Development specialist engaged to design asset resale platform

Work on the development of a secondary market for repossessed, movable assets is pressing ahead, the latest move being the engagement of an e-commerce development specialist to design the digital secondary market solution with features that allow for auctions of assets online.

Movable assets cover a gamut of things, including intellectual property rights, equipment, accounts receivables, and more.

The specialist selected to work on the project has not been named, but was engaged by the International Finance Corporation, a member of the World Bank Group that has been working with the Ministry of Industry, Investment & Commerce, MIIC, for the past three years on the project.

The ministry is still considering whether ownership of the platform should rest solely with the private sector or if it should be a public-private partnership.

The project is aimed at enhancing Jamaica’s secured transaction regime, with a view to facilitating the ease of using personal and other assets as collateral for financing. It’s expected to address what the MIIC describes as existing weaknesses in the valuation of repossessed assets, and will be structured to ensure pricing transparency around repossessed assets; and buyers and sellers are screened.

Over the years, the use of personal assets, such as motor vehicles, furniture and financial securities, to secure financing for loans, particularly personal debt, has grown in Jamaica. But there has been an increased focus on asset-based lending in recent times, since it is seen as a fix to the potential credit crisis caused by the COVID-19 pandemic and, more broadly, a plug to the finance gap particularly experienced by micro, small and medium-sized businesses, MSMEs.

Bank financing for businesses is largely securitised or collateralised by immovable assets such as land and buildings. Still, the banks have given their nod to the movable assets initiative.

In October 2020, the World Bank conducted and published a diagnostic assessment of the secondary markets for movable assets in the manufacturing sector in Jamaica. It concluded that while the markets are present, its mainly fragmented, and proposed that there was the need for an efficient and comprehensive technological platform to provide transparency in pricing for repossessed assets, to support the market in real-time resale values.

Accordingly, the development of an electronic-commerce secondary market platform for new and used goods was proposed. The launch of the virtual platform, which is planned for 2023, will be preceded by a pilot test, initially. on small manufacturers and agro-processors.

In the meantime, the country continues to utilise the National Security Interest in Personal Property Registry, NSIPP, a web-based platform administered by the Companies Office of Jamaica for registering and searching for notices of security interests in movable assets.

Over the course of 2021, there were 21,150 loans issued utilising the NSIPP Registry, according to the 2021 Economic and Social Survey of Jamaica, which represented a 7.1 per cent decline, compared with the previous year.

The steepest declines came from the categories ‘micro-enterprises and personal loans’. However, business loans jumped 25 per cent to account for 2,624 of the loans issued in 2021 when compared with 202o.

Of the loans issued in 2021, business loans accounted for 2,624, a 25.1 per cent increase. So far, only a small number of movable assets, such as machinery, equipment, financial securities, accounts receivable, agricultural produce, and intellectual property rights, have been used as security for business loans.

Further analysis of business loans disbursed showed that loans to small businesses increased by 14.0 per cent to 424, and accounted for 16.2 per cent of business loans.

Individual loans, which may also include credit issued to sole traders, totalled 18,524, representing 87.6 per cent of total loans issued.

karena.bennett@gleanerjm.com