UPDATED: Banks failing entrepreneurs, commentators claim
Commentators are decrying what they see as the lack of involvement of commercial banks in efforts to push real growth in Jamaica.
Addressing a recent Gleaner Editors' Forum at the newspaper's North Street, Kingston, offices, they said the financial sector is a big part of the problem of the lack of growth because they are constantly cited for being unsupportive of entrepreneurial efforts.
Entrepreneur Yaneek Page broadsided banks for mostly supporting consumption rather than partnering with businesses that can spur economic growth.
Page accused banks of taking the majority of the country's savings and putting them into consumption loans.
"The BOJ (Bank of Jamaica) data show that more than 70 per cent of loans are given for consumption purposes. And when you take out that 30 per cent that is actually given to businesses for productive purposes, 70 per cent of those loans are given to medium to large enterprises, so the small business sector is being squeezed out," Page charged.
She was supported by business consultant Donovan Mayne.
Mayne said it was significant that Michael Lee-Chin, the recently named growth czar, was chairman of Jamaica's largest bank, National Commercial Bank.
ASSESSING THE ROLE OF BANKS
He said that, as chairman of the Economic Growth Council, Lee-Chin would have to assess the role of banks.
"The biggest impediments to growth in this country are the banks. The access to credit is what makes a country grow, and the access to credit in Jamaica is such that it is easier for me to get a $15-million loan to buy a car than to get a $3-million loan to start a business," Mayne said during the forum conducted to assess the first 100 days of the Andrew Holness administration.
The 100th day was recognised on Sunday.
Meanwhile, Dr Densil Williams, executive director of the Mona School of Business and Management, urged caution on the question of banks granting business loans.
He called for businesses to look at their own practices that may not assist in proper relationships with banks.
"While we hear that general argument, we have to be fair. If you borrow people's money you'd want to pay [it] back, and even before we get to that, we must consider that a big part of the problem is that our entities do not want to professionalise themselves," Williams said.
BOJ data for December 2015 show that total domestic loans and advances were $4.145 trillion.
Nearly half that number (47 per cent or $1.976 trillion) was accounted for as personal loans.
*Note: Earlier, this story had said BOJ data for December 2015 show that total domestic loans and advances were $41.45 trillion. That was incorrect. It was actually $4.145 trillion.