The Government created an Economic Growth Council (EGC or Council), in late April, chaired by businessman, Michael Lee-Chin. Its role was ‘to advise the Government on a framework of proposed initiatives along with sub-initiatives that are expected to yield economic growth’. It will have no more than 12 members, both from the private and public sectors, and will make quarterly reports on its progress. Mr. Lee-Chin pledged that the Council will ‘work tirelessly to achieve a Gross Domestic Product (GDP) growth rate of five per cent over the next four years‘. (Let’s call that ‘5 in 4’.)
The Council presented its recommendations to a meeting of the Cabinet on Monday, September 12th. Not much fanfare, I gather. It was drawn from ‘inputs gained from over 80 consultative meetings held with stakeholders over the past four months. These groupings included various business groups, the confederation of trade unions, the Opposition, public sector agencies, ministries of government, members of academia, the media, diplomatic missions, and multilateral development agencies among other stakeholders. It also draws from studies and work in the area over the years’.
The eight Growth Initiatives outlined are:
- MAINTAIN MACRO-ECONOMIC STABILITY AND PURSUE DEBT REDUCTION STRATEGIES
Macro-economic stability is a pre-requisite for economic growth. The stability we enjoy today has been hard-earned but remains fragile. High debt poses a systemic risk to the Jamaican economy. Jamaica needs to continue the process of fiscal consolidation with a view to achieving debt sustainability. Economic growth and fiscally responsibility are not mutually exclusive.
Improving citizen security is the most consequential growth-inducing reform that Jamaica can undertake. Jamaicans need to experience dramatically improved levels of security and feelings of personal safety. However, it requires a comprehensive approach encompassing judicial and police reform, while also addressing entrenched problems of social exclusion among other measures. Piecemeal, knee jerk responses that lack depth and perspective are unlikely to improve outcomes.
- IMPROVE ACCESS TO FINANCE
Finance is the oxygen of business. Small and medium-sized businesses have too hard a problem accessing debt and equity financing. Some of the problems lie with regulatory constraints, competition, and over burdensome taxation. Arguably, aspects of the regulatory framework for the financial sector impede risk taking, which vibrant economies require, rather than promoting the prudent management of risk. Improving access to finance expands economic opportunity, improves business competition and creates a more meritocratic and fair society.
- PURSUE BUREAUCRATIC REFORM TO IMPROVE THE BUSINESS ENVIRONMENT
All aspects of the interface between Government and business are in need of reform to improve effectiveness, efficiency and customer service.
- STIMULATE GREATER ASSET UTILISATION
Increasing the utilisation of dormant and under-utilised assets would have a major impact on employment and growth. The Urban Development Corporation and the Factories Corporation of Jamaica, for example, collectively own approximately J$100 billion of assets on which they earn a relatively modest return.. In addition, several functions provided by the Government of Jamaica could, arguably, be better performed by the private sector thereby improving resource allocation. Having a robust, socially responsible mechanism to accelerate privatisations and asset sales could have a meaningful growth effect.
Human capital is too often an undervalued component in the conversation on growth. We need to focus on policies and strategies that nurture human capital development and provide skills training that match the needs of our economy.
- HARNESS THE POWER OF THE DIASPORA
The diaspora represents very powerful reservoir of capital, relationships, skills and expertise that remains largely untapped. Replicating and leveraging diaspora engagement models that have been successfully pioneered by India, Ireland, New Zealand, Australia and Chile among other countries would allow Jamaica to more constructively organize and harness the power of the diaspora for economic growth and social development.
- CATALYSE THE IMPLEMENTATION OF STRATEGIC PROJECTS
Strategic projects are critically important. As Jamaica’s experience has shown, by themselves these projects do not necessarily lead to economic growth at a national level. These projects can, however, transform towns and communities. We must therefore focus on strategic projects to ensure timely and efficient implementation.
The official announcement added: ‘The EGC’s focus will be on a method of implementation that encourages the Government of Jamaica to enter into an action oriented Declaration of Intent (“Declaration”) with the EGC, private sector groups, unions, and civil society. This will underscore their commitment to specific policies that fall under each Growth Initiative, consistent with the Terms of Reference of the EGC. This approach will provide for there to be a transparent process of monitoring and reporting on implementation, in accordance with the Declaration and for the Declaration to be a “living document”, updated on a periodic basis.’
In the past few days, I’ve seen written comments about the report. Jamaica Observer firmly stated in an Editorial ‘Economic Growth Council report must not gather dust on a shelf‘, noting ‘what needed to happen was implementation’. It reminded us that past reports’ ‘beneficiaries have been paid consultants and committee members. There are billions of dollars in grants that remain unspent over the years because the myriad projects for which they were negotiated have not been implemented or, in some cases, poorly implemented’. Going forward, Government must be ‘fully aligned in a supportive way’. It laid the blame squarely poor growth in the past was ‘not a reflection of a lack of Jamaican entrepreneurship but is the direct result of a failure by successive governments to create and maintain a facilitating and predictable business environment’.
