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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