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Financial News

Oct 2009 Financial News

'Shearer' struggles - Small-business owners reject $5,000 note

Oct 06, 2009

Small-business operators have been struggling to cope with the new $5,000 note pumped into the system by the Bank of Jamaica (BOJ) last month.

In Ocho Rios, St Ann, operators of small businesses said they were concerned about how difficult it has been to find change for the note and have been rejecting its use to avoid possible confrontations with customers.

As a result of this decision, some small-business operators have erected signs informing customers that they would not allow transactions with the note.

"No $5,000 notes are accepted here," read a sign in a popular restaurant at the Ocean Village Shopping Centre, which is frequented by locals and visitors alike. A specimen of the new note was attached to the sign.

Difficult for change

With lunch prices starting at approximately $200 at that restaurant, finding change for a lunch from a $5,000 note could wipe out whatever change the restaurateur would have in hand and might prove to be a disruptive force to the business, one person suggested to The Gleaner.

In fact, former president of the Small Business Association of Jamaica, Edward Chin-Mook, in responding to queries about the problems that could be associated with the new note, echoed the sentiments of residents in Ocho Rios.

"Persons that utilise small businesses don't even sell that for the day, so they can't accept it as legal tender," Chin-Mook said.

Some other business operators said that while they were not totally rejecting the new note, its acceptance would be limited to their ability to find change.

"So maybe we might accept one or two, depending on the time of day and how business is going," one businessman said.

Taxi operators, too, are on the lookout for commuters who might want to proffer the new note as a guise to avoid paying.

Cautions early

"Mi tell dem (passengers) straight up from dem come een, no $5,000!" declared one driver plying the Ocho Rios to St Ann's Bay route, for which the fare is $90. "Dis a car, dis a nuh bank!"

One of the fears persons have regarding the bill is the possibility that, should they lose one of the new notes, it would represent a huge loss as against losing a smaller denomination.

"If somebody pick mi or if mi loss $500, dat bad an' nuh too bad," one consumer said in response to The Gleaner's queries. "But $5,000 one time? No man, dat too much."

However, there are persons who seem to appreciate the new denomination.

One businessman said he withdrew more than $300,000 from a bank in St Ann's Bay last week and was disappointed that he was given wads of $1,000 bills instead of the $5,000.

According to him, a manager at the bank told him the new notes were not available at that bank yet.

"The $5,000 is convenient if you have to move around large sums of money. It's not for everyday spending on the streets, so there shouldn't be a problem," he suggested.

However, Chin-Mook said the notes were a bad idea from the get-go.

Disagreed

"We (Small Business Association of Jamaica) actually said that such a note would not be a good thing. I was blasted by the minister of finance (Audley Shaw) to say what was needed was greater productivity," said Chin-Mook.

"The BOJ governor (Derick Latibeaudiere) had mooted the reasons for the change but I didn't think it was necessary. The quantity of sales and the price of goods were just not there yet," he added.

The Gleaner was unable to contact the BOJ governor for a comment yesterday evening.

Now that the notes are here, Chin-Mook has pointed to alternatives for small businesses that could help ease the burden.

"The leaders need to offer different kinds of payment solutions and this could be a way of stimulating the economy," he said, pointing out that carrying around cash was dangerous and it cost money to do simple tasks like deposit cash in a bank.

One of the alternatives that Chin-Mook refers to is the idea of M-pesa, which translates to mean mobile cash. The system is one where businesses use mobile phones to make payments on loans or on goods. It can also be used to transfer money, while reducing the cost of dealing with cash.

"We have to look at reducing the cost of money and the cost of getting it into the hands of those that deal with production," said Chin-Mook.

The $5,000 note is the largest denomination in circulation, ahead of the $1,000, $500, $100 and $50 notes.


Source:
Carl Gilchrist, Gleaner Writer
Jamaica Gleaner
Tuesday October 6, 2009

http://www.jamaica-gleaner.com/gleaner/20091006/lead/lead1.html