Growth & Jobs | Financing for MSMEs critical for national growth

PRESIDENT OF the Private Sector Organisation of Jamaica (PSOJ), Metry Seaga, has urged stakeholders in Jamaica’s financial sector to rethink the rigid requirements imposed on entrepreneurs seeking to access financing.

This, as he pointed out that micro, small and medium-sized enterprises (MSMEs), which are critical to Jamaica’s economy, face significant gaps in financing that hinder their potential for growth and contribution to the country.

“The Planning Institute of Jamaica reports that MSMEs contribute over 40 per cent to Jamaica’s GDP (gross domestic product). We account for over 34 per cent of the total employed labour force... . We employ 90 per cent of the private sector and [contribute] over $80 billion in tax revenue to the Government of Jamaica,” he stated.

Seaga was speaking at the PSOJ and Inter-American Development Bank (IDB) Empower JA Forum, held under the theme ‘The New Finance Frontier: Empowering SMEs with Tailored Capital Solutions’, at The Jamaica Pegasus hotel in Kingston on September 11.

The PSOJ president said despite their significance, MSMEs continue to face a financing gap that is estimated to be hundreds of billions of Jamaican dollars.

“It is arguable that more than half of the small and medium enterprises either cannot access the credit they need or are forced to settle for financing that doesn’t truly fit their circumstances,” he lamented.

Seaga pointed to issues such as high-collateral requirements, lengthy approval times, and risk frameworks that do not reflect the true potential of a small or medium-sized entity.

He emphasised that stakeholders must rethink the traditional financing model to unlock Jamaica’s growth potential.

THREE IMPERATIVES

In this regard, the PSOJ president said the organisation has set three imperatives to guide it.

The first imperative – advocacy for competitiveness and inclusion – is characterised by the entity’s ongoing push for reforms that make it easier to do business, reduce red tape, and create a financial ecosystem where SMEs are not afterthoughts but are central players.

The second focuses on driving productivity and innovation.

“Jamaica cannot achieve sustained growth if our SMEs are left behind. Productivity gains will come from empowering entrepreneurs with tools, capital, and know-how to compete not just locally but in global markets,” Seaga affirmed.

He pointed out that the third imperative is centred around building resilience and partnerships.

“Whether it’s climate shocks, pandemics, or shifts in global trade, our economy is vulnerable. SMEs need financing models that build resilience, insurance products, risk-sharing facilities, blended financing solutions that cushion the blows and create room for long-term planning,” the PSOJ President outlined.

He added that with Jamaica’s economy showing stability in recent years, it is critical for businesses to be able to access capital that will allow them to scale up operations.

“If just 10 per cent of SMEs in Jamaica were able to scale up operations through better access to finance, we could generate tens of thousands of new jobs, expand exports, and strengthen our tax base,” Mr Seaga pointed out.

He challenged the nation’s bankers, investors, policymakers, and entrepreneurs to move beyond traditional financing models.

RESHAPING FINANCIAL FRONTIERS

“Let us look at angel investing, venture capital, fintech innovations, and risk-sharing partnerships, not as buzzwords but as practical solutions that can reshape the financial frontiers for our SMEs. To the financial institutions, I encourage you continue innovating, design products that match the realities of our SMEs, and price them in a way that is sustainable for both the lender and the borrower. To our entrepreneurs, I urge you take the time to become finance-ready,” the PSOJ President said.

He further encouraged the nation’s policymakers to clear the obstacles, streamline approvals and create incentives for inclusive financing.

In her remarks, IDB Country Representative to Jamaica, Natacha Marzolf, said Jamaican small businesses face persistent and interconnected challenges that stifle growth, productivity, and innovation.

“This is why targeted support, coordinated policy research and responses, and formulation, and sustained long-term investments are key to unlock the full potential of the SME sector in Jamaica,” Marzolf affirmed.

She pointed out that the IDB has been working with the Government and the private sector to address the challenges.

“IDB, IDB Invest, and IDB Lab, which form the IDB group, remains a committed and long-term partner in strengthening SMEs in Jamaica. We work alongside the Government, financial institutions, policymakers, and ecosystem stakeholders to offer practical, scalable, innovative and, very importantly, competitive solutions,” the IDB Representative stated.