Banks should lead economic growth
THE EDITOR, Madam:
The topic of economic growth has been a constant in the news lately since Michael Lee-Chin, chairman of the Economic Growth Council (EGC), announced that the ‘5 in 4’ target (five per cent GDP growth in four years) was difficult to attain. A five per cent growth target was bold to begin with, considering Jamaica has not seen that level of growth in decades. Mr Lee-Chin laid much of the blame on permanent secretaries and public-sector inefficiencies, but refrained from holding ministers accountable, including the prime minister and fellow EGC members who are all successful and experienced in various sectors.
While growth has been sluggish – around one per cent when positive – one sector that does consistently well in the economy is banking. Commercial banks continue to report significant profits and growth over the years. Despite economic constraints, banks seem to be immune to devaluation, inflation, unemployment, etc. Tourism, like banking, is booming, but little of the profits earned seems to be trickling down into the economy. We hear of record numbers of visitor arrivals, which continue to soar – 3.4 million as of October, according to Minister Edmund Bartlett. Tourism earned US$3.1 billion in revenues to date this year, with new hotels being built to increase capacity.
If more profits were retained in Jamaica, this country could be poised for big things. The creation of wealth revolves around banking activities. Perhaps some of their policies are stifling the economy; for example, high fees, poor service, limited products and lines of credit. Banks should become more innovative and creative to stimulate the economy and generate steady streams of income flows. It should always be easy to do business with them. If it is difficult to do banking, it will be difficult to move the economy forward. This is a stark difference you’ll notice with banks in First-world countries: they go all out to be a convenience and stimulate growth and development. This helps to position their brand and gain a competitive edge in markets where consumers and investors do have a choice.