ipt>

Microfinanciers want meeting with finance minister


More than a year since discussions resumed between the Government and the microcredit sector on provisions for legislation to regularise the microfinancing institutions (MFIs), the parties are still worlds apart in terms of reaching an agreement.

Minister of Finance and the Public Service Dr Nigel Clarke met with the bodies representing the microlenders in June, 2019 to straighten out the ruffles created by the latest Bill tabled by the present Administration. But, as was the case with an earlier Bill proposed by the previous Administration, the legislation is still idle.

Although there has not been much public uproar over the delays, which have lasted for at least a decade, the failure of successive governments to pass a Bill, which will not just regulate the microlending sector, but remove the tag of “predator”, which has affected their credibility since their inception, has been one of the main issues affecting the discussions.

Executive director of one of the two leading bodies representing the MFIs, the Jamaica Micro Financing Association (JaMFA), Raymond Gabbidon, insists that the current Microcredit Bill actually encourages the view that the MFIs are predatory.

He refers to the section of the Bill’s Memorandum of Objects and Reasons which states that among the objectives is the need to “discourage excessive interest rates and predatory lending practices by the microcredit institutions”.

Gabbidon insists that the inclusion of that sentiment in the memorandum suggests that the MFIs are considered as “predators”, milking people involved in small and micro-business activities and use severe predatory means to recover their loans, unlike the mainstream financial institutions.

“It makes it seem as if the Bill is there to deal with microfinanciers, not to work with them. It is very negative, when it should really be creating an environment which is inclusive and allow for the financiers and their clients to have good relationships,” he told the Jamaica Observer.

Acting chairman of the JaMFA, Andrew Mais, says that the situation is at a stage now where the organisation has teamed with its main rival body, the Jamaica Association for Micro Financing (JAMFIN), and working through the direct portfolio ministry, the Ministry of Industry, Commerce, Agriculture and Fisheries (MICAF), to break the ice.

JaMFA and JAMFIN, the latter which is chaired by Dr Blossom O’Meally Nelson, have been meeting jointly with the minister of state in MICAF, Floyd Green, whom they believe has been much more responsive to their positions, hoping that this will lead to a resumption of the discussions they thought they had already begun with the finance ministry.

Mais also noted that despite making more than 20 recommendations to the finance ministry for improvements to the Microcredit Bill, only one major recommendation has been accepted.

He told the Sunday Observer that there has been an agreement to amend the clause dealing with how the MFIs set their interest rates, by removing it from under the Treasury Bills rates and allowing for market determined rates.

However, the associations insist that their rates are already market determined, as the level of competition between MFIs ensures market influences for survival.

Mais said that with increasing access to credit being arguably the most powerful strategy any Government can implement to drastically improve upon the social and economic status of individuals involved in business, the MFIs are necessary to ensure that there is delivery of financial services at affordable costs to the disadvantaged and low-income segments of society.

“We are not sure what the motivation is, and we can’t just sit on the sideline and speculate that there might be influence from other sections of the economy, which might have created a pushback. What we are concerned with are the facts,” he stated.

“The microfinance industry has supported the growth and development of the country for years, by supporting micro and small businesses which are not being accommodated by the major financial institutions. We are talking about the average Jamaican, who has a little shop and a little space and who has to depend on microfinancing for survival,” he noted.

“We are not against regulations. We are not saying we don’t want to be regulated. In fact, what we are saying is that we want to be regulated, so that we can be better appreciated by the society and respected in the way that we want to be respected,” he said.

“If we go the route of accepting the proposals in this Bill, we would certainly be stifling the growth of the sector and that can’t be to the benefit of the country. That can’t for the benefit of the Jamaican economy,” he added.

Jamaica’s microlending sector, which has been growing since 2003, is estimated to comprised over 200 firms in operation, which are required to maintain customer records for a minimum of seven years and conduct an audit of operations on an annual basis for submission to the Bank of Jamaica, under the proposed new Act if it is passed without amendments further amendments.

Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at http://bit.ly/epaperlive





Source link

(Visited 1 times, 1 visits today)

About The Author

You Might Be Interested In

LEAVE YOUR COMMENT

Your email address will not be published. Required fields are marked *