Bunting calls for more banking support for MSMEs
Opposition Spokesman on Industry, Commerce and Competitiveness, Peter Bunting, is challenging banks to do more for the Micro, Small and Medium-sized (MSME) sector.
Bunting, in making the call, has acknowledged recent efforts to assist MSMEs by Private Sector Organisation of Jamaica (PSOJ) President, Howard Mitchell and JMMB’s Keith Duncan.
However, he is urging banks to do more now, while pointing out that present circumstances will force them to do so.
“As blue-chip companies bypass banks entirely and directly access the capital markets for funding, spreads are being squeezed on corporate loans and asset-backed consumer loans and spreads have disappeared almost entirely on government paper,” said Bunting.
“Bank profits are still being propped up by fees and foreign exchange trading as the exchange rate bounces around erratically,” he added.
But, the opposition spokesman warned that this was not sustainable in the long run.
“Banks will have to re-learn how to do cash flow and business cycle lending to small and medium-sized companies if they are to continue growing business,” he stated.
Bunting made the comments recently, during his contribution to the 2019/2020 Sectoral Debate in the House of Representatives.
He acknowledged that he has seen a growing recognition by private-sector leadership, of the importance of the MSME sector to economic growth and economic inclusion.
He referenced a recent speech by Mitchell, in which the PSOJ president recognised that MSMEs employ 70-80 per cent of the workforce but get only 11 per cent of private sector credit and 26 per cent of bank loans.
Bunting also acknowledged that there has been more than just talk, with the setting up of access to finance facilitation panel under the auspices of the PSOJ, by the Bankers Association of Jamaica.
“I spent many hours at their workshop on MSME financing at Terra Nova Hotel recently listening to small business people give the senior bankers a piece a 'dem' mind about how they are treated by the banks,” said Bunting.
Meanwhile, Bunting lamented that Jamaica continues to lag behind other countries in the area of ‘necessity entrepreneurship'. He said the last survey showed that Jamaica was ranked 64th out of 64 countries surveyed.
The investment banker said this type of entrepreneurship should be encouraged and expanded to drive growth.
“These are the ones that really drive innovation in the market, they see a market opportunity, they come up with a new product or service and that’s where the new employment and growth come from,” Bunting said.
“We have seen very little effort to drive this and the next generation of entrepreneurs towards economic growth that is broad-based and inclusive,” he argued.
He explained that inclusive means that economic growth filters through the economy, creating new classes of jobs and spurring innovation.