Camilo Thame, Business Reporter

Jamaica's outreach to its microfinance sector is among the worst in the region, a new lending agency survey has found.

In 2005, the latest available regional data, local microbusinesses got loans averaging US$376, said an Inter-American Development Bank report. The figure converts to approximately J$23,700.

The study did not make clear whether this was an improvement or decline for Jamaica, but regionally, the IDB survey found that micro loans or financing reaching low-income individuals throughout Latin America and the Caribbean increased almost five-fold within five years through microfinance institutions (MFIs).

The loan portfolio of MFIs increased from US$1.19 billion disbursed to 1.8 million borrowers in 2001 to US$5.4 billion issued to nearly six million borrowers by the beginning of 2005, according to the IDB in a report from its Sustainable Development Department, entitled: 'Microfinance in Latin America and the Caribbean: How large is the market?'

The report did not track the growth for the 23 countries it surveyed, but by the beginning of 2005, Jamaica's portfolio represented US$4 million - or a mere 0.07 per cent of the total portfolio - issued to 10,401 borrowers.

The average loan of US$376 placed Jamaican institutions at position 21, third from last, above Haiti and Brazil.

Haiti, Jamaica's French partner and the largest populace of about eight million within Caricom, lent US$24 million to 81,222 individuals, for average loans of US$374, while Brazilian MFIs, which issued US$91 million in loans across 289,697 borrowers, was at the bottom of the list, lending on average US$313 per person.

On the other end of the spectrum, tiny Barbados, the smallest country on the list, had the highest average loans of US$9,446, but it also had the smallest number of borrowers, 384. Its loan portfolio equaled Jamaica's at US$4 million.

Growth in region

Trinidad and Tobago was fourth, having lent US$3 million to 1,733 borrowers, or US$1,500 on average.

According to the IDB report, the overall growth in the region showed an average annual growth rate of 35 per cent for the number of borrowers and 46 per cent for total loans.

If the growth rate holds, the total number of creditors to MFIs in Jamaica should total close to 20,000 and the loan portfolio would have grown to US$8.5 million by the end of 2006.

Microfinance stemmed from early programmes in South America and East Asia, which operated under the conviction that low-income households should have access to credit, and that the poor engage in income generating activities that require financing.

It was the limited access to formal financial institutions that created the need for MFIs.

Important presence

The IDB study, though not focused on credit unions, noted that the more traditional institutions "have an important presence in the region and work with low-income populations."

"There is some degree of overlap and competition with MFIs that needs to be better understood," add the report.

At the beginning of 2005, credit unions throughout the region had a total of US$9 billion in loans issued to 8.4 million borrowers, giving a slightly better average lending rate of US$1,080, compared to that of MFIs' US$911.

In the case of Jamaica, the loan portfolio of credit unions at US$282 million dwarfed that of MFIs, and reached far more borrowers - 756,113 - by the beginning of 2005.

camilo.thame@gleanerjm.com