Durrant Pate/Contributor

Latest impact indicators are showing that Jamaica’s National Financial Inclusion Strategy (NFIS) is working and reaping much success.

The Bank of Jamaica (BOJ) has published the latest impact indicators, which shows that the volume of digital payments and the value of these payments are climbing, owing largely to the positive results of the financial inclusion strategy being rolled out across the island.

NFIS’ reforms agenda is structured around four main pillars and a cross-cutting foundation:

• Financial access and usage focusing on electronic transaction instruments, 

• Financial resilience looking at savings, insurance, retirement products, 

• Financing for growth, targeting MSME, agriculture and housing finance, and

• Responsible finance emphasising consumer protection and financial capability

Regarding the volume of digital payments, for January to June 2023, there was a moderate increase of 8.3 per cent relative to the same period in 2022. Transaction volumes over the period amounted to 40.3 million versus a 37.3 million in 2022. 

As it regards the value of digital payments, for January to June 2023, there was a 16.0 per cent increase in the value of transactions when compared with the similar period in 2022. The value of transactions over the period amounted to J$6.17 trillion versus J$5.32 trillion in 2022.

Utility bills paid digitally vs paper-based payments stats

January to June 2023, there was an increase in the proportion of the volume of utility bills paid digitally to 60.9 per cent when compared to 50.4 per cent in the same period of the previous year. For January to June 2023, there was an increase in the proportion of the value of utility bills paid digitally to 79.2 per cent from 73.5 per cent in the same period of the previous year.

As at June 2023, there was a decline in the percentage of credit from deposit-taking institutions (DTI’s) as a percentage of gross domestic product (GDP). The figure moved from 48.9 per cent from January to June 2022 to 47.5 per cent for January to June 2023. 

A contributing factor was BOJ’s continued policy actions towards the slowdown in credit growth by facilitating an increase in market interest rates since September 2021 to control inflation. As it regards DTI’s credit to the micro-, small- and medium-sized enterprises (MSMEs) as a percentage of GDP, the numbers remained relatively unchanged between last year and this year.

However, year over year, there were increases in credit provided to all business sizes with small and medium businesses having the largest increases of 15.3 per cent and 21.1 per cent respectively. There was also an increase in economic activity when compared to the same period in the previous year.

Slowdown in growth of new mortgages

For January to June 2023, there was a 12.9 per cent increase in the volume of new mortgages and a 4.7 per cent increase in the value of new mortgage loans when compared to the same period in 2022. This signalled a slowdown in the pace of growth in both the volume and value of mortgages for the period when compared to the same period in 2022.

For January to June, the value of new mortgage loans amounted to J$31.5 billion, while the number of loans accounts up to June this year stood at 628,900. As at June 2023, there was a 19.3 per cent increase in the number of loan accounts (DTI only) when compared to June 2022 moving from 527,300 in 2022 to 628,900 loans in 2023.

The largest increases in the number of loan accounts were seen in loans extended to local residents comprising personal loans and business loans extended to the distribution and agriculture sectors. There was also a large increase in loans extended to overseas residents.

As at June 2023, there was a 2.1 per cent increase when compared to June 2022. The number of savings account amounted to 4.3 million versus 4.2 million in June 2022, a 90,000 increase.

Dormant accounts

There was a 2.6 percentage point increase in the percentage of dormant accounts to 39.1 per cent in June 2023 when compared to 36.5 per cent in June 2022. This represents a sharp increase of 2.9 per cent when compared to 36.1 per cent as at March 2023.