Access to Finance Project

The Access to Finance (A2F) Project is a US$20 million Project that will be executed during a period of five years from November 2017 to November 2022, with the objective of improving access to finance for micro, small and medium enterprises (MSMEs) and housing finance for the low and middle-income households.

The Project consists of three components:

  • Component 1: Enhancing MSME finance
  • Component 2: Deepening the housing finance market
  • Component 3: Project management

Component 1: Enhancing MSME finance

Under this component, the proposed Project will finance activities for: (i) enhancing the operational features of the CEF and providing capital for its expansion; (ii) strengthening DBJ’s capacity to assess and manage risk of AFIs; (iii) improving the enabling environment for access to finance for MSMEs, including by encouraging the development of financial instruments, such as leasing and factoring; (iv) encouraging the development of PEVC, through the establishment of an SME fund and reforming the related legal, regulatory, and tax regime; and (v) business development services for MSMEs to improve bankability.

 

Subcomponent 1.A. Enhancing the CEF features and capitalization

This subcomponent aims at improving the operational features of the CEF. It will finance: (i) capitalization of the CEF; (ii) development of a business plan, financial model, policies and procedures for the operations of the CEF, and training; and (iii) marketing and awareness raising to Approved Financial Institutions (AFIs) and SMEs.

 

Subcomponent 1.B. Enabling environment for access to finance for SMEs, including the development of financial instruments

On factoring the Project would finance: (i) a market feasibility study for factoring, (ii) advisory inputs for potential drafting of legal and regulatory amendments, or factoring law; (iii) feasibility assessment of the factoring platform; (iv) design, development and implementation of an on-line factoring platform; (v) awareness raising and capacity building of AFIs, SMEs, and other stakeholders on factoring and its benefits.

 

On leasing, the Project would finance: (i) market assessment on the leasing sector (ongoing as retroactive financing); (ii) advisory inputs for potential drafting of legal and regulatory amendments, or leasing law; (iii) awareness raising and capacity building of key stakeholders on leasing and its benefits; and (iv) leasing handbook.

 

Subcomponent 1. C. SME Fund

This subcomponent will contribute capital to a proposed SME Fund, which would provide risk capital to SMEs with high growth potential and with operations in Jamaica. The Project would support: (i) capitalization the SME Fund; (ii) management fees and potential start-up costs of the fund; (iii) feasibility assessments for the fund; (iv) legal, regulatory and taxation reviews to assess  gaps in Jamaica’s legal, regulatory, and taxation framework for PEVC funds and proposed reforms to ensure an enabling environment for onshore and offshore funds; and (v) technical assistance for the creation and operation of the program, including assistance to the SME Fund manager and DBJ, and  pre- and post- technical assistance to SMEs to alleviate targeted constraints.

 

Sub-component 1. D. Business development services for MSMEs to improve bankability

This subcomponent aims at improving the capacity of DBJ to expand and enhance the quality of its MSME support program. This subcomponent would provide support for: (i) an assessment of the existing Voucher Program’s performance; (ii) technical assistance to improve the voucher program design; (iii) technical assistance to develop a broader strategy to promote business development services (BDS) for MSMEs; (iv) design, development, testing and implementation of an interactive virtual platform for BDS providers and MSMEs; (v) update the existing database of BDS providers; (vi) an awareness campaign to promote the new and improved programs for MSMEs; and (vii) resources to implement the new BDS for MSMEs strategy.

 

Component 2: Deepening the housing finance market

Under this component, the Project will support the expansion of the mortgage insurance industry through: (i) a risk-based financial analysis of the existing MI portfolio, including capital adequacy, premium pricing, financial sustainability, and product features, to inform, inter alia, future capitalization requirements and product features; (ii) reviews and reforms of legal, regulatory, and supervisory frameworks, including amendments to the Insurance Act and Mortgage Insurance Act, amongst others; (iii) capitalization of a licensed mortgage insurance company, considering legal, regulatory, and actuarial risk-based requirements, as well as expected business volumes; (iv) capacity building of the MI insurer, including support for risk-based financial analytics and management, investment guidelines, product development, and software tools; (v) capacity building for the supervisor to supervise MI, including preparation of MI supervisory guidelines and trainings for FSC supervisors; and (vi) capacity building for the NHT in risk management and new product development.

