PM announces US$20mn for ICT, framework for venture capital funding

- Thursday, May 12, 2011

PM announces US$20mn for ICT, framework for venture capital funding

The Development Bank of Jamaica (DBJ) will provide a J$1.7bn (US$20mn) credit line to allow more Jamaicans to capitalize on opportunities in the ICT sector, particularly in business process outsourcing (BPO), Prime Minister Bruce Golding said during the 2011-12 budget presentation.

"The ICT/BPO sector is one in which Jamaica is making significant strides and has established its competitiveness," he said, highlighting the sector's labor intensiveness, which can create jobs. "We want to facilitate more enterprising Jamaicans to establish business in this sector."

The funding comes in conjunction with the announcement that Jamaica's government is looking into ways of providing a legal framework for venture capital funding to help solve the equity deficiency that many SMEs face on the island.

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The government worked with Don Wehby, CEO of Jamaican conglomerate GraceKennedy Group, in exploring how to bring about venture capital, which "has been mooted for a long time but has never had the benefit of a serious, sustained effort," Golding said.

The result is a report recommending fiscal incentives "that would facilitate the establishment of several venture capital funds, operated by different entities mobilizing resources from institutional, corporate and individual investors."

"It is not the government that will be providing these venture capital funds, although we have not ruled out putting up some of the seed capital to get it started," the prime minister added. During this year, the DBJ and private sector partners may set up an initial venture capital fund targeting viable businesses that require capital, capacity building and improved governance structures.

Benefitting companies must commit to listing on Jamaica's junior stock exchange within 2-4 years. The fund will be managed by a private sector general partner, which will ensure proper due diligence and monitoring.

OUT OF RECESSION

The overall idea is to get people back to work, Golding said. "We have not recovered from the ravages of the global recession. Our export earnings are less than half of what they were in 2008. People have lost jobs; businesses have been forced to lay off workers - some have even gone out of business."

Jamaica's economy has endured three years of negative growth with a cumulative decline of 5%, he added, which "is a worrying outcome although not unexpected, given the impact of the global recession."

However, "I am able to confirm that Jamaica is now officially out of the recession as in the January-March quarter the economy registered modest but positive growth."

Use this link to review the government's complete budget presentation.