Tuesday, December 12, 2017

The context of this four part series will be done based on my reading of the Inter-American Development Bank (IDB) Report of July 2017 titled “Analysis of Agricultural Policy in Jamaica”.

In my previous article I opined that the lack of structured, flexible agricultural loans is one of the problems affecting agricultural productivity within the Livestock sub-sector. The conclusion was mad e by comparing the loan incubation periods in Jamaica (roughly three to six months) to the countries of India and Australia (2-3 years) for livestock projects.

Devon Paul Sayers
In this article, we will discuss some possible reasons for the failure of small and medium size farmers growing to full commercial operations.

The IDB report highlights:

1. Only 18 % of the Jamaica population is employed in agricultural based employment, however 46 % of the population lives in rural areas.

2. Poultry production has been up 9% from 2014 and consistently rising.

3. Traditional crop exports have consistently declined, in contrast to non-traditional crop exports which have increased by 8% between 2008 to 2012.

4. Productivity in the agricultural sector is low but improving.

5. Development Bank Loans at 10% are used up mainly by the poultry sub-sector and agro processing.

The following questions must, therefore, be asked:

1. How does a developing country with 46 % of its population living in rural areas have only 18 % of its people engaged in agricultural production, given the high import food bill and the lack of jobs?

2. Why is the poultry sector eating up the majority of DBJ 10% loans?

Follow the money

Without having the actual figures, but based on my knowledge and information gained over the years, I know that majority of the DBJ monies are being absorbed by large commercial poultry farms that are collateralized and guaranteed by the two large agribusiness groups on the island.

This is by no means an attack on the growing commercial poultry industry. In fact all other sectors within agriculture should look at the poultry sector as a model to follow en route to commercialization.

However, it should be hypothesized that the sector is no longer at the developmental stage.

Development funds for development

More low interest loan capital needs to go to small independent farmers in subsectors of agriculture that are still in the developmental stage. If we are serious about food security and increasing employment in rural areas then instruments should be put in place by the Development Bank of Jamaica to allow access to more low interest loans for proven small farmers without collateral, and who don’t have the privilege of having big business guarantors.

Honestly, I feel that the development money for agriculture is being hijacked by big business. Our once booming sector was driven by small and medium size farmers has been suffering from a lack of capital injection, because the system is blocking them from the finances needed to be more productive. It’s no wonder traditional exports are down and such small portions of our rural population are engaged in agricultural activities as a means of employment.

The People’s Cooperative Bank (PC Bank), which was a solid defender for the subsistence farmers, is now the first point of rejection. The agriculture board which decides the policies of the bank seems out of touch with the realities of running a small farm business. They seem only interested in short term crop production (peppers, tomatoes, cabbage, etc), while leaving the pimento trees to become fire wood for jerk pork. They are only interested in six weeks chicken, while, goats and sheep are stolen because farmers cannot build proper housing.

Redemption strategy

Productivity in the sector is improving, because of the sheer determination of our farmers to provide food for the nation, despite the unfriendly economic conditions.

Let’s say thanks to the fulltime engineers and police officers, who take out loans against their salaries to plant crops on five-acre lots and to the bar owner who uses the round robin money to support the 12 cows shared between herself and her boyfriend. People like these are the driving force for the increased productivity in the sector.

The redemption strategy is not simple but necessary. It should be a mix of general support services such as farm road improvement and other necessary infrastructure developments and revisit of some direct support (resembling subsidies) that can force “production for production sake”.

The production for production sake concept will have to apply to long term traditional produce such as coffee, cocoa, beef, cattle, etc, which will need large intakes of capital without immediate returns, but is the key to sustainable agricultural production in the country.

Finally, with the growth of non-traditional agriculture providing us with an avenue to earn more without using up large land space by applying appropriate technology such as hydroponics and shade house farming, the opportunity exists for us to venture into the production of ornamental flowers, roses, garnish vegetables, which incongruously trending upwards in the recent years based on export numbers.

Devon Sayers, MBA, is Vice President of the Small Ruminants Association of Jamaica and Lecturer in the Department of Business at Portmore Community College. Send feedbacks to This email address is being protected from spambots. You need JavaScript enabled to view it.

Published in Commentary

The relationship between One-on-One Educational Services Ltd and the Development Bank of Jamaica (DBJ) began right after the company won the best innovation in education award for its MyLocker software at the 2014 National Innovation Awards and decided to expand its operations.

MyLocker is a successful e-Learning platform that has enriched the lives of more than 2,000 students. Secondary students have 24/7 access to course material online and can also work on their labs and student-based assessments (SBAs). Soon, says Allen, the company will expand its reach to serve tertiary students.

