MCDONALD

John Myers Jr., Business Reporter

There has been a rush of applications for loans from the Development Bank of Jamaica for the development of agricultural projects under the Government's special loan facility initiated to boost the productive sector.

According to figures provided by McDonald, the DBJ approved $70 million in loans since February for agricultural projects from funds provided by the National Insurance Fund (NIF), and another $30 million was being processed.

He said an additional $30 million was approved for agriculture from funds provided by the Bank of Nova Scotia Jamaica (BNSJ) and DBJ was currently processing a further $10 million.

"We have been lending a few amounts of monies in the agricultural sector from the BNS (line of credit) for all types of projects - pig farming, beekeeping, poultry, greenhouse technology," Mr. McDonald said.

Seven-year loans

"For the BNS (funds) you can get facilities (loans) up to seven years, and for the NIF (funds) you can get it up to four years. So what we do is for projects that need funding in excess of four years, we would use the BNS funds, and for projects for four years or less, we use the NIF," he explained.

Some $600 million was put up by the Bank of Nova Scotia - $250 million for the agricultural sector and $350 million for tourism - for on-lending at single-digit interest rates under the special loan facility established shortly after Prime Minister Portia Simpson Miller's assumed office last year.

Another $1 billion was raked into this special pool of funds from the National Insurance Fund to provide cheap funding for the productive sector as part of the Government's thrust to boost the local economy.

But McDonald said the approximately $150 million received from the NIF was almost exhausted and the DBJ was in the process of asking for more due to the strong demand from the agricultural sector.

Interests received

In terms of interest from the tourism sector, that has been less vibrant. In fact, the DBJ has not yet disbursed any funds to the tourism sector. McDonald said the DBJ was just now processing some $30 million in loan applications.

Funding provided under the special loan programme is made available at a concessionary interest rate of 7.8 per cent. However, there is a ceiling of $5 million per project and successful applicants are required to provide at least 30 per cent equity.

Conditions for accessing these loans are less stringent but McDonald said applicants are required to provide some amount of surety. "Where the commercial banks would probably want to insist on full life insurance, we have been able to make some adjustments here and there ... So we exercise some flexibility but not to jeopardise our long-term financial interest," he explained.

Last year, the DBJ, which was formed from the merger of the National Development Bank and the Agricultural Credit Bank in 2001, disbursed $1.4 billion in loans, with one third of that amount going to the agricultural sector, according to the Finance Ministry.

The Government-owned institution was created to assist with the development and modernisation of viable enterprises in the agriculture, agro-industrial, services, manufacturing and tourism sectors by providing medium- to long-term credit.

Funds are disbursed through several approved commercial and merchant banks, the Peoples' Co-operative Bank and credit unions.

john.myers@gleanerjm.com