 

Component 3: Project Management

This component will support a Project Implementation Unit (PIU) responsible or the coordination, management, implementation, and supervision of the project. The Project will finance: (i) the recruitment and training of the PIU team members; (ii) equipment and furniture for the PIU; (iii) monitoring and evaluation activities; and (iv) the project’s financial audits.

 

The Environmental and Social Management Framework – Access to Finance Project

The Environmental and Social Management Framework (ESMF) is an instrument that will help the Government of Jamaica, through the Ministry of Finance, as the borrower, and the Development Bank of Jamaica, as the implementation agency, to identify appropriate methods and tools to assess and manage the potential environmental and social risks and impacts of the project.

The key environmental and social risks of this A2F project stem from the potential for poor MSME compliance with national laws and regulations, and gaps in environmental assurances in the mortgage lending and foreclosure process. For the Development Bank of Jamaica(DBJ), Approved Financial Institutions (AFIs), and the SME Fund manager, the key steps to address these risks include screening of MSMEs for Environmental and Social (E&S) compliance, provision of regulatory liaison and technical guidance, inclusion of E&S requirements in guarantee and participation agreements, and periodic supervision, auditing, and reporting.  For the Mortgage Insurance provider, the key steps to address potential risks include screening prior to home purchase, as part of underwriting by the lender and the mortgage insurer, to help disclose any E&S condition that poses a risk to the purchaser or lender. In addition, foreclosures may also pose E&S risks from existing conditions, and the screening checklist would also be applied in these cases.

A Vision for Sustainable Development and the ESMF

The World Bank (WB) Group Strategy sets out the corporate goals of ending extreme poverty and promoting shared prosperity in all its partner countries. Securing the long-term future of the planet, its people and its resources, ensuring social inclusion, and limiting the economic burdens on future generations will underpin these efforts. The two goals emphasize the importance of economic growth, inclusion and sustainability – including strong concerns for equity.

 

The WB is globally committed to environmental sustainability, including stronger collective action to support climate change mitigation and adaptation, recognizing this as essential in a world of finite natural resources. Equally, social development and inclusion are critical for all the World Bank’s development interventions and for achieving sustainable development. For the Bank, inclusion means empowering all people to participate in, and benefit from, the development process. Inclusion encompasses policies to promote equality and non-discrimination by improving the access of all people, including the poor and disadvantaged, to services and benefits such as education, health, social protection, infrastructure, affordable energy, employment, financial services and productive assets.

 

The Environmental and Social Management Framework (ESMF) is an instrument that helps the Government of Jamaica, through the Ministry of Finance, as the borrower, and the Development Bank of Jamaica, as the implementation agency, to identify appropriate methods and tools to assess and manage the potential environmental and social risks and impacts of the project.

 

This ESMF consists of the following sections:

  • Environmental and Social Conditions and Potential Risks and Impacts
  • Jamaica and World Bank Environmental and Social Requirements
  • Project Environmental and Social Management

The draft ESMF was disclosed by the Development Bank of Jamaica (DBJ) for consultations from March 7 to March 31, 2017. The document was made available online on the website of the DBJ. In addition, consultation meetings were held March 14 to March 16, 2017 in a series of five consultation workshops designed to reach different stakeholders. Following the consultations, this final version of the ESMF, reflecting comments received and additional input throughout project preparation, has been prepared and will be publicly disclosed on both the DBJ and World Bank websites. Annex 5 contains details of the consultation process and the comments received.

 

The DBJ, as implementing agency, will be responsible to carry out the Project with due diligence and efficiency in compliance with all requirements pertaining to environmental and social protection applicable under the laws and regulations, and the ESMF.

Please see the document below for further information.

Jamaica-A2-ESMF-September-1-1.docx

 

Jamaica Access to Finance Project – Environmental and Social Management Framework