The Editorial then opined ‘If the EGC insists on implementation we have a real chance of growth this time.’ Well, I don’t know what powers the Council has to insist on anything. As I have noted before, this is a body created by the fiat of government, and has no mandate to direct; at best it can advise. The PM had stated it was ‘tasked to work with the technical experts in the Office of the Prime Minister and the Ministry of Economic Growth and Job Creation and all the agencies under that Ministry.’ Put simply, it is subordinate to Ministers, so shouldn’t be insisting on anything.
The Observer, then shifted focus to the World Bank report entitled ‘Toward a Blue Economy: A promise for Sustainable Growth in the Caribbean’, which estimates the economic value of the Caribbean Sea to the countries of the region at US$407 billion per year or 18 per cent of the region’s total GDP inclusive of all forms of economic activity notably fishing, transport, trade, tourism, mining and energy. This was a bit abrupt, but I guess is the latest ‘flavour of the month’, and I will leave it there, because there are many initiatives, old and new that can generate substantial economic value for Jamaica and the region.
The Private Sector Organisation of Jamaica (PSOJ) welcomed the report, and liked the’focus on improving the business environment generally’. The PSOJ reportedly said it fully supports the implementation of these recommendations and stands ready to assist where possible.
Colin Bullock, formerly head of the Planning institute of Jamaica (PIOJ) wrote an article this week Reviewing Recommendations Of Economic Growth Council. He noted that the eight initiative ‘largely mirror earlier recommendations presented in the Growth Inducement Strategy (GIS) (2010) and the Growth Agenda Policy Paper (GAPP) (2015)’, and that the EGC work is ‘useful as a restatement and reaffirmation of understandings derived from earlier consultations and analyses’.
Pointedly, Dr. Bullock notes that on the concern about access to finance ‘One takes hope from the composition of the EGC that this issue will be vigorously and meaningfully addressed.’ That arrow had Mr. Lee-Chin’s head as its target, one imagines.
He also adds that it’s an ‘important understanding that Jamaica’s growth deficit is less in analysis and more in effective implementation. The proposals imply an acceptance that stronger and sustained growth will not result solely from the promotion of major investment projects.’
Finally, he hopes that ‘the role of the ECG either in direct growth promotion or indirect engagement needs to be more fully defined. At the same time, public monitoring of the pathway to stronger growth requires a macroeconomic blueprint of investment and sectoral initiatives as well as interim landmarks consistent with the ultimate target.’
That leaves little more for me to add. The comments I have seen deal with several of my own concerns, namely that the Council was going to rehash what had been done before. It has, but has repositioned or repackaged those, trying to prioritize. Again, however, Jamaica hasn’t lacked knowing what others thought were priorities for progress.
I’m also concerned about some governance issues relating to the Council and whether that role outlined for it is respected. I’m a mere citizen, but it’s important to understand how our government has been set up to work, and unelected bodies can take on roles that overstep that set-up. That is not meant to sound sinister. However, we have a tendency to love the existence of opaque structures, only reacting to what they do when something inappropriate or scandalous hits the fan. Eyes wide shut is not how we should proceed.
I’m also interested in processes. From what I have seen, the report of the Council having been presented to the Cabinet is not yet something that has been shared with the public/ If it has, it’s missed a lot of people. If it has not, then let’s be clear about how and when that will be.
I’m more than a little tired with unfulfilled ‘overtures’ to the diaspora. If I could get US$10,000 for every time I’ve heard how its potential could and should be harnessed, I’d be extremely rich; well off enough to invest substantially in Jamaica’s development. I have a fear that it’s a ‘big bang’ approach that is being sought, rather than building on the many small initiaitives that have been going on for decades. For instance, we have several generations of Jamaicans who have benefited enromously from the diaspora’s uncoordinated and coordinated mobilization, through goods sent in barrels, from remittances, from direct support to schools, health facilities, and churches–without government involvement in any of that. I was sending used laptops adn books and school supplies to schools in St. Elizabeth as a side activity while I was working at the IMF. I know people and organizations who have been doing likewise for decades. Maybe, part of the issue is that it’s hard to measure all of that to see what it really totals, and if it can be directed in other ways. Ideas like ‘diaspora bonds‘ don’t seem to have taken off in Jamaica. How much more talking about this, rather than some doing, do we need?
One of the great things that Jamaica should have learned from its current arrangement with the IMF is that transparent and consistent reporting is one of the elements that build public confidence in what government does, even if the results are not to everyone’s liking. It’s one of the strengths of our democracy, too, that election results don’t get delayed or subverted by other processes.
We are not yet comfortable ‘in bed’ with good governance, but as the opportunities arise, we ought to assess carefully the path we take.