Finance the Growth Emile Spence Business Development & Research Executive Jamaica National Building Society Jamaica Trade & Invest August 20, 2009 … How to of your Business the

Financial crisis Economic downturn Recession Downsizing of businesses Job cuts Redundancies Re- financing Re-tooling Early retirement Right- sizing New strategies

Areas of Focus What is this financial crisis? How will the financial crisis affect individual businesses? Why is it important for business persons to be vigilant in making monetary decisions?

Global Financial Climate Global cash crunch Major economies record steep declines in output Global economy expected to decline by 1.3% for 2009 Estimated world credit loss of US $2.3 trillion Approximately US $14.5 trillion or $33% of the value of the world’s companies affected

Global Financial Climate

Reduced access to credit Reduction in demand for aluminum Contraction of global demand for goods and services Fall in global oil demand Removal of tariffs Global Financial Climate

Impact on Jamaica Declined by 17% since January 2009 M Contract by 3% 1.3% Jan-March 2009 Decline in value Economy Inflation FDI Remittance inflow Low levels of output Exports $159B of the $548B budget earmarked for debt repayment

Decline in price and volume of exports Restrictions in access to trade financing Reduced remittance inflows Depressed commodity prices Weakened labour markets Low business and consumer confidence Falling asset values Downgrade of Jamaica’s credit rating Impact on Jamaica

International Response IMFIMF World Bank IBD Offer policy advice and technical assistance Umbrella Vulnerability Fund to which developed countries would dedicate 0.7 per cent of their planned economic stimulus for assistance to developing countries At end of December 2008 disbursed approximately US$150 M, including some US$120 M for budgetary support. Additional US$200M to US$300M available for lending during 2009 G-20 Nations $1.1 Trillion for developing countries to boost micro enterprises sector 5 th Summit of the Americas … recognition of importance of MSME sector and commitment to finance sector in LAC countries 5 th Summit of the Americas … recognition of importance of MSME sector and commitment to finance sector in LAC countries

Regional Response CARICOM to establish College of Regulators to facilitate closer collaboration among supervisory authorities in Caribbean jurisdictions which is critical to ensuring safety, soundness and stability in the financial services sector. 13 th Heads of Government of the Caribbean Community Meeting in Guyana, July 2009

Government's Response GovernmentInitiatives Funding for MSME sector International funding Funding for tourism sector Renegotiation of international loans Concessions to Manufacturing sector Youth Entrepreneurship Programme (YEP)

Look for creative micro and small business opportunities in sectors such as agriculture and tourism Become financially literate Refine financial management for small businesses: Funding Cash Management The Importance of Saving Response of Businesses

Funds from Development Bank of Jamaica available for on-lending by microfinance institutions such as: JN Small Business Loans Ltd Jamaica Business Development Corporation Credit Unions J$350 million fund for small and medium size businesses J$2.25 billion venture capital loan programme established Funding for Small Businesses

Importance of Saving Save profits to replenish raw materials or stock Save profits toward purchase of new equipment Save profits to reward one’s self

JN’s Response

Tips for Survival CONSERVE GRASP OPPORTUNITIES BE FINANCIALLY LITERATE SAVE ELIMINATE UNECESSARY DEBT Payday loans - rates as high at 32.5% on the reducing balance Credit Cards - Interest rates as high as 49% per annum on Jamaican currency cards and up to 20% on International cards Hire purchase Hire purchase - interest rates range from 2 – 3% per month, add on … on outstanding balance

Economic Opportunities Information Technology … use of the internet Music Tourism Capacity building in the area of music … Jamaican Motown record company Theme Parks, Cultural sites, adventure & sports tourism

“Seeds of faith are always within us; sometimes it takes a crisis to nourish and encourage their growth.” Susan Taylor Hope…