Taxi operators priced out of gov’t loans earmarked for PPVs

Thousands of public passenger vehicle (PPV) operators across the island have been priced out of a $200-million loan earmarked by the Government for the sector after microfinance institutions (MFIs) proposed a slew of requirements for loan take-up, including interest rates ranging from seven to 13 per cent that were reportedly beyond their reach.

In an emailed response to a Gleaner query on Wednesday, the Development Bank of Jamaica (DBJ) acknowledged that no one from the group of approximately 37,000 PPV operators has so far benefitted from the initiative that was first announced by Dr Nigel Clarke, minister of finance and the public service, in Parliament last year.

The revelation comes eight months after the DBJ unveiled the revolving loan as the Government sought to counter the after effects of COVID-19 and to help accelerate the island’s economic recovery.

Clarke, during the Budget Debate for the 2022-23 fiscal year, said the Government would make the loan available through microcredit and approved financial institutions by way of the DBJ.

“This financing will be available for short-term loans for tyres, batteries, and spare parts required for public transportation operations,” said Clarke.

He also said then that the intervention “must be seen as the Government putting its money where its mouth is and stepping up and providing support”.

Rates not feasible

But the DBJ said that despite “strong interest” up to the launch event in August, none of its microfinance institutions has taken up the facility to date.

“MFIs indicated that the revised [interest] rates of seven to 13 per cent were not feasible for them and that operators claimed that they were not required to provide collateral,” DBJ said in its response to The Gleaner.

Further, the DBJ said taxi association representatives “claimed” that the 13 per cent interest rate was too high.

The initial rate was 20 per cent.

It was agreed that the MFIs would receive the loans at three per cent and charge transport operators between the seven and 13 per cent after mark-up.

With no take-up, the DBJ said that it is “holding the funds” pending requests from MFIs.

At the same time, the bank said it is currently reviewing the loan facility, and based on market feedback, will update and relaunch it under revised terms.

The finance minister did not respond to The Gleaner’s request for comment on the development up to press time even as taxi operators decry the loan qualification criteria.

Egerton Newman, president of the Transport Operators Development Sustainable Services (TODSS), said taxi operators, which he put at 25,000 islandwide, were forced to abandon their applications after “a number of red tapes” presented as roadblocks.

He said operators were not expecting the loan criteria to be so broad and that “it was way out of our reach”.

Speaking with The Gleaner last week, Newman said: “They were asking for receipt from deposits made to the bank weekly from their income. Taxi operators wouldn’t have those things. They want proof of how long you are in the business. Those are things that we did not expect. That was not outlined to us by the minister or the ministry.”

Newman said the group was of the view that operators could present their car documents to financial institutions after verification from the Transport Authority and then access the loan.

He said operators were of the view that after discussions with the ministry, the loan would carry an initial three per cent interest rate and an MFI mark-up of 1.5 per cent would subsequently follow.

“Is it a fact that this was a political stunt on us or to gain our interest in the Ministry of Finance? Does the Transport Authority know anything about this? Our information is that they know nothing about this,” said Newman.

He also questioned whether the money is in fact being held by the DBJ or if it has been diverted to the open market.

Mikael Phillips, opposition spokesman on transport, stressed that the requirements to access the loan are “too onerous”, pointing to a similar government initiative for taxi operators at the height of the pandemic, which, he said, fewer than 50 per cent accessed.

Phillips, said, too, that operators also missed the opportunity to benefit from Prime Minister Andrew Holness’s announced 30 per cent cut in renewal fees for PPVs because the announcement was made with only “a few days” left for the expiration of licensing to take place.

Holness, who made the announcement during his contribution to the 2023-24 Budget Debate, said the support would last for a year.

“So the general population of operators didn’t benefit from it, and it is going to be the same thing on the loans proposed. I can guarantee that before the time expires that probably no one will be able to access this loan unless they are multiple fleet operators who can show what is required,” Phillips told The Gleaner.

“So these things are just grand announcements but generally have no root in how the sector operates and the types of persons who operate within the sector. There’s no true benefit.”