Jermaine Francis, Staff Reporter
The Development Bank of Jamaica (DBJ) is hoping to revolutionise the way micro-, small-, and medium-sized (MSMEs) business operators who are heavy cellular-phone users conduct business transactions.
The government entity is to introduce a pilot programme called Mobile Money, which has targeted 100 Jamaicans.
With one of the highest mobile-phone concentration in the region, the bank said the economic benefits of this heavy usage among this sector is largely untapped.
General manager for risk and strategy management at the DBJ, Claudine Tracey, said the pilot phase of its microfinancing mobile-money platform has already been launched and some 100 small- and medium-sized business owners are now using it.
"We believe that a groundbreaking, game-changing initiative that we are really interested in (that is) using mobile money as an avenue to directly reduce the transaction costs that are related to micro-financing," Tracey told a Gleaner Editors' forum last week.
She noted that this initiative, when fully implemented, will go a far way in minimising the transaction costs associated with acquiring and repaying loans in the small-business sector.
Describing how the mobile-money process works, Tracey said instead of paying with cash, cheques, or credit cards, entrepreneurs will have a chance to use any mobile phone, from anywhere in the country, to pay loans and even buy goods and services.
"What we are specifically using it for is to disburse loans, transfer funds from person to person. It will also allow you to use your phone to purchase goods and services and check your account balances," she said.
Tracey admitted that there were risks associated with this system, but said they were minimal as accounts "are not attached to the phones, but to the personal identification number on each phone".
With the Bank of Jamaica (BoJ) insisting on the mobile-money platforms being bank centric, Tracey said the system will not be monopolised by mobile providers.
"By it being bank centric, it means the central bank acts as a regulator. So, for every mobile-money product coming out in Jamaica, they have to partner with a commercial bank so that the central bank can regulate and monitor," said Tracey.
She was supported by managing director of the DBJ, Milverton Reynolds, who said the organisation's obvious partner is the BoJ.
Reynolds told Gleaner reporters and editors that the mobile-money project had been held up for sometime because requirements stipulated by the central bank had to be met.
"One of the reasons why the project is moving at the pace that it is at is that we had to convince the central bank that this is a project that will meet all their requirements dealing with money laundering and all of that. So we meet with them quarterly to discuss what we are doing," stated Reynolds.
In the meantime, Tracey said in this first phase, individuals targeted by the DBJ are those without bank accounts, and those with inactive accounts.
"What the platform allows for is that you don't have to open a bank account because it's not that the customer will have an account at a bank, the account is really a virtual account."
DBJ will hold physical accounts at commercial banks.
She said opening virtual account has been simplified as opposed to the tedious process involved in opening a normal bank account.
Complaints by operators of small- and medium-sized (SMEs) enterprises about the difficulties associated with accessing loans could soon become a thing of the past.
The Development Bank of Jamaica (DBJ) has introduced a strategic programme to provide institutional strengthening to MSMEs.
The DBJ - the quasi-Government agency responsible for developing the microfinance sector - said the bank has created a voucher system aimed at helping unsuccessful small-business loan applicants to better prepare business-development plans.
General manager for risk and strategy management at the DBJ, Claudine Tracey, speaking at a Gleaner Editors' Forum last week, said the system will be ready for implementation in January 2014.
"We want to get to the SMEs not just in a general sense, but right at the point when they need it most, when they are accessing a loan," declared Tracey.
She said with the new voucher system, loans will no longer be denied on the basis of inadequate business plans without any follow-up or assistance for the applicants.
The system is designed to help unsuccessful small-business owners at the point of loan applications.
"What the voucher system does is instead of denying the loan, they (lenders) would offer a voucher to the SMEs to go to a business-development organisation to get the exact capacity development that they need," said Tracey.
She added that the vouchers would provide SMEs with the opportunity to get business counselling and hands-on training, "to draft business plans so that they can then return to the bank and stand a better chance at getting a loan".
The DBJ has proposed to pay at least 70 per cent of the cost for the business-development training to better prepare the small operators who will be required to fund 30 per cent.
DBJ is now at the final stage of the market consultation, but it expects that consultations will be concluded on November 30.