Sun | Dec 17, 2017

Growth & Jobs | Save more to capitalise on investments in the country

Published:Tuesday | October 31, 2017 | 12:00 AM
Hayden-Cater

Maureen Hayden-Cater, managing director, JN Bank, says a programme which influences Jamaicans to save more has to be a critical component of preparing for a future of increased investments in the country.

"The more you save, the more you'll be able to invest," she said.

She was speaking against the background of a recent panel discussion hosted by the Institute of Chartered Accountants of Jamaica (ICAJ) as part of its Business Conference, which discussed investments in Jamaica and the Caribbean, and ahead of World Savings Day, which is being observed today.

"What we see is that Jamaica has moved along a path of heavy spending," Hayden-Cater continued. "It's not unusual for people to spend every dollar they earn by the end of the month."

The country's savings, as a percentage of its gross domestic product (GDP), is somewhere between 19 per cent and 20.5 per cent, according to data from the World Bank and the Central Intelligence Agency (CIA). The CIA ranks the country at 87 out of 181 countries in terms of savings.

 

NATIONAL SAVINGS

 

Although Jamaica is ranked above some developed countries, such as Canada at 98, and Italy at 99, with under 20 per cent of their GDP representing savings; and even the United States ranked at 135, with its gross national savings representing only 14 per cent of its GDP, Hayden-Cater said that saving more would position Jamaicans to take better advantage of an improving Jamaican economy.

"There are many developments taking place and touted to take place, such as the development of special economic zones; and in the tourism sector; therefore, Jamaicans will be in a better position to grasp opportunities that may arise from these projects if they have savings to support them," she said.

 

IMPORTANT TOOL

 

The banker, with more than three decades of experience, said savings are an important tool to access credit, which people need to acquire assets and build wealth.

"Your savings in a financial institution is security, which you can use to access credit; but also, those savings can provide you with a footprint for financial institutions to use when considering how much to lend you," she advised.

"Therefore, as opportunities emerge, you may need to borrow to purchase the capital to support those opportunities instead of depleting your savings," she added, noting that more deposits also position financial institutions to lend for a wider range of purposes.

Those savings, she maintained, can continue to earn interest in your account; or can be invested in other instruments, such as securities and bonds, to earn even higher yields.

"And, the opportunities to save and invest aren't limited to Jamaicans in Jamaica, but include those living overseas," she said, noting that Jamaican financial institutions offer a higher rate of return.

... Financial literacy needed to improve nation's saving rate

Jamaicans need to become literate and prudent about financial management in order to increase the country's saving rate, says JN Bank Managing Director Maureen Hayden-Cater.

At the same time, Hayden-Cater added, financial institutions must take their role as educators seriously.

"It's not a job for government alone. In fact, the financial sector needs to lead the cause," she stressed, pointing to JN Bank's financial literacy programme implemented through the JN Foundation to assist members with managing their lifestyle.

"And we could begin by assisting more persons to become confident with the services that financial institutions provide. If they are going to commit to save, then they must feel empowered to do so," she said.

"They have to be able to bank on us," she emphasised.