Members of the Jamaica Micro Financing Association (JaMFA), a committee of eight microfinance institutions formed in 2008, reportedly have had their access to relatively cheap wholesale funds from the Development Bank of Jamaica (DBJ), a state-owned bank, blocked due to delays in the Ministry of Finance in renewing their exemptions from the Money Lending Act, a law established in Jamaica in 1938 [1]. The Ministry of Finance reportedly has stopped automatically renewing the exemption certificates, stating that microfinance institutions do not need exemptions from the Money Lending Act to access the funds. However, in the absence of current exemption certificates, DBJ and other wholesalers have refused to loan to the microbanks. The Money Lending Act aims to protect small businesses and other borrowers by keeping the interest rates of loans relatively low [2].
In a statement attributed to Raymond Gabbidon, the President of JaMFA, “billions of dollars promised by the [Jamaican] government for the small-business sector is likely to be channeled through other financial institutions because of their exclusion,” referring to the exclusion of members of his organization.
As of 2012, the members of JaMFA had a combined loan portfolio of approximately JMD 6 billion (USD 60.5 million). The number of active borrowers served by this institution has not been released. DBJ reported total assets of JMD 23 billion (USD 220 million) as of November 2012.
By Meghan Gillis, Research Associate
About The Jamaica Micro Financing Association
The Jamaica Micro Financing Association (JaMFA) was formed in 2008 by microfinance companies Worldnet Investments Limited, Kris Ann Charles Investments Limited and First Union Finance Limited. As of 2012, there are eight members of JaMFA with an aggregated loan portfolio of approximately JMD 6 billion (USD 60.5 million).
About The Development Bank of Jamaica (DBJ)
Owned by the government of Jamaica, the Development Bank of Jamaica (DBJ) is mandated to foster the growth of “strategic” economic industries in the country with a special emphasis on developing the micro-, small and medium-sized enterprise (MSME) sector. DBJ was formed in 2000 as a result of the merger of the Agricultural Credit Bank of Jamaica and the National Development Bank of Jamaica Limited. In 2006, DBJ merged again with the National Investment Bank of Jamaica. DBJ reported total assets of JMD 23 billion (USD 220 million) as of November 2012.
Sources and Additional Resources
[1] The Gleaner: “Moneylenders Locked Out of Cheap-Loan Pool,” http://jamaica-gleaner.com/gleaner/20130515/business/business3.html
[2] The Ministry of Justice: “Money Lending Act,” http://www.moj.gov.jm/laws/money-lending-act
MicroCapital brief, May 15, 2013, “MICROCAPITAL BRIEF: Development Bank of Jamaica Commits $20m to Micro-, Small Businesses,” https://www.microcapital.org/microcapital-brief-development-bank-of-jamaica-commits-2b-to-micro-small-businesses/
MicroCapital brief, March 7, 2013, “MICROCAPITAL BRIEF: Development Bank of Jamaica to Launch Mobile Money Pilot Project in Partnership with Transcel, Alaric, National Commercial Bank,” https://www.microcapital.org/microcapital-brief-development-bank-of-jamaica-to-launch-mobile-money-pilot-project-in-partnership-with-transcel-alaric-national-commercial-bank/
MicroCapital brief, January 29, 2013, “MICROCAPITAL BRIEF: National Commercial Bank, Development Bank of Jamaica Partner to Allow Microborrowers to Access Loan Funds Via Automated Banking Machines,” https://www.microcapital.org/microcapital-brief-national-commercial-bank-development-bank-of-jamaica-partner-to-allow-microborrowers-to-access-loan-funds-via-automatic-banking-machines/
MicroCapital Universe Profile: Development Bank of Jamaica (DBJ)
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