By Dennise Williams, Staff ReporterPROVING THE strength of the recent positive reports of consumer confidence in the economy, Jamaicans have spent $5.9 billion through the MultiLink network during the second quarter of 2004.
MultiLink is a service operated by JETS Limited which facilitates the electronic transfer of money between financial institutions, merchant and debit card holders. Customers can access the money in their account balances through Automated Banking Machines (ABM) or Point of Sale (POS) terminals in merchant stores. And impressive as the $5.9 billion seems, this figure does not include cheques, cash or credit card transactions.
According to Edmundo Jenez, general manager of JETS, "During the months of April, May and June, the number of withdrawal transactions for the period was over 2 million. The average dollar amount withdrawn was $2,922." Taking a snapshot of one month, Mr. Jenez stated that, "Overall the June 2003 versus June 2004 growth rates for ABM and POS usage, revealed that withdrawal amounts increased by 40.75% and withdrawal transactions increased 31.44%. When we examine this in more detail by looking at the changes in the average transactions amounts we observe that the average ABM withdrawal dollar amount increased by 7.10% (cash) whereas the POS transactions increased by 13.16% (in store purchases)."
In explaining this growth, Dr. Gavin Chen, Professor of Entrepreneurship and Economics at the University of the West Indies opinioned, "It is obvious that there is an increase in economic confidence. To see the type of spending activity means that the economy is on the rebound.
If you juxtapose this data against the consumer confidence numbers, you will see that their predictions are bearing out." On July 6th, speaking at the Jamaica Conference Board's (JCB) release of consumer confidence figures, Professor Richard Curtain stated, "Jamaicans expressed more favourable purchase plans in the second quarter survey compared to last year. Consumers are able to spend more because the price of debt has declined.
Right now it is cheaper to borrow. Also, remittances from abroad and even the underground economy support the numbers. This spending creates jobs and fuels the growth in the economy." The JCB revealed that planned purchases by Jamaican consumers were --
a. 11 per cent of consumers planned to buy a home (up from 9 per cent in the first quarter)
b. 16 per cent of consumers planned to buy a car (up from 13 per cent in the first quarter)
c. 24 per cent of consumers planned to take a vacation (down from 25 per cent in the first
quarter)
Dr. Chen, looking at the numbers revealed, "It is a great time to be a retailer in Jamaica. There is definite economic growth." In response, Michael Ammar Jr, president of the Jamaica Chamber of Commerce and managing director of Ammar's stated, "Perhaps Dr. Chen wants to buy six stores off of me." In a more serious vein, Mr. Ammar stated that is view of the situation is "cautious optimism." Mr. Jenez believes that the increase in spending is not really a function a red-hot economy but the fact that inflation is still with us in Jamaica. "The disparity in the growth rates between the dollar amount withdrawals against the actual withdrawal transactions suggest that persons take more funds on each transaction than a year ago reflecting increased costs of goods and services."
Mr. Ammar's take on the situation is this. "For retailers, April was a very bad month, but that is always the case during the budget season. May was down, but not as bad as April. June has been a very good month and July is also shaping up to be a good month. So I would say that the macro economic picture has stabilised."
In response to the 'plastic money' trend, 18 new ABM and 450 new POS machines were installed.
The particular jump in POS machines means that merchants have joined the Multilink bandwagon. Mr. Ammar tells the Financial Gleaner, "We definitely see a move from cash to plastic." Overall, there is 331 ABMs and 8,508 POS machines island wide. Mr. Jenez tells the Financial Gleaner that 769 new cardholders are signed up each day. "Since the inception of Multilink in 1997, our members have issued over 1.2 million cards, however, at the end of June 2004, over 214,000 cardholders are currently active."
