Dr. Rosalea Hamilton, founder of the Institute of Law and Economics, is working with five business associations on risk management, to improve access to financing. - File

Sabrina Gordon, Business Reporter

The Institute of law and Economics (ILE), working with the Technology Innovation Centre, a unit of the University of Technology, will be teaching risk reduction techniques to small businesses to make them more saleable as candidates for loans and other financing.

The Enterprise-wide Risk Management and Financing Programme (ERMFP), launched last Thursday, is also meant to build credibility and create a voice for micro, small and medium enterprises (MSMEs).

"With some strengthening they can become an effective sector of the economy," said Dr. Rosalea Hamilton, ILE founder and a chief adviser to the Prime Minister.

Network of five

There are about 150 business associations islandwide, but the ERMFP is currently constructed around a network of five referred to as the 'MSME Alliance'.

The alliance was registered in January as a limited company by guarantee with no share capital.

Finance Minister Dr. Omar Davies, though endorsing the ERMFP, said its objectives needed clearer definition on whether the idea was to graduate the MSMEs into larger corporations, or just to improve operational efficiency.

"The programme should identify possible models between the interaction of the public and private sector entities and provide a menu of options available for partnership," said Davies.

"The task should be how to equip them with consistent quality, volume and price."

The Finance Minister also called for new research on small enterprises, saying the last study done by him 13 years ago was deficient on services.

"It is imperative to recognise that the service sector is playing a significant role in the economy," he said. Services GDP grew 3.2 per cent last year, according to the PlanningInstitute of Jamaica, taking dominance over the goods-producing sector's 1.1 per cent growth.

The ILE says there is a $3.8 billion pool of funds available for lending to MSMEs in addition to grant funding that is not fully subscribed, associating the under-utilisation with risk factors.

Loans market

Compared, the loans market was valued overall by the Bank of Jamaica at just over $233 billion to March 2007, according to figures published June 1.

Access to, and the cost of capital, have long been a challenge for small and micro businesses, especially in the areas of short-term working capital and long-term credit for fixed assets and human capital investment.

But a new note was struck when Prime Minister Portia Simpson Miller took office in 2005, with the announcement of a controversial plan to draw down $1 billion from the $54 billion National Insurance Fund - a funding source for pension payments - to finance cheap loans for the sector.

Those loans are being disbursed.