BY BALFORD HENRY Senior staff reporter balfordh@jamaicaobserver.com
Friday, December 12, 2014
Jamaica Micro Financing Association (JamFA) Chairman Hurshel Cyrus says that the delay in introducing legislation to regulate the sector is handicapping its efforts to establish its value to Jamaica’s growth and development.
“We are in a fast evolving sector, and there is need for us to have some kind of order in the sector for it to realise its full potential… That is why we are insisting that some kind of regulation must be introduced very, very shortly,” Cyrus said.
He was responding to recent media reports that the Consumer Affairs Commission (CAC) has cautioned Jamaicans about how they do business with same-day loan operators during the Christmas season.
According to the media report, CAC Director of Communications Latoya Halstead said that the commission has received anecdotal evidence that some microfinance businesses have been engaging in questionable activities.
However, Cyrus pointed out that JamFA has been insisting that the answer to the problem is not in condemning the sector, but in introducing the proposed Micro Credit Bill, with the necessary regulations, to protect both the creditors and the borrowers.
“Over the years, the microfinancing landscape has changed significantly, and when we speak of microfinancing, we don’t just speak of only lenders any more, although a lot of Jamaicans are focused almost exclusively on that. But there are changes around the world, and I am seeing them in Jamaica also, where other products have been introduced,” Cyrus stated.
“So when you think about microfinancing, we think about things like loans, savings, insurance, transfer services and other financial products, which are particularly targeted to the low-income strata. We are seeing the transfer of funds now by cellphone, mobile money, that is a form of microfinancing,” he pointed out.
Cyrus said that recent developments, like the implementation of the Security Interests in Personal Property (SIPP) legislation, and the establishment of the National Collateral Registry, which is designed to improve commerce by expanding access to domestic credit while minimising the risks of loan default, are welcome improvements for the sector.
He noted that under the SIPP registry, which will be a repository of information on non-real estate assets tendered as collateral for securing loans under the SIPP Act, assets include motor vehicles, stocks and securities, agricultural products, crops and other agricultural yields, machinery and equipment, accounts receivable and futures, future acquisition of security interests, and unborn livestock.
He said that financial institutions will have to register notices of loans granted and the associated assets used as collateral. The availability of this information in a central database will enable the institutions to verify any previous use of the potential collateral, and establish priority with regard to other claimants on the same asset
However, he said that in order to properly regulate the sector and guard against problems, like those which have been raised about it, the micro credit legislation is essential.
“I am still hoping that Parliament will move on it quickly so we can have a registration environment for the companies that operate within the sector, because only that will ensure that we serve the public better,” Cyrus said.
According to JamFA Executive Director Raymond Gabbidon, it is essential that the Government enact legislation to create a proper regulatory framework for Micro Finance Institutions (MFIs).
He said that this would help to create a more trusting environment for the loan companies and their clients and reduce the risk of some MFIs being labelled as “loan sharks”.
“The latent capacity of the poor for entrepreneurship can only be significantly enhanced with the provision of microfinance services, to enable them to engage in economic activities and be more self-reliant,” Gabbidon said.
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JamFA defends microfinanciers
