Jamaica's biggest lender. is ready to make smallest loans
SCOTIA Group Jamaica launched a new subsidiary yesterday that will tap into the big local market for microfinancing. The official opening of the offices of Scotia Jamaica Microfinance Company or CrediScotia on Duke Street in downtown Kingston marked the institution re-engaging itself with a market it has underserviced for many decades, admitted Scotia Group president and CEO Bruce Bowen.
“Over the past 122 years, we have impacted the growth of industries, people’s development, the country’s independence and the growth of the economy,” said Bowen.
“An area that we saw that we haven’t been able to provide the support that we would like is the microfinance sector. It’s a sector that has some unique needs and requires a unique approach,” he acknowledged.
CrediScotia will primarily provide loans ranging from $60,000 to $850,000 to microentrepreneurs, who face a daunting challenge trying to get credit through traditional banking channels.
“Before starting this venture we did significant research and identified what the needs of those customers were and set about meeting them,” CrediScotia general manager Yvette Anderson told the Business Observer, stating that the financial institution will be “contributing significantly to the development of the customer, transitioning them to bigger, successful and profitable businesses.”
Patsy Latchman-Atterby, head of the Small Business unit at Scotia, said that CrediScotia’s pricing model is going to be risk-based with interest rates on loans determined on an individual basis by three parameters: available collateral, past history with financial institutions and character.
“The most important thing really is the character, because if you don’t have the character you won’t want to repay your loans,” she said.
Latchman-Atterby noted that the launch of CrediScotia means
Scotia has now cemented its place in all markets of the business sector. Scotia has in the past been involved in microfinancing through its sponsorship of the nonprofit organisation Micro Enterprise Financing Limited (MEFL) — in association with the Canadian International Development Agency and Kingston Restoration Company — but Latchman-Atterby said that MEFL was mainly geared towards corporate social responsibility.
“We have closed the loop in our offerings to the business sector,” said Latchman-Atterby. “While corporate social responsibility will form part of our strategy and vision, what we are going to really do is to close the loop by providing services to microbusinesses in a meaningful way.”
Scotia's loan portfolio, after provisions were made for losses, totalled $100.4 billion at the end of July, up from $94.4 billion a year earlier and represented almost 40 per cent of all loans outstanding to commercial banks.
CrediScotia will face stiff competition in the lucrative microfinancing market from the likes of JN Small Business Loans, Access Financial Services and Micro Credit Limited.
Small and micro-enterprises represent the bulk of the business sector in Jamaica.
Micro-enterprises in Jamaica are defined as businesses that carry an asset base (excluding land and building) not exceeding US$10,000 while small enterprises are those with an asset base (excluding land and building) of between US$10,000 and US$100,000. According to the Economic and Social Survey Jamaica 2010, there were 6,920 micro-enterprises compared to 3,541 small-enterprises last year. More than half of the small-enterprises and 40 per cent of micro-enterprises were categorised as wholesale and retail traders. These figures are based on GCT returns, however, which means that the total numbers don’t take into account the country’s large informal economy.
CrediScotia will also provide education loans.
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