The company’s early success convinced owner Ricardo Allen that he needed capital to grow. He applied for a DBJ loan through Sagicor and got JMD $25 million for capital support and to develop new products and services. The loan was backed by a JMD $12.5 million loan guarantee, issued by DBJ’s credit enhancement facility that helps small and medium-sized enterprises satisfy the collateral requirement of lenders.

Allen is grateful that the DBJ gave him a platform to acquire loans at reasonable rates.

“The DBJ is still very supportive,” says the 26-year-old scholar and entrepreneur. He also recognizes the bank’s role in providing guidance and financial assistance that helped fund One-on-One’s Summer School’s entrepreneurial course.

One-on-One has a 97-100 per cent pass rate to show for its efforts. In 2014, it recorded 100 per cent passes in CSEC mathematics from 103 students taking the exam. That same year, Michael Pryce, a student of the institution, won the top national award for CSEC mathematics.

Allen was a 2010 Rhodes Scholar finalist and the Fulbright Scholar in 2013. In perhaps his boldest move ever, he turned down the US-based Fulbright Scholarship and decided to invest in his own company.

He tells new entrepreneurs to develop a solid plan, do proper research, and network vigorously, as he did. These days it is getting easier for SMEs to develop their business plan. Through the DBJ’s Voucher for Technical Assistance programme, SMEs can apply for vouchers to access capacity-building services from Business Development Organizations. These services help put together the building blocks for new businesses making it easier for them to find capital and develop marketing strategies.

Allen knows how to network effectively. Very early in the business, he contacted Danny Williams, Chairman of Sagicor Group Jamaica, and managed to convince the renowned and influential businessman to be his mentor.

With the DBJ/Sagicor loan, he recently signed a five-year exclusive partnership with Cable & Wireless to provide access to a wide variety of study materials for GSAT, CSEC and CAPE examinations to students across the Caribbean.

Under the arrangement, One-on-One educational materials – video tutorials for full online courses, video lectures, past paper solutions, and other examination preparation materials – will be distributed through the Flow Broadband service.

Allen’s other big victory is being selected one of the 24 young professionals for the 2016 Young Leaders of the Americas Initiative programme that US President Barack Obama announced on his visit here last April. Allen is Jamaica’s sole representative.

“I am extremely delighted to have been selected as Jamaica’s first recipient of the Youth Leaders of the Americas Fellowship,” he says. “Dedication has certainly won. This award is a testament to the wonderful work and support of my team. DBJ has provided us with the working capital support, along with invaluable advice and mentorship that was instrumental in our success.”

Allen says One-on-One is committed to advancing the education system and impacting future generations. “We’re on a drive to revolutionize the education industry in Jamaica and the Caribbean,” he explains, “and we’re thrilled that the DBJ supports us.”

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Published in Business News

The Development Bank of Jamaica (DBJ) announced recently that the Scotiabank enterprise-wide risk management and financing program, (SERMaF) has done a sterling job in producing the first Caribbean risk assessment tool.

DBJ’s General Manager of Strategic Services, Claudine Tracey, told business owners and other stakeholders at SERMaF’s closing ceremony, that the psychometric risk-rating model will help the DBJ shape its policies and programmes for MSMEs.

Tracey said the model can advance the DBJ’s aim to provide Jamaican entrepreneurs with capital, collateral and capacity building and increase access to financing for MSMEs in Jamaica.

The technical analysis was spearheaded by consultant Professor Vanus James using a study that collected data from over 1,000 SMEs in a stratified random sample that included all parishes.

The model is meant to implement an upgraded business and risk-rating system for MSMEs, but to later include medium-sized and large businesses. Two key findings, according to Professor Vanus, are that MSMEs are well represented among top performing firms and that the smaller businesses that are not growing are asset constrained, and they can’t grow unless they get access to credit.

The DBJ partnered with Scotiabank and the University of Technology (UTech) on SERMaF in May 2014 and provided $13.6M in grant financing to expand the project.

At yesterday’s ceremony, Professor Rosalea Hamilton, SERMAF’s Project Director and Vice President for Development at UTech, thanked the DBJ for doing the heavy lifting in supporting the programme.

“We couldn’t have done it without you,” she said.

The DBJ and Scotiabank have partnered in the past on MSME initiatives. In 2015, the DBJ loaned more than $785 million to 50 MSMEs through Scotiabank. Seventyone Scotia business customers got financial statements business plans and other services through DBJ’s voucher for technical assistance programme.

