Acting managing director of the Government-owned National Export-Import Bank of Jamaica (EXIM Bank) Errol Barnaby has assured micro, small, and medium enterprises (MSMEs) of its willingness to increase support for the sector this year.

Guest speaker at a Biz-Social hosted by the Small Business Association of Jamaica (SBAJ) at the bank’s head office, Hope Road, Kingston, recently, Barnaby indicated that the underserving of the MSMEs has led the bank to ensure that its strategic objectives for this year will be focused on achieving a strengthened MSME sector, which will stimulate economic growth by generating more income in the economy and inevitably increase productive employment.

“The fact that MSMEs are underserved by the traditional banking sector, as they are considered risky businesses and are issued high unsustainable interest rates, help to inform our processes and how we structure our rates here at EXIM,” he noted.

“I would like to preface by stating that EXIM Bank has been a friend to the small business sector for over 30 years and has always prioritised the growth and development of micro, small and medium-sized entities (MSMEs) as a critical part of our mandate,” he told members of the SBAJ and their guests.

He also noted that MSMEs, which are considered Jamaica’s growth engine, contribute significantly to the gross domestic product (GDP) of the island — at least 60-70 per cent of the country’s GDP, and it is purported that the classified taxpaying MSMEs account for over 90 per cent of all classified and registered enterprises in Jamaica.

“Particularly, our partnership with the SBAJ spans many years, and I am here today to reaffirm EXIM’s commitment to the association and to discuss with you the bank’s offerings to the sector to aid its growth,” he told the investors, who welcomed his insight.

The EXIM Bank, an agency of the Ministry of Industry, Investment and Commerce (MIIC), is Jamaica’s business ministry, as it continues to pursue the growth of the MSME sector.

Barnaby noted that, most recently, the ministry has indicated that the strategic objectives for this year are focused on achieving a strengthened MSME sector, which will stimulate economic growth by generating more income in the economy and, inevitably, increase productive employment.

“In fact, there is a symmetrical relationship between job creation and development,” he argued. “Jobs are at the centre of development. If Jamaica is to continue achieving high levels of economic growth, even equitable to or surpassing the growth achieved in the last few years following the onset of the pandemic, we will need to continue increasing the availability of good, inclusive jobs,” he noted.

“At EXIM Bank we understand this dynamic relationship between economic growth and sustained job creation, so our goal is to find ways to facilitate it as much as possible, which we do by providing affordable financing products to the sector, thereby enabling our MSMEs to thrive, expand, earn higher revenues, and create more jobs. The entirety of the bank’s operations has been in support of this as EXIM extends its assistance to the productive sector by way of trade financing facilities,” he said.

“Our mandate allows us to finance many productive sector activities, with a focus on manufacturers, agro-processors, mining companies, exporters, and the services industry, with a special emphasis on the tourism sector. From our inception, our intended national outcome focal point has involved two things, which I shared with you earlier — economic growth and sustained job creation. This focus has not wavered over the years,” he added.

He said that the EXIM Bank understands the dynamic relationship between economic growth and sustained job creation, and so its goal is to find ways to facilitate it as much as possible.

“Which we do by providing affordable financing products to the sector, thereby enabling our MSMEs to thrive, expand, earn higher revenues, and create more jobs. The entirety of the bank’s operations has been in support of this, as EXIM extends its assistance to the productive sector by way of trade financing facilities,” he added.

He noted that, currently, the bank’s suite of products is available to the productive sector and its linkage companies, with solutions ranging from short- to medium-term financing programmes, which are denominated in both Jamaican and US currencies.

He said that the short-term products are primarily used for working capital support, with loans being financed for up to 270 days.

“Our medium-term products are financed for up to 5-7 years and loan purposes include the acquisition of machinery and other equipment, infrastructure upgrades, and retooling. The bank lends directly to the SME sector, with indirect lending to micro entities facilitated by JN Bank.

“In fact, we have an EXIM RESET facility, which is available at the JN Bank, with a pool of $200 million to be lent to the micro productive sector at a rate of 4.75 per cent. This pool of funds has been made available by the MIIC to support recovery in the MSME sector and expand inclusive growth. We encourage our micro entities to take advantage of this product which was specifically designed with their viability in mind,” he added.

He said too that the EXIM Bank will finance up to 80 per cent of eligible project costs, and loan purposes span a wide range of e-commerce services and products. This product is being offered for up to 5 years, with a 5 per cent interest rate and loan amounts range between $1 million and $5 million.

Earlier this year, the bank also launched a solar energy loan for the SME sector. This facility helps businesses to reduce their energy costs by adopting more eco-friendly, sustainable alternatives, like renewable energy. He said that the EXIM Bank will finance up to 85 per cent of the cost of the purchase and installation of equipment. The solar energy loan facility is available for up to 7 years, at 7.5 per cent interest and eligible borrowers may get up to $50 million towards their energy projects.

He said that the bank’s focus on imports is on import substitution as it endeavours to prioritise the growth of local producers and boost productive activities, as their large trade deficit is an issue which may only be overcome by reducing imports and bolstering MSMEs’ export potential.

He also noted that in today’s robust markets, local companies may need to purchase items abroad which are needed for use in the production of their final products. The bank’s international lines of credit may be used for companies wishing to source outbound goods and services. These loans are financed for up to 270 days.

Doing business presents many challenges, one of which is guaranteeing the assurance of your receivables. For greater protection in your domestic and foreign markets, the bank also has Trade Credit Insurance (TCI), which protects the SMEs against non-payment of receivables by their local and foreign buyers.

The SBAJ handed out a number of awards to members at the event. Other speakers included Fayola Evans Roberts, deputy executive director at the Office of the Supervisor of Insolvency; Marlon Johnson, senior programmes director HEART/MSME. The function was chaired by SBAJ’s chairman of the membership committee, Garnett Reid.

He said that the bank’s suite of products is available to the productive sector and its linkage companies, with solutions ranging from short- to medium-term financing programmes, which are denominated in both JA$ and US$ currencies. “Our short-term products are primarily used for working capital support, with loans being financed for up to 270 days. Our medium-term products are financed for up to 5-7 years and loan purposes include the acquisition of machinery and other equipment, infrastructure upgrades, and retooling. The bank lends directly to the SME sector, with indirect lending to micro entities facilitated by the JN Bank.”