Transcript The Current Financial Climate

the
Emile Spence
… How to Finance the Growth
of your Business
Business Development & Research Executive
Jamaica National Building Society
Jamaica Trade & Invest
August 20, 2009
Re-tooling
Job cuts
Rightsizing
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
Contraction of
global
demand for
goods and
services
Global Financial
Climate
Removal of
tariffs
Reduced
access to
credit
Fall in
global oil
demand
Reduction in
demand for
aluminum
Impact on Jamaica
Economy
Inflation
FDI
$159B of the $548B budget
earmarked for debt repayment
Remittance
inflow
Exports
Impact on Jamaica
• 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
International Response
G-20 Nations
$1.1 Trillion for
developing
countries to
boost micro
enterprises
sector
IMF
Offer
policy
advice
and
technical
assistance
World Bank
Umbrella
Vulnerability Fund
to which developed
countries would
dedicate 0.7 per
cent of their
planned economic
stimulus for
assistance to
developing
countries
5th Summit of the Americas
… recognition of importance of MSME sector and
commitment to finance sector in LAC countries
IBD
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
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.
13th Heads of Government of the Caribbean
Community Meeting in Guyana, July 2009
Government's Response
Youth
Entrepreneurship
Programme (YEP)
Funding for
MSME sector
Funding for
tourism sector
Renegotiation of
international loans
Government
Initiatives
Concessions to
Manufacturing sector
International funding
Response of Businesses
• 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
Funding for
Small Businesses
J$350 million fund for small and medium size businesses
J$2.25 billion venture capital loan programme established
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
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
SAVE
CONSERVE
ELIMINATE
GRASP
UNECESSARY
DEBT
OPPORTUNITIES
BE FINANCIALLY
LITERATE
Credit Cards - Interest rates as high
as 49% per annum on Jamaican
currency cards and up to 20% on
International cards
Payday loans - rates as high
at 32.5% on the reducing
balance
Hire purchase - interest rates
range from 2 – 3% per month,
add on … on outstanding balance
Economic Opportunities
Information
Technology
… use of the internet
Music
Capacity building in
the area of music …
Jamaican Motown
record company
Tourism
Theme Parks, Cultural
sites, adventure &
sports tourism
Hope…
“Seeds of faith are always within us;
sometimes it takes a crisis to nourish
and encourage their growth.”
Susan Taylor