, and in the industry by extension,” he said.

He noted that JaMFA has a rich history in the sector, and has been doing significant work in the development of the industry.

He argued that the MCIs have, unquestionably, changed the economic landscape of Jamaica over the past 30-40 years, enabling aspiring entrepreneurs to realise their dreams, “and giving hope to those who may have been marginalised because of limited access to financing.

He stated that with the passage of the Micro Credit Act last year, the association has proactively undertaken to put together an assistance and development proramme for its members, dubbed JaMFA’s Micro Credit Licensing Preparation Assistance Project, which will focus on assisting its members in their efforts to organise their affairs consistent with the prescriptive of the Act for registration and licensing.

He said that the webinar was part of the series of sessions for this assistance, as well as other activities and events already completed and others to come.