Jamaica Micro Finance Association (JAMFA) is creating a venture capital fund to be backed partially by its ten members, according to Executive Director Raymond Gabbidon.
JAMFA wants to create a venture fund of J$600 million to J$700 million for ploughing into entities which need capital to grow, said Gabbidon.
However, the group says it is concerned that the proposed withdrawal of tax subsidies for the junior stock market could hurt the venture-capital sector that Jamaica is seeking to create.
Venture capitalists typically take an equity position in the companies they fund, but eventually cash out through various means, which can include the sellback of shares to the original owners or disposing of the shares through the stock market.
"The Junior Stock Exchange is very much a part of our thinking," said Gabbidon.
"We were hoping to go to the JSE to cash out and return money to the fund for revolving assistance to firms which need it."
The four-year-old Junior Stock Market was designed to provide equity financing for small and medium businesses of J$50 million to J$500 million.
Listing on the junior exchange entitles participants to a 100 per cent waiver from corporate taxes and a 50 per cent waiver in the next five years in the first five years.
However, the Jamaican Government is proposing to end the tax breaks under reform of the tax incentive system.
Still, Gabbidon said JAMFA is prepared to create the fund, even if there were a shift in policy direction for the junior market.
"Members are already committed," he said.
But the group also plans to approach the Government for matching funds through the Development Bank of Jamaica or MIDA, and explore whether it can access multilateral backing, Gabbidon said.
JAMFA members manage a total loan portfolio of approximately J$6 billion, the executive director said.