Banks to Bridge the Gap of Financial Literacy in the Business Sector

Aug 2019
Jamaica, August, 30 2019 - Jamaica Banker's Association president Jerome Smalling says many operators of small, medium-sized enterprises (SMEs) are not formally trained in business, but the banks are pledging to bridge the gap of financial literacy in the business sector.

Smalling on Tuesday (August 27) told the Jamaica Observer Caribbean Business Report, that he's not declaring that all entrepreneurs must have a background in finance, but by merely recording the business plan, which he believes already exists in their heads, goes a long way for the banks to facilitate financial inclusion.

“A business plan is nothing hifalutin; every single man who is running a business, essentially has a business plan in his head,” he said.

“For years and years we have been banking small businesses, and all I say to you is, you have a truck; who do you carry the cement for? Who do you carry the sand for? And I put it down on paper and I establish what your financial position goes through that process,” he continued.

The association's president added that under the Proceeds of Crime Act (POCA), businesses have to provide the bank with additional information, such as a financial statement for the business venture. This is used to indicate the business' expected money flow and substantial proof that the business is generating that amount of money.

“All your financial statement is, how much did I sell, how much did it cost me to sell it? how much did I pay in expenses and how much is my net profit? if you don't know that and you're not recording it then how are you running your business?,” he enquired.

Smalling indicated that while the banks want to simplify the business language, in particular create an understanding of what a business plan is, he urged SMEs to formalise their business by registering and becoming tax compliant, as the banks are there to help them through the process.

“Everybody comes to the table and agree that we need to find a solution; and what it means is it that we're going to be looking at things differently; how can we help [SMEs] to be formalised? and how are we looking at the [loan and account] applications process? is it suited for a small Jamaican business and what are the changes we can make,” he stated.

“There's this belief in Jamaica that it is a bad thing to formalise [businesses], but SMEs have to take some of the responsibility and put [themselves] in a position where the banks can comfortably take up money belonging to other people and lend,” Smalling continued.

Smalling further indicated that collaborative efforts with the Private Sector Organisation of Jamaica to host financial inclusion resource workshops are underway.

“Over a period of a year or two, we're going to be having workshops; we're going to be working seriously towards ensuring that we can include every Jamaican in the financial sector,” he said.

In addition, Smalling revealed that there is a financial inclusion strategy being pursued between the banks and the Bank of Jamaica (BOJ), which includes discussions around POCA, with a view that inclusiveness is of utmost importance.

He indicated that SMEs require services such as having a basic bank account and access to a cheaper method of accepting electronic payments.

“We believe that a lot of small businesses are at risk because they're cash-based; they don't take electronic payments, because it is extremely expensive, even if they have a bank account,” he said.

“If we're supposed to set up a taxi man with the system that now exists, for him to take credit and debit card payments, the processing fees might be too high for him to run a viable business; so that's something we're going to have to try to address,” he said.

Source : Jamaica Observer

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