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Finance the Growth

Surviving. Financial Crisis. Finance the Growth. … How to. Business. of your. Emile Spence Business Development & Research Executive Jamaica National Building Society Jamaica Trade & Invest August 20, 2009. the. Re-tooling. Economic downturn. Recession. Early retirement.

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Finance the Growth

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  1. Surviving Financial Crisis FinancetheGrowth … How to Business of your Emile Spence Business Development & Research Executive Jamaica National Building Society Jamaica Trade & Invest August 20, 2009 the

  2. Re-tooling Economic downturn Recession Early retirement Financial crisis Job cuts New strategies Re-financing Right-sizing Downsizing of businesses Redundancies

  3. 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?

  4. 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

  5. Global Financial Climate

  6. Global Financial Climate Contraction of global demand for goods and services Removal of tariffs Reduced access to credit Reduction in demand for aluminum Fall in global oil demand

  7. M Declined by 17% since January 2009 Impact on Jamaica Economy FDI Remittance inflow Inflation Exports Decline in value 1.3% Jan-March 2009 Low levels of output Contract by 3% $159B of the $548B budget earmarked for debt repayment

  8. 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

  9. International Response IMF World Bank IBD G-20 Nations Umbrella Vulnerability Fund to which developed countries would dedicate 0.7 per cent of their planned economic stimulus for assistance to developing countries At end of December 2008 disbursed approximately US$150 M, including some US$120 M for budgetary support. Offer policy advice and technical assistance $1.1 Trillion for developing countries to boost micro enterprises sector Additional US$200M to US$300M available for lending during 2009 5th Summit of the Americas … recognition of importance of MSME sector and commitment to finance sector in LAC countries

  10. 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

  11. Government's Response Youth Entrepreneurship Programme (YEP) Funding for MSME sector Government Initiatives Concessions to Manufacturing sector Funding for tourism sector Renegotiation of international loans International funding

  12. 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

  13. Funding forSmall Businesses J$350 million fund for small and medium size businesses J$2.25 billionventure 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

  14. 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 Saving should be a consistent habit

  15. JN’s Response

  16. Tips for Survival Credit Cards - Interest rates as high as 49% per annum on Jamaican currency cards and up to 20% on International cards SAVE CONSERVE ELIMINATEUNECESSARY DEBT Payday loans - rates as high at 32.5% on the reducing balance GRASP OPPORTUNITIES Hire purchase - interest rates range from 2 – 3% per month, add on … on outstanding balance BE FINANCIALLY LITERATE

  17. Economic Opportunities Music Information Technology … use of the internet Tourism Capacity building in the area of music … Jamaican Motown record company Theme Parks, Cultural sites, adventure & sports tourism

  18. Hope… “Seeds of faith are always within us; sometimes it takes a crisis to nourish and encourage their growth.” Susan Taylor

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