Jamaica SME Finance : Technical Note
Almost all formal small and medium enterprises (SMEs) in Jamaica have access to checking or saving accounts, but the financial sector is scarcely used to finance their investments. The lack of funding for the SME sector, or its high cost, has a neg...
| Main Authors: | , |
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| Format: | Report |
| Language: | English en_US |
| Published: |
Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/05/24459218/jamaica-sme-finance-technical-note http://hdl.handle.net/10986/21909 |
| Summary: | Almost all formal small and medium
enterprises (SMEs) in Jamaica have access to checking or
saving accounts, but the financial sector is scarcely used
to finance their investments. The lack of funding for the
SME sector, or its high cost, has a negative impact on
entrepreneurship and business profitability and stability
through the business life-cycle, having a particularly
negative effect on employment. In addition, the supply of
formal nonbank sources of finance is limited, especially for
micro-entrepreneurs, with credit unions providing mostly
consumer finance and an underdeveloped microfinance sector.
The authorities aim to develop a micro-credit act to make it
mandatory for multilateral investment funds (MIFs) to
register, and to create a regulatory authority to oversee
microfinance institution (MFIs). The authorities have taken
significant initiatives to enhance the legal and regulatory
environment and financial infrastructure, but further
efforts are needed. The authorities have also put in place
public programs for micro, small, and medium sized
enterprise (MSME) finance, however they lack sufficient
coordination, and the partial credit guarantee scheme needs
to be revamped. It also operates a partial credit guarantee
scheme, which is not being utilized by lenders. Thus, its
design should be reviewed and revamped to ensure adequate
incentives for lenders to use it and its sustainability. |
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