Despite an increase in receivables, the EXIM Bank (National Export-Import Bank of Jamaica Limited) is reporting levels of recovery among borrowing companies.
EXIM, which supports local companies in increasing production and exports, indicates that many companies have seen a recovery following the fallout occasioned by the novel coronavirus pandemic.
The areas of growth among clients contributing to the bank's loan portfolio as at March 2021, when compared to March 2020 are headed by manufacturing. This sector experienced a 26 per cent increase in 2021 when compared to 2020.
Maxine Brown-Cowan, general manager of trade at EXIM, said the growth trajectory continued up to November 2021 with a 41 per cent increase. Apparel, a sub-segment of manufacturing, saw a 100 per cent increase up to November 2021.
Food and beverage increased by 8.8 per cent year over year but declined by 43.9 per cent at the end of November. Mining saw a 1.9 per cent increase with a further increase by 4.9 per cent up to end of November 2021
Areas yet to recover include agro-processing which has slipped 11.9 per cent decline with further decline by 5.7 per cent up to the end of November 2021.
Also in distribution/tourism and services there has been a 21.6 per cent decline upt to March 2021, with a further decline by 6.5 per cent up to the end of November 2021.
Challenges affecting all portfolio companies, post-March 2020, according to Brown-Cowan, include reduced business based on lockdown orders, and logistical issues resulting in extensive delays in receiving ordered goods; and closure of border resulting in especially tourism businesses being hard hit.
There were also restrictions on the entertainment industry which saw revenue streams being completely dried up; and delays with collection of receivables by some clients which significantly impaired working capital and debt servicing obligation. There were also delays in obtaining financial information as auditors and accounting offices were impacted, the trade manager said.
EXIM seeks to support increased production and exports through pre- and post-shipment financing and trade credit insurance, as well as medium-term financing.
It provides special windows for the key sectors of the economy which demonstrate the potential for export growth, employment creation and expansion.
While demand and non-accrual loans are projected to remain at $1.7 billion at fiscal year end March 2020 (Public Bodies Report), medium-term loans are projected to climb from $1.6 billion at fiscal year end March 2021 to 2.06 billion at year end March 2022.
EXIM depends on Government funding to fulfill its mandate. The bank made a net loss of $288.21 million for the fiscal year ended March 2020. However, its budget of $8.1 billion for fiscal April 2020 to March 2021 was approved by Parliament.
Its last annual report (2020) indicates that the bank has put in place new measures to reduce losses and regain profitability. It is, however, projecting a further loss of $129.45 million for fiscal year ended March 2022, according to the Public Bodies Report of the Ministry of Finance and the Public Service.
Brown-Cowan said that following an assessment of the impact of COVID fallout, all clients which were in good standing (no arrears on accounts) were granted a moratorium on principal payments for the month of March 2020.
The Tourism Enhancement Fund (TEF), on whose behalf the Small and Medium Tourism Enterprises (SMTE) facility is administered, approved a three-month moratorium on both principal and interest payments commencing 1 April 2020 for all clients utilising the facility.
Meanwhile, it is awaiting approvals to assist companies in the tourism sector. Brown-Cowan said, “EXIM, which facilitates the tourism grant on behalf of the Ministry of Finance, noted that approvals have been received on a quarterly basis for these clients up to December 2021 and we have requested and are awaiting approvals for those clients who are still not able to operate fully for another quarter up to March 2022.”
Since COVID, assessments were done for individual clients as per specific needs to provide restructuring, loan rescheduling and loan extensions. Additional funds were lent to existing clients with new business opportunities who were either pivoting to or who were operating in the sanitisation sector to include manufacturers of chemical and cleaning products, distributors of masks and other associated supplies, printers engaged in production of signage to support protocols, etc.
EXIM also facilitated several surveys to get information about the precise way individual businesses were being affected by the pandemic in a bid to better craft solutions to assist.
It has since developed new products (receivables financing solution and exporters working capital guarantee) to assist clients with cash flow constraints and those limited by collateral.
It is also reviewing penal rates. Brown-Cowan noted that EXIM, which was responsible for the administration of funds provided by Ministry of Industry, Investment and Commerce (MIIC) under the Rebuild Engage and Stimulate our Economy Together (RESET) Programme, has moved to review of penal interest rate to provide relief to clients who were struggling to meet loan payments based on the economic situation precipitated by the COVID-19.
Its credit lines are currently focused on MSMEs involved in non-traditional exports such as tourism and its linkages, manufacturing, agro-processing, mining, the service industry, information, communication and technology and the creative industries.
For financial year 2021/22, one of EXIM's plans is to facilitate improved national export performance by facilitating exports for new and existing clients through the Exim Export Club facility.
This is a joint export development programme (primarily between EXIM Bank and Jamaica Promotions Corporation – Jampro) giving exporters from Jro's Export Max III Programme special club access to services from EXIM.
It also plans more activity under the EXIM Express facility, a receivables financing facility allowing small and medium enterprises (SMEs) access to loans of up to 75 per cent of their receivables to meet working capital needs.