Minister of Finance Audley Shaw, has committed to waive 1.5 per cent of Government interest on loans from Development Bank of Jamaica (DBJ) in an effort to facilitate single-digit interest rates to entrepreneurs seeking finance.

Shaw, who was speaking at the launch of DBJ’s, promoting financial inclusion in Jamaica project yesterday, noted that his mission is to seek to get money to the financial sector at the most competitive rates possible.

“One example is the World Bank’s credit enhancement programme with the DBJ, where I found that my ministry — at the time it was marked up by 0.5 per cent — was marking it up by another 3.5 per cent. And then the DBJ was marking it up by another 1.5 per cent and the approved financial institutions (AFIs) again marked it up by around four per cent, so the loan reached double digits by the time entrepreneurs received it,” Shaw said.

“Guess what — I’m cutting the 3.5 per cent markup to about 2 per cent, then the DBJ will have to cut theirs to one per cent and we will ask the AFIs to live with a three per cent mark-up instead of four or five — and it can work,” he reasoned.

According to Shaw, the approach will allow entrepreneurs to benefit from loans between five to seven per cent, which are vital for improving growth levels of the economy.

Shaw recently criticised the local financial institutions for continuing to offer loans at a 15 per cent interest rate, which he insisted was too expensive and a disincentive for small business investors and even Jamaicans seeking mortgage loans.

“We can tell Metry Seaga publicly from this platform, that his dream of five per cent money for loans to the manufacturing sector can happen and I’m going to work towards it,” Shaw stated.

http://www.jamaicaobserver.com/business-observer/five-per-cent-is-possible-8212-shaw_112079