Government of Jamaica
After many months of preparation and planning, the Development Bank of Jamaica (DBJ) is now set to launch its
much anticipated Mobile Money for Microfinance (M3) Pilot Project in collaboration with its technology partner,
Transcel Limited and other industry stakeholders.
The Bank of Jamaica, which is responsible for the health and security of the formal financial and payments systems after reviewing the pilot project, wrote in June 2012 that it has no objection to the pilot proceeding.
The DBJ, as the Government of Jamaica’s designated lead agency responsible for developing microfinance had included Mobile Money in its current strategic plan as one of its main interventions in this sector.
The DBJ will keep industry stakeholders informed as to the progress of the pilot and will seek to involve other participants as time, resources and regulations will allow.
Microfinance, the provision of financial services for small businesses and micro-entrepreneurs, is widely viewed as a potent instrument for reducing poverty, enabling the poor to accumulate assets and reducing their vulnerability to economic shocks.
Jamaica has a nascent microfinance industry primarily focused on providing microloans. One of the major
challenges the industry faces is the cost of disbursing loans and collecting loan payments. This is consistent
with the experience of microfinance institutions (MFI) in other countries. More significantly, it is the single greatest obstacle to MFIs lowering the comparatively high interest rates they charge on microloans. Another hurdle to the widespread adoption of microfinance is the difficulty in accessing rural populations.
There is a potential solution to both problems: Mobile Money.
‘Mobile Money’ refers to a range of monetary transactions carried out using mobile phones and the mobile phone network.
Early reports from Mobile Money implementations in Africa and South Asia suggest that the use of mobile money significantly reduces the costs and increases the accessibility and security of financial services delivery.