William Clarke (left), chairman of the Micro Enterprise Financing Company Limited (MEFL), and Gerard Johnson, country representative of the Inter-American Development Bank, are seen at the April 30 signing of a US$300,000 financing agreement between MEFL and the Multilateral Investment Fund, an agency of the IDB. Carina Cockbourne, MIF specialist, stands in the background. - Contributed

Micro Enterprise Financing Company Limited (MEFL) will use a US$300,000 ($21 million) grant from the Inter-American Development Bank (IDB) to create a mobile network capable of delivering loans to applicants in their communities.

Instead of clients seeking out MEFL's offices, the micro finance company will invest in the expansion of its office network, and outfit its field agents with appropriate technology to negotiate and process loans where its clients reside. The financing agency currently has four offices in four parishes islandwide.

A partnership of Scotiabank Jamaica, Kingston Restoration Company and the Canadian Agency for International Development, MEFL lends to micro businesses, distributing some $520 million of credit to 13,200 in its six years of operation.

Varying interest rates

The loans, which have ranged between $10,000 and $300,000, are priced at varying rates: one per cent add-on for a weekly repayment schedule; two per cent add-on for fortnightly repayments; and four per cent add-on per month. Full repayment is within two years.

Last month, the agency acquired $115 million of new capital from CIDA and Scotiabank and is looking to increase business.

MEFL manager, Glenroy Bernard previously advised Wednesday Business that the strategy is to set up satellite offices in main townships, as opposed to full branches. Scotiabank said the expansion plan will be rolled out within five years.

Part of the strategy involves reshaping how service is delivered to clients whose ability to access financing for their businesses is often constrained by lack of mobility.

The current IDB-sponsored project aims to solve that problem by making the financing mobile instead. Its roll-out is scheduled for six to 12 months, said Scotiabank, following the signing in Kingston of the financing agreement with the Multilateral Investment Fund, a division of IDB.

The idea is to localise MEFL's services, using mobile technology which allows the field agent to take his/her office along.

Scotiabank - whose president Bill Clarke is chairman of MEFL - said some of the funds would be invested in staff training in customer service, and credit risk assessment. Some of the training will be done overseas.

'Unique mission'

Gerard Johnson, IDB country representative in Jamaica, says the funding agency likes the "unique mission" that MEFL has taken on - by branching out to rural communities.

"Jamaica has not absorbed enough of the funds available from the IDB for development projects like these," said Johnson in a Scotiabank issued statement. "We believe that micro enterprise is one of the important areas which can help to improve Jamaica's current harsh economic conditions and the standard of living for many persons across the island."

Create value

Clarke, meantime, says MEFL, whose programme encourages borrowers to save, has helped its clients accumulate $31 million, and that the mobile loan programme could create even more value for recipients of credit.

"It is very important for Jamaicans to be aware of the opportunities for financing that exist," he said. "This funding will allow MEFL and its loan officers to provide the direct support services to residents in their communities helping them to improve their lives and take their businesses to another level."

business@gleanerjm.com