Mon | Aug 20, 2018

PetroCaribe’s role in funding social and human capital development projects

Published:Wednesday | December 30, 2015 | 12:00 AM
Dr Wesley Hughes, CEO of the PetroCaribe Development Fund.

Horace Levy has been a dedicated Jamaican in the cause of peace and development for decades. He therefore deserves a thoughtful response to his letter in The Gleaner of December 28, 2015 commenting on my speech to the Rotary Club of downtown Kingston, published a week prior on December 22.

While I did not comment on human capital investment directly in that speech, it was in no way intended to deny or downplay its importance. My intent was to get minds focused on the actual investments on the ground to encourage local investment. Somehow I can't help feeling that in his letter, Horace set about unwittingly to set up a straw man to knock him down. After all, the ultimate outcome of all genuine development endeavours is the realisation of the full potential of the human being. Investment in physical infrastructure is ultimately to enhance human development. As I said in my speech, the investment in the North Coast road is, "not an end in itself ... it is the basis for further investment".

Since my days serving as director general of the Planning Institute of Jamaica and chairman of the Jamaica Social Investment Fund for close to 15 years, much of my work has been devoted to leading teams of professionals in the design, financing, and execution of national and community programmes and projects to enhance human capital and social development. To reinforce the point, I would like to recall just few of those projects that I was involved in and which readily come to mind:

1. Health Rationalisation Project

2. Agricultural Support Services Project

3. Citizens Security and Justice Programme

4. Enhancement of Basic Schools Project

5. Social Safety Net/PATH Project

6. Reform of Secondary Education (ROSE)

7. Social Investment Fund

8. Inner City Basic Services Project.

Of course, these programmes and projects were actually implemented by many dedicated public servants across numerous ministries, agencies and departments. I am therefore no stranger to the central importance of human capital investment and social development. The grant and loan programmes of the PetroCaribe Development Fund (PCDF), finance both physical and human capital development. We do this as part of our stated mandate, primarily of which is to invest the debt financing from the PetroCaribe Agreement, so as to ensure that at all times we are in a position to meet our debt-payment obligations to Venezuela. We are mandated to lend only to self-financing public bodies and to central government. These public bodies include the Development Bank of Jamaica (DBJ) and the EXIM Bank, both of which then on-lend to the private sector for export and job creation. For example, most of the funding by the Development Bank of Jamaica for business process outsourcing expansion, renewable energy and the small and medium enterprise sector, comes from the PetroCaribe Fund.




In fact, the PCDF does significant social and human capital financing from its investment earnings. Mindful of the need to ensure the viability and sustainability of the Fund, the board, on the advice of our actuary, allocates some seven per cent of each previous year's surplus as grants to social projects and human capital.

Some of the projects that come readily to mind include a major wooden housing project for the indigents through Jamaica Emergency Employment Programme and Food For The Poor, scholarships for secondary and tertiary students, allocation for education assistance via the Ministry of Finance, funding for 10,000 poor children to visit the Hope Zoo (an issue raised by Levy), funding for renewable energy in schools and NGOs like RISE, the funding of a project through JSIF to eliminate all remaining pit toilets from primary and all-age schools, and the renovation of most of the markets in downtown Kingston, through the UDC, including Coronation Market.

I invite Horace Levy and the general public to visit our website and our annual reports to see the extensive portfolio of social and human capital development projects that the PCDF finances. Apart from loans to the Ministry of Finance to refinance debt obligations, the PCDF is an important source of distribution (dividends) to that ministry from our annual surplus. These are used to fund budgetary expenditure for human development.

It should be very clear to Horace Levy that apart from the PCDF's extensive financing of physical infrastructure, we are equally involved in human and social capital investment. In this way, we are sympathetic to his point for 'our own people' to grasp the opportunities that exist or are emerging. Indeed, that was the essence of my speech.

All the infrastructure investments that have taken place in water, sewerage, flood control, highways, airports, energy, ports, were not done for foreigners per se. In fact the vast majority of the people who benefit from these projects on a daily basis are not tourists or investors, but ordinary Jamaicans. What I was pleading for in my speech, was for Jamaican investors to take advantage of these developments. National development based only on foreign investment, as important as that is, is not sustainable in the long run. Everything needs to be done to encourage and facilitate local investment as well. The beauty of infrastructural development is that it provides a basis for both, local and foreign investment.

I know Horace Levy is fully sold on the need for human capital development as well as for physical infrastructure investment. As a social economist, and in my capacity as head of the PCDF, I am mindful of the need for both.

There is therefore no need for 'straw man' debates. Let us debate about how we can get our people to take advantage of existing opportunities to ensure a sustainable development model.

- Dr Wesley Hughes is the CEO of the PetroCaribe Development Fund.