SBA seeks new approach to meet needs of micro sector


Friday, February 23, 2018

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Would you invest in a microbusiness that is traded on a transparent platform in which the price of the shares showcases the value of the start-up?

The Small Business Association (SBA) hopes that first the regulators will approve such a partnership with the Jamaica Stock Exchange (JSE) and that small businesses and the investment brokerage community will embrace a new way to access financing.

Currently, the small business sector is mainly financed by debt or personal savings of the business owners.

Jamaica has characterised the sector in terms of medium, small, and microenterprises and the attention of many organisations has been on the medium enterprises and perhaps the small. But what about micro organisations?

That is where Hugh Johnson, President of the Small Business Association of Jamaica (SBAJ) sees a gap that his organsation can bring value to. Currently with an excess of 2,000 members, the SBA is in refresh mode to bring greater value to its members and give them a voice at the policymaking table.

Johnson is of the view that the micro sector must receive serious focus to allow it to blossom and scale up.

“Think of it this way. As a country we fail to address primary education and then turn around and spend millions in remedial secondary education. So too with the business sector. I am appealing to the powers that be to take greater risk with the micro sector because that is the nation's engine of growth.”

“We in this country we talk about microlending as the financiers of the micro sector. And yes, they are serving a worthwhile purpose to get people to `eat a food`. However, it is time to help people scale up to Fortune 500. While micro financing may benefit traders who buy today to sell this evening and are able to pay back the loan by the next day, it will not be prudent for the producer who operates today and doesn't generate a profit until six months down the road.”

The president continues, “I am calling on the government, the Development Bank of Jamaica and the financial sector to consider the micro producers who need support.”

However, Johnson says that one organisation has heard the call of the SBAJ and has come to the table. And that is the Jamaica Stock Exchange.

“If I go to the bank and ask for a $5-million loan to re-tool my business, it is likely that I will be denied because the bank says my business is too risky. Now my employee goes to the bank for a $50-million car loan and uses his salary that I pay him as the proof of being able to service the debt. He then gets a new car. So how is it that my business is too risky for a re-tooling loan, but my payroll is a safe bet for an employee car loan? That just doesn't make sense to me.”

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