Peter Bunting, the Shadow Minister of Industry, Commerce, and Competitiveness, has touted the role that he foresees the Micro, Small, and Medium Enterprise (MSME) playing in Jamaica’s economy.
Bunting, in his presentation in the 2018-2019 Sectoral Debate, posited that
“The MSME sector has to become the catalyst for the development and inclusive growth of the private sector.”
“The MSME sector can support innovation, competitiveness, wealth creation, and social stability,” he noted.
He said that the private sector leadership has now recognized the vital role of the MSME sector to economic growth and economic inclusion.
Bunting said, “Recently, the PSOJ President gave a speech where he recognized that SME’s employ 70-80% of the workforce but only get 11% of private sector credit and 26% of bank loans. And there has been more than just talk, as an access to finance facilitation panel has been set up under the auspices of the PSOJ by the Jamaica Bankers Association. I spent many hours at their workshop on SME financing at Terra Nova recently, listening to small businesspeople give the senior bankers a ‘piece of dem mind’ about how they are treated by the banks.”
He further noted the effort being made on the part of private-sector leadership but argued that “a more powerful motivation is now operating as blue-chip companies bypass banks entirely and directly access the capital markets for funding.”
He stated that leverage on loans are tighter and bank profits are propped up from different sources.
“Spreads are being squeezed on corporate loans and asset-backed consumer loans, and spreads have disappeared almost entirely on government paper. Bank profits are being propped up by fees and FX trading as the exchange rate bounces around erratically, but that is not sustainable in the long run. Banks will have to re-learn how to do cash flow and business cycle lending to SMEs if they are to continue growing business,” said Bunting.
He stated further that everyone will benefit if there is a vibrant MSME sector
“High rates of growth with equity can only be achieved with a business and social revolution that unleashes the potential of the MSME sector and creates inclusive economic growth,” Bunting concluded.
Nigel Bell, Readers Bureau, Fello
Edited by Jesus Chan
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