Micro-finance goes mobile in Jamaica

A great story has come out of Jamaica today – the Development Bank of Jamaica (DBJ) has announced that since the micro-finance industry is such an important part of the national economy, it has signed an agreement with a service provider to provide mobile access for enterprise.

What’s the background?

Micro-finance is a concept that has been around for a long time, but has only really begun to build steam recently. It addresses a very specific problem that very poor regions often face: quite often, it is not cost-effective for a bank to provide financial services in a region. If the cost of maintaining an account is greater than the profits of doing business with it, the banks simply won’t operator there. So you have people who want and need banking services, but are unable to access them. Micro-finance is a way of providing financial services even to people who will only transact minuscule amounts of money. Further details about micro-finance can be found here (it’s actually a pretty controversial topic).

What’s the news?

The DBJ provides a lot of money to micro-finance institutions – 4,125 operators in total. Last year it gave almost $230 million to them. It has now signed an agreement with an as-yet-unidentified services provider to give micro-finance institutions the ability to use mobile services. The idea behind it is that it will reduce the cost of doing business for these institutions, which will further reduce the cost of accessing financial services for small Jamaican businesses – and more of the money that DBJ gives to micro-finance operators will find it’s way to farmers and entrepreneurs.

Source: http://www.jis.gov.jm/news/hl.s1/27675

What we think?

Part of the focus of the DBJ is to promote the growth and development of viable enterprise segments in Jamaica – and it would seem that the growth of micro-finance providers has made them a viable enterprise. More than that, though, they disseminate a lot of money to small and medium enterprises in Jamaica that would not otherwise be able to access those kinds of funds. The success of Grameen Bank in Bangladesh is a real beacon for services like this, and while it has been hard to replicate in other regions it seems that DBJ is willing to give a real go.