11/27/2008
Having acquired 16 payment centres from the Jamaica Public Service (JPS) in May, Jamaica National (JN) wants to use the now 15 locations to widen access to commercial banking services throughout society. These would join the five existing JN Money Shops - with four more set to open - which are marketed as 'Community Banks', including in the inner city Kingston community of Tivoli Gardens.
The building society first needs to file for approval from the Bank of Jamaica (BoJ), a process which it is yet to initiate, said JN General Manager Earl Jarrett. Speaking at the annual luncheon for the JN Small Loans Limited, held at the Alhambra Inn in St Andrew on Monday, executives said that more needed to be done to raise the national level of what Chairman John Cunningham termed 'financial democracy'.
"What we have found in our business is that many businesses need to move to another level and what we find sometimes is that mainstream banks are not ready to receive them yet," said Jarrett.
Philip Bernard, JN general manager for community banking, told the Business Observer that the former JPS locations were now accepting non-JPS bill payment services. It has begun offering small business loans at its Montego Bay location and plans to add this service to its other 14 locations within a month, as part of a second phase. Phase three will see the addition of remittance services; phase four, automatic teller machines (ATMs) and phase five, collecting deposits and opening accounts with JN.
"This has been about expanding access and what we've done is enable the customers access to a loan and therefore reduce the poverty penalty. The cost for customers to do banking in remote areas is more expensive and in the lower echelons of society the cost is much higher as a percentage," said Bernard.
Addressing the luncheon Jarrett had referenced a survey by pollster Bill Johnson, which concluded that 375,000 Jamaicans need access to small business loans - with JN serving 18,000 of them, added Jarrett. Claiming an estimated 19,000 jobs were created via $3 billion disbursed under the JN loan programme, which began in 2000, the company was keen to promote its service to the small business sector.
"We also recognise this year that the Government of Jamaica, and governments all around the world, as we face the global economic crisis, have recognised that small business funding support and growth is important for job creation," said Jarrett. However, he cautioned against calls to cap interest rates for small business loans, which he said should remain determined by the marketplace.
JN has a portfolio of four small business loans offered at interest rates beginning at one per cent per week. The loans have a default rate of four per cent, which JN attribute to the superior financial management skills of women, who account for over 70 per cent of their clients. JN currently issues small business loans at a current rate of 2,000 per month, with several of their clients attending the luncheon.
Source: http://www.jamaicaobserver.com/magazines/Business/
