Ignorance or distrust: - Former PSOJ boss weighs in on resistance to divestment
With a recent RJRGLEANER-commissioned Don Anderson poll indicating that Jamaicans do not favour the privatisation of state-owned companies, former president of the Private Sector Organisation of Jamaica, Howard Mitchell, has called for greater public education on the benefits of divestment.
The poll, conducted between February 8 and 18, found that, of the 1,038 Jamaicans surveyed, 76 per cent disagreed with the prospect of the Government selling its almost 20 per cent stake in the Jamaica Public Service Company (JPS) and TransJamaican Highway. Fourteen per cent were in agreement, while six per cent did not know and four per cent were uncertain.
Fifty-nine per cent said that they disagreed with the Government’s policy to privatise state-owned companies. Twenty-six per cent agreed, while eight per cent did not know. Seven per cent indicated uncertainty.
But when questioned if state-owned companies should be listed on the Jamaica Stock Exchange, 52 per cent said yes and 23 per cent said no. Fourteen per cent did not know and 11 per cent said they were not sure.
The statistics suggest that Jamaicans are largely resistant to the Government giving up its stake in companies – except where the masses can benefit. That instinct might be anchored in the long-held suspicion that private enterprise might hike rates for services considered essential.
The poll responses, according to Mitchell, indicate that Jamaicans are either ignorant of the effect of listing on the stock exchange or distrustful of the private sector – so much so that that sentiment outweighed their frustration with inefficient state ownership.
“It is rather surprising to me that the vast majority of persons said no to the divestment of Transjamaican and JPS, as well as to privatisation,” the businessman said.
Mitchell recommended that more be done to persuade citizens to invest in the Jamaica Stock Exchange.
“It appears those surveyed are not convinced of the advantages of not having the State control the heights of our economy. The divestment, if properly done, can reduce the inequality of ownership and of income in Jamaica by allowing more people to profit from the activities of large enterprises.”
socialisation of wealth
The Holness administration has talked up the benefits of a wider span of Jamaicans investing in the local stock market, calling that campaign the socialisation of wealth.
Last May, the government-owned Wigton Windfarm Limited was listed on the stock exchange following an initial public offer that generated some $14 billion. That venture netted more than 11,000 new investors on the market.
The National Road Operating Constructing Company is currently floating 10 billion shares in Transjamaican, valuing $14 billion. Transjamaican Highway was previously owned by French contractors Bouygues Travaux Publics, Vinci Construction, IFC and Proparco, dating back to 2001. The Government of Jamaica bought 100 per cent of the shares, via a short-term loan, in December 2019.
Mitchell’s views of privatisation align with those of Ethnie Miller Simpson, president of the Jamaica Chapter of the Women’s Entrepreneurs Network of the Caribbean, who added that, in the present atmosphere of globalisation, the State is notorious for inefficiency and waste.
“If you look at it from a business perspective, then clearly a different decision needs to be made,” she said.
Miller Simpson expressed hope for women to be among those taking advantage of investment opportunities.
“We are seeing a couple of things changing. We have women who are far more involved in business than before, but still not enough,” she told The Gleaner.
“We are seeing in terms of investment, women are looking for opportunities to invest. However, we don’t own as much as we should, so the confidence we ought to have is not as strong as it ought to be.”