Alcan reaching out to Jamaican farmers
CANADIAN bauxite company Alcan, which pulled out of the island in 2001, will be allocating US$1 million (approximately J$66 million) in guarantee funds to the Micro Enterprise Financing Limited (MEFL) for the benefit of Jamaican farmers.
“They will be meeting on Monday with representatives of Canadian Investment Development Agency (CIDA) to wrap up discussions,” Debra Williams, executive director of MEFL, told the Observer on Thursday.
Partners in MEFL are the Bank of Nova Scotia (BNS), CIDA and the Kingston Restoration Company (KRC).
According to Williams, the hypothecated funds will allow loans to be disbursed to the agricultural sector at lower interest rates than that currently being offered to farmers through MEFL.
Farmers presently receive short-term loans of up to six months from MEFL at a rate of 2.5 per cent per month, reducing to 1.5 per month for repeat loans based on repayment record.
“We are supporting working capital, not start-up financing,” Williams explained, adding that special repayment facilities were in place specifically for farmers.
The funds designated for the agricultural sector will, in effect, act as insurance for MEFL, allowing the lending institution to recover in case a farmer suffers a loss.
“Because we now have guaranteed funds we have less risk, so we don’t have to make high provisions for loss,” said Williams.
Monitoring and training clients is an integral part of operations at MEFL, and partnering with the Rural Agriculture Development Authority (RADA) and other agencies would further reduce operating costs, Williams added.
Williams said that Alcan’s decision came out of discussions with the MEFL after the bauxite company initially expressed an interest in assisting parishes where there were mined-out lands. “Eventually the assistance extended to all 14 parishes,” she said.
“It is a legacy fund. They wanted to find a way of supporting in the parishes where they mined bauxite,” she added.
MEFL has so far disbursed 10,169 loans totalling $242 million, with a 96 per cent repayment rate, according to Williams.
“We have 1,615 active clients at the end of September 2006,” she said.
The MEFL was established in May 2002 as part of government’s inner-city renewal programme, designed to offer micro financing to low-income, urban micro-entrepreneurs, who owned little or no collateral.
The initiative was in keeping with the Ministry of National Security’s strategy to alleviate poverty as part of a comprehensive plan to control crime.
MEFL kicked off the programme in the volatile Kingston inner-city communities of Southside, Seaward Pen, Tel Aviv, Rema and Waterhouse to tremendous success, Williams said.
Since then, MEFL has added two branches, one in Santa Cruz and another in Savanna-la-Mar, and have expanded their loan portfolio to include activities common to the areas which they operate.
Applicants for MEFL loans are expected to have good character, own and operate a business for at least six months, live or work in the same area, and be willing to open a group savings account at BNS for the purpose of loan repayment.
fosterp@jamaicaobserver.com