Business

Shaw says microfinancing has key role in financial inclusion

Sunday, December 16, 2018

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MINISTER of Industry, Commerce, Agriculture and Fisheries, Audley Shaw, says the local microfinancing sector must play a key role in creating financial inclusion in the economy.

“We have to grow the economy, and the credit that you are involved in is a vital part of the ability to grow the economy,” Shaw told Wednesday's annual national conference of the Jamaica Micro Financing Association (JaMFA), at the Knutsford Court Hotel in New Kingston.

He noted that the local microfinancing landscape has seen a revolution in recent years, with several mobile money offerings targeting an increasingly discerning and informed market. And with the presence of some 300 microfinance institutions (MFIs) providing credit for small borrowers unable to meet the requirements for loans from the traditional sector, the government will need to evaluate the scope for collaborating with the MFIs to make the financial landscape more inclusive.

He urged the MFIs to incorporate innovative solutions in their services and products that will drive accessibility and ease of doing business for their clients, as the government partners with the private sector to foster inclusive growth and development.

“This partnership is pivotal, since microcredit allows borrowers who typically lack collateral, stable employment and verifiable credit history to access small loans to drive their entrepreneurial pursuits, alleviate poverty and serve as a special purpose financing vehicle for those at the bottom of the economic pyramid,” Shaw said.

“Microfinancing is therefore a key strategy in the toolbox of strategies to attain financial inclusion, as it places persons plagued by poverty on the path to becoming financially independent. The sector must, therefore, invest in technology to bring its own innovative financing solutions to the market,” Shaw stated.

He also noted that there are nearly 300 microfinance institutions existing in Jamaica, of which three are already listed on the stock market.

He said, however, that it is important that the MFIs employ the most modern technology and best practices, to serve their customers.

Also speaking at the opening ceremony was Andrew Mais, the acting chairman of JaMFA, who described the conference's theme, “The Digital Reality: Redefining The Way We do Microfinance”, as “relevant, timely and urgent”.

He said that JaMFA is renowned for taking on the big topic issues, including putting microfinance further along the road to progressively change the dynamics of lending in Jamaica.

“We are also pushing the envelope even further, by taking on this very significant topic, as we seek to redefine how we offer our services to Jamaica,” Mais pointed out.

“The fact is that as microfinance providers we reach the core of our population, through the services that we offer. Something that I think the traditional institutions are still trying to figure out,” he said.

“I think that we redefined how lending operates and, in fact, if you read carefully what is happening in the media, you will find that a lot of the things that we have undertaken, our partners in the more traditional lending landscape are now modifying what we do and topping what we do and redefining it in a way that to them seems a lot more palatable.

“But, that's okay. It says that that we are doing something good that needs to be emulated, and we should be emulated,” he added.

He also urged the microfinanciers to participate actively in the association's digitisation programme.

“So, when you leave here, I want you to begin that digital change in your organisation, that is going to be the catalyst for change and prosperity in giving the proper service not only to your customers, but in terms of how we redefine Jamaica, so that we can make Jamaica's 2030 vision plan a reality,” he concluded.

The function was chaired by Dr Sharon Smith, with presenters including: Craig Stephens, CEO of CreditInfo; Paul Chin, general manager, Microfinance Services at the Development Bank of Jamaica; Desmond Montgomery, project manager-ICT, in the Ministry of Science and Technology; Ryan Sterling, co-founder and CEO of Vertis Technology; Jacinth Hall-Tracey, managing director of LASCO Financial Services; and Assistant Superintendent Warren Williams, head of communications for the Jamaica Constabulary Force's Forensic and Cybercrimes Unit.

Opposition spokesman on Industry, Investment and competitiveness, Peter Bunting, was guest speaker at the luncheon.

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