The VTA is a DBJ capacity development grant that gives MSMEs access to specific business development products and services from an accredited list of business development organizations. The DBJ finances 70% of the cost up to $500,000 so that business can better access credit to grow.

Tracey explained that Scotiabank issued DBJ’s first voucher, to Norsai Distributors, for a loan of $30 million. Norsai was then able to hire 60 fulltime and 130 part-time employees.

“The DBJ will use the psychometric and business data derived from the firms to better position our intervention programmes to help MSMEs to expand, be more efficient, profitable and sustainable,” says Tracey. “We expect Scotiabank will use the psychometric credit scoring tool to enhance its credit appraisal system for MSME lending.”

Other project partners in SERMaF include the Inter-American Development Bank (IDB) and the Institute of Law and Economics.

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Published in Business News
Friday, 30 October 2015 12:22

DBJ funds ignites small businesses

Minister of Finance and Planning Dr. Peter Phillips launched a new DBJ project and re-launched two others for micro, small and medium-sized enterprises (MSMEs) in October.

These DBJ projects are designed to bring business capacity and funding support to MSMEs. The Innovation Grant from New Ideas to Entrepreneurship (IGNITE) will fund new and innovative business ideas, the credit enhancement facility (CEF) offers partial guarantees to lenders so MSMEs can get financing, and the voucher for technical assistance (VTA) gives entrepreneurs access to technical services. The CEF and the VTA are existing programmes that have been revamped.

Access to affordable capital and poor technical structures limit many small businesses. The three DBJ projects are to help overcome these obstacles to growth. They are part of a larger business ecosystem that the DBJ is making more user friendly in its mission to facilitate growth and development.

“We are doing this in a deliberate and targeted way by offering incentives to businesses and collaborating with Approved Financial Institutions to respond to the needs of entrepreneurs in the SME sector,” says Managing Director Milverton Reynolds. “And, so far, we have seen tremendous success from our collaboration.”

The IGNITE project is DBJ’s newest option for start-ups, supporting development and commercialization of their innovations. The CEF addresses the recurring challenge of inadequate collateral for many businesses in Jamaica. The VTA helps MSMEs build capacity so they can expand and improve their access to financing.

IGNITE helps to finance innovative start-ups, and targets new businesses through existing SME development and incubator programmes. IGNITE supports creation and growth of innovation in firms in the productive sectors. It has started as a two-year pilot to test the effectiveness of grant funding in such instances.

The grants will support innovation activities to stimulate growth of 30 new firms in strategic sectors. Grants will be channeled through business service intermediaries (BSIs), selected in a transparent and competitive process. The BSIs will be responsible for getting the funds to the entrepreneurs and firms, and will help DBJ monitor the objectives agreed on with each beneficiary.

Published in Business News
Thursday, 01 October 2015 12:01

DBJ and Bureau of Standards sign $6m deal

Milverton Reynolds, managing director of the Development Bank of Jamaica (DBJ) and Yvonne Hall, executive director of the Bureau of Standards Jamaica (BSJ), on Monday signed a memorandum of understanding (MoU) under which the DBJ will provide funding of $6 million of a $13-million project to support the BSJ’s implementation of two management systems for training programmes.

The BSJ is seeking international accreditation of its industrial training unit to ISO/IEC 17024, which covers requirements for certifying persons against specific requirements, and ASTM E2659-15, which guides certificate issuers in developing and administering training courses for personnel in the public and private sector.

The DBJ’s support will help to implement these two management systems and allow the BSJ to offer personal certification to individuals in any course of study through verifiable pre-determined criteria.

Under the memorandum of understanding, the BSJ will also begin developing webinars and an e-training platform to deliver the training courses. This will account for 25 per cent of the total training programmes the BSJ now offers.

Speaking at the function at the bank’s Oxford Road office, the DBJ’s Reynolds noted that among the over 700 organisations that will benefit from the BSJ’s programme are small and medium-sized enterprises (SMEs).

“SMEs are specifically targeted by the DBJ for assistance in accessing loans and other forms of financing and business development – to make them more structured, more efficient and more likely to survive,” he said. “And although the training will focus primarily on the manufacturing and services industries, it is easy to see that the ‘train-the-trainer’ approach to the delivery of the programme will have far-reaching effects across all the productive sectors and segments of the population.”

He praised the BSJ for the development role of the programmes, pointing out that among the positive impacts they will have is the improvement of Jamaica’s standing among its regional and international counterparts.

Hall said that the project fit perfectly with the DBJ’s growth strategies as it seeks to build a user friendly ecosystem for business.

Published in Business News

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