Think local
Academic urges Jamaican businesses to support community-based banking
LILLIPUT, St James — Pointing to anti-money launderin
g laws which sometimes make loan application unwieldy, dean of global engagement at Colby College in America, Dr Stacy-Ann Robinson, has stressed the importance of Jamaican enterprises pooling their resources at the community level.
“We have to support community-based banking, for example credit unions,” she said during a panel discussion at the JHTA Climate Resilience Symposium held at Iberostar, Rose Hall, in St James last Friday.
The topic discussed was ‘Climate Change Impacts and Coastal Vulnerabilities’ and Robinson, who weighed in on challenges accessing funding in general, also spoke directly about bankrolling projects aimed at combatting climate change.
“The reality is that it is very difficult because the process can be very cumbersome to get funding for some of these small and medium-sized properties to get funding,” she said. “One of the things that we need to remember is that if you are talking about international climate funding it is almost like a different ball game.””
She believes that an important step in accessing those funds is to understand the rules of the game, because different donors will provide funding for different things.
“Traditionally, for example, some may support infrastructure. So if you are looking into building breakwater, for example, or building seawalls, there are some donors that are more likely to support those activities. So a part of that is saying, ‘What exactly do I want to do? Which donors support what I want to do? And what are the channels for accessing those funds?’ ” advised Robinson.
She also stressed that there is no direct access to international climate financing.
She gave an example of challenges a small, community-based organisation would experience if it tried to approach entities such as the World Bank to get financing for a particular project. She said the way forward is to go through the Government.
“There are alternatives to pool resources, but one of the things that my research has found as well is that most of the monies are coming in bilaterally, not necessarily through those big multilateral organisations such as the World Bank. We have to think where money can come from as well,” stated Robinson.
Director at Charela Inn in Negril, Sophia Grizzle Roumel, who was among those in attendance, told the Jamaica Observer that she agrees with the suggestion for greater engagement with community-based institutions.
She pointed to a solar project loan her 59-bedroom hotel took out with Jamaica National Building Society in 2013 before it became a commercial bank.
“They had this fund called the Five by Five by Five, which was five million over five years at five per cent, and it was an excellent loan. We took that loan. It was an excellent loan and we found it very easy. But there again we had an advantage because we already had loans with the big commercial banks, such as NCB [National Commercial Bank] and Scotiabank, so we would have had a lot of the requirements in place already. But it was a very, very easy loan to apply for,” said Grizzle Roumel.
“We were very, very happy with it, and we felt that it was a very, very good project. We need to encourage a lot more of the banks to do that. Now, because of the international regulations, it’s very hard for smaller businesses, because the amount of documentation that is required is mind-boggling,”” said the hotelier.
“The small banks [have a role]. There are a lot of great entrepreneurs with great ideas who just need a little financing to start some of these wonderful businesses that will do well. The financing is there and I think it’s an excellent idea,” stated Grizzle Roumel.
She pointed to potential opportunities in ecotourism, something which she said is of interest to her guests.
“The tourism industry is expanding and there is room for anybody who has a good idea. There is room for them from entertainment to adventures, to food… because people want to come out for the adventure. They want to go into the communities and see what it’s like,” argued Grizzle Roumel.
“Even our guests, the road is so bad up to the farm, but they still hire drivers to carry them up to the farm because they want to see the farm where the food is coming from and so forth,” she added.
Addressing Robinson’s point that bilateral loans are made at the government level, she wants the Jamaican Government to get loans at a cheaper rate which can then be provided to businesses through commercial banks which then offer customers lower rates. She said the existing procedure is for the funds to be provided through the Development Bank of Jamaica, a difficult and expensive undertaking.
“We are not asking for any free money, but we’re asking for loans at between two and four per cent. Which means if the World Bank gives [Jamaica] a loan at two per cent then our commercial bank can give us at four per cent, because you know it costs the bank to do the paperwork and so on. We’re looking for loans under [a] five per cent interest rate,” she said.