Local microcredit provider Dolla Financial is in the process of pursuing expansion opportunities but may be hampered by the new Microcredit Act, among other challenges.
CEO Kadeen Mairs revealed during the company's annual general meeting on Thursday that the company is eyeing opening new locations locally, but was less direct when speaking about prospects for regional expansion.
"We're in the process of establishing new branches. The Microcredit Act and coming under the regulation of the BOJ [Bank of Jamaica] has somewhat slowed the pace at which we can open a new location because it has to be approved by the BOJ," he said.
Mairs added that whereas opening a new location could take a few weeks once the company identified a location and a team, such a process could now take months for approval. He, however, conceded that, given the novelty of the Act, the number of microfinance institutions still awaiting approval of licences, and the possible resource constraints that the Bank of Jamaica may be facing, he understood the delays in approving a new location.
Dolla Financial opened a new branch in Portmore last year. Mairs also disclosed that another branch in Clarendon "is ready", but the company is still awaiting the approval of the central bank to begin operations.
The Dolla Financial CEO also said that the institution will need to seek the green light from the central bank for expanding into other jurisdictions. Notwithstanding, he told the gathering that the company was being careful about expanding in the region.
Dolla Financial operates a subsidiary in Guyana, which, for 2022, generated $37 million in earnings or 13 per cent of profit before tax. It also manages 12 per cent of the total loan books.
It also owns Ultra Financier, a microfinance outfit that offers solutions using asset-based lending.
"Outside of Jamaica, we'll be now focused on cities that have high net worth individuals who might need access to credit. Recently our CEO of [Ultra Financier] David Henriques made a trip with the delegation to the [Dominican Republic], so that's one of the markets we're eyeing next.
Commenting on the growth of Guyana, he noted, "Guyana is a new market so, of course, we're still there learning the market and we don't want to be too aggressive in a market that we are new to. And that's the same temperament that we'll have as we look to expand in other Caribbean countries."
When asked by a shareholder about the expansion prospects in the South American country, Mairs stated that the board of directors have taken a decision to focus on Dolla Financial Guyana's operation in the capital of Georgetown and grow the loan portfolio there given resource constraints.
Another shareholder questioned the possibility of growth in Panama. In response, Mairs pointed out that, "Panama was one country that we were looking at, we visited before [and] we were on the ground."
While noting that Dolla Financial continues to look at that market, he said a number of factors need to be considered before entering, including barriers to entry, language, and talent. He further argued that the culture of the market must fit the company's business model.