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Only 20% of MSMEs qualify for loans - Most lack business plans other necessities

Published:Tuesday | January 20, 2015 | 1:00 AM

Chief executive officer of the Jamaica Business Development Corporation (JBDC), Valerie Viera said that only about 20 per cent of Jamaica's micro, small and medium-sized enterprises (MSMEs) which apply for loans are so granted by the island's financial institutions.

That, she attributed to the findings of JBDC research across all parishes over the last four months, which show that approximately 85 per cent of MSMEs do not have a business plan, 50 per cent "don't have a clue" about developing a marketing plan and approximately 70 per cent have never even thought about research and development.

"So is it any surprise that only about 20 per cent of the client group that applies for, or is even granted a loan from a financial institution?" Viera asked, at an Editors' Forum at The Gleaner's North Street, Kingston offices on Wednesday.

MSMEs have for years complained about limited access to financing.

However, while acknowledging that finance was an important and major issue for the sector, "I want to be a little radical and say it is not the first obstacle that my clients in the field are facing," she told a business roundtable on financing MSMEs at the Mona School of Business and Management inaugural conference at the Holiday Inn Sunspree Resort, Montego Bay last week.

"I want to first start to say we need to build the capacity of the MSMEs to really be in a position to negotiate for the financing," she added.

Viera said there was a misalignment between the various stakeholders about the requirements of MSMEs, noting that financial institutions require, for example, business plans and audited financial statements from those borrowers but they have not built the capacity to fulfil those requirements.

"Many of our financial institutions speak about ... products for the MSMEs. The truth is that it's the same people who access those funds over and over because it's the same people who qualify for interviews," Viera said.

Moreover, she said, "I often wonder what's the philosophy behind many of the products that the financial institutions are offering because most of them have no relationship to the needs of the client group. If I'm diabetic and you give me a beautiful cake you (are) not helping me. That's exactly what is happening and we need to revisit that."

mcpherse.thompson@gleanerjm.com