MSBM research to hone in on lesser known roles diaspora could play in development
The Mona School of Business and Management (MSBM) is undertaking research to establish the empirical worth of the Jamaican diasporic economy, beyond remittances and philanthropic endeavours.
MSBM lecturer Dr Indianna Minto-Coy stressed that the role of the Jamaican diaspora in the country's growth and development is key and needs to be properly defined, hence the move to conduct the research.
"This diasporic economy is a huge contributor to the Jamaican economy and to the Caribbean economy, but it's unmapped, so we know a lot of anecdotal evidence, but the hard-core evidence still remains to be seen. And that's one of the things that we believe - that there is still a very strong business case to be made for migration," Minto-Coy said while participating in a Gleaner Editors' Forum last Wednesday.
"The role of the diaspora is key to how we move forward, but there is still a case to be made for [what its role] should be and a more convincing case to be made for that, beyond acknowledging remittances [and] Ö social engagement," she added.
World Bank research indicates that the Jamaican diaspora holds more than US$5 billion in savings. Beyond remittances and philanthropic efforts, the Jamaican Government has been exploring ways of tapping this vast resource within the diaspora, much in the same way China and Israel have done.
The idea of floating a diaspora bond has been previously pitched but is yet to get off the ground, as the Government and its advisers still have not worked out the structure and yield of such an instrument.
STRUCTURING THE BOND
At a Gleaner Editors' Forum last year, Foreign Affairs State Minister Arnaldo Brown explained that such a bond instrument would have to be structured so that it doesn't become part of the country's already burdensome debt stock, which was the sticking point. Further, he said, the yield on the bond instrument would have to be attractive enough to gain the attention of members of the diaspora.
"It would be a retail bond and not an institutional bond, which means it would be sold in small denominations to a large number of people and fully regulated in the United States, Canada and United Kingdom," the World Bank's chief economist, Dr Dilip Ratha, explained in March 2013.
"Institutional bonds cannot be marketed directly to the retail market, so increased regulatory compliance is the key distinction in offering diaspora bonds," he added.
The World Bank was engaged to assist with establishing the framework necessary to facilitate the financial instrument.
Minto-Coy argued that "there are many other diverse ways in which the diaspora can be engaged".
"If you look at countries like China and Israel, they identified their diaspora as key target investors, and so there are lessons to be learnt as to how to engage this massive wealth, in terms of numbers and in terms of money, Jamaica's growth, and development for the future," she continued.
According to the academic, the diaspora economy offers opportunities for local businesses to expand their markets and grow revenues.
"One of the areas where you see the most innovation Ö are firms that are based locally and within the region that are operating in the diasporic economy. If you look at a Jamaica National [Building Society] and GraceKennedy, Ö these are firms that have been internationalised by following the footpath of the diaspora," she explained.
"We know that Jamaica National started out as one branch in Savanna-la-Mar, but now it's in the UK and all over the world," Minto-Coy added.