Worrying signs in CARICOM
Published: Sunday | June 28, 2009
The following is an excerpt from a speech given by Douglas Orane, chairman & CEO Of GraceKennedy Limited, at the fourth annual Caribbean Association of Industry and Commerce Private Sector Meeting/Dinner with CARICOM ministers of trade and finance at The Jamaica Pegasus hotel, June 13.
I am a Caribbean man. I first got to know other Caribbean people at the age of 17 in, of all places, Scotland, where I was an engineering undergraduate at the University of Glasgow. I studied alongside several other young Caribbean people and it was a revelation to me how many more similarities than differences there were among us.
I now admit a sense of deep disquiet that centrifugal forces are at work which could blow us off course from our vision of an integrated region. This crisis is manifesting in two ways. One is that, given the realities of external forces acting upon us, countries are tempted to seek individual solutions based on their relationships with players outside the region. The second is an emotional response of 'every man for himself' or, in this case, 'every country for itself'.
GraceKennedy Limited and Jamaica Producers Group have already invested within the region and are expected thrive despite challenges. - File
Regional political analysts are increasingly citing what they see as a waning political commitment to the CARICOM Single Market and Economy (CSME). A key indicator has been the region's inability to respond in a timely or cohesive way to the global and economic crisis. A specific example is the recent report that at the special session of CARICOM leaders on May 24, a team was commissioned to come up with recommendations on the region's approaches to the global economic crisis, even while we are yet to move on a draft report that was submitted by another task force mandated in January by the region's finance ministers.
We are now nearly one year into this crisis and our heads of government have yet to articulate a cohesive strategy for us to work our way through this crisis! I am sure if you spoke to each prime minister and president individually you would find each to be deeply passionate about his commitment to our goals. So, what is it that prevents this from happening?
I believe that there are a number of issues that we need to confront and accept, in order to move on to where we would like to be.
The first issue is the decision-making machinery within CARICOM is outdated and rooted in the thinking of the mid-20th century.
At GraceKennedy, we had to go through a wrenching transformation over the last several years to convert our internal decision-making processes, our structure and our culture to make them relevant to the 21st century.
The result is we have the same name, and we have the same values that we have always had, but our modus operandi is completely different. I would like to suggest that if it is to survive as a regional body with any authority and legitimacy, the CARICOM region also needs to go through a process of self-transformation. We need to ask ourselves what is it that we need to change in our CARICOM systems and culture to become more nimble and creative in our decision making and actions.
We still have an outmoded belief that lengthy meetings and speeches are actually an output of work. This is a completely misplaced concept in the 21st century. Meetings and speeches are only vehicles for achieving outcomes, not the end in themselves. Yet, we continue to be mired in a culture of long meetings and longer speeches, and then congratulate ourselves for a job well done.
Years ago, we determined at GraceKennedy that a lot of productive time was being wasted in meetings. We took the decision, first of all, to do away with meetings simply because they were a standing committee meeting, if the objectives were not clear. We also took the decision to consciously determine that where possible, meetings would not exceed an hour. This principle was adopted across the board, from executive meetings to staff meetings. This had the effect of forcing participants to be more succinct and also gave them more working hours to actually execute the decisions taken in these meetings.
Even before this (global financial) crisis we had moved to teleconferencing as a standard method of communicating across geographical boundaries to save on travel costs and to speed up decision making. With operating locations in some eight countries, it is rare that we have a business meeting that is not teleconferenced across several countries. We do this as needed and these sessions tend to be, on balance, very focused.
Compare this with the traditional CARICOM Heads of Government calendar for meeting twice yearly. Ask yourself the question: How are we going to respond to the current global environment where there is breaking news every few hours if our heads of government only meet twice a year? Now, the traditional response would be to have more physical meetings. What I am proposing is the opposite - what we need are virtual meetings using 21st-century technology, such as teleconferencing and video conferencing so that, with any event that takes place, our political leaders can get together within hours and come to a decision.
The second issue is our capacity to use information to assess situations, and predict the future. In private industry, market information is vital to competitiveness. Let's take remittances as an example. At GraceKennedy, we know this business well and we spend a lot of time determining where our diaspora live, what industries they work in, what are their savings, investment and spending patterns in order to meet their needs more effectively. This helps us to provide better service to them.
using MArket research
We were also able to anticipate that the decline in remittances would not be as sharp for Jamaica because our English-speaking Caribbean nationals work primarily in health, education and transportation services which are, interestingly, the industries that have been least affected by the global crisis. In fact, health services continue on a net basis to create jobs. According to the US Bureau of Labour Statistics, health-care employment increased by 24,000 in May, which was just about in line with its average monthly job growth so far in 2009.
How are our governments and our universities collecting and assessing this kind of information? Are we using research to predict future job demand trends in our countries and in the developed world that would inform how we educate and train our people to take advantage of opportunities?
Our experience in CARICOM has been that we do not have the resources to gather and analyse data with the ease of our developed country counterparts, and so, many of our decisions are made based on anecdotal evidence.
A case in point: the issue of migration within the region has surfaced as a hot-button issue within the last few months, but how much of the current debate is actually informed by hard data, as opposed to anecdotal evidence? The fact is that much of the analysis currently available on intra-regional migration is based on information derived from the 1990 regional census.
At a meeting of Caribbean statisticians last year, CARICOM Deputy Secretary General, Ambassador Lolita Applewhaite, noted that analytical information from the 2000 regional census was only made available to the public in 2008, largely due to a shortage of qualified statisticians. She also announced that efforts are being made under the Caribbean Integration Support Programme (CISP) to strengthen our capabilities in this regard, in order to ensure availability of more timely interpretative data. Our universities should be co-opted in this regard, and encouraged to conduct more research on trends that will assist our countries to carry out more effective workforce planning.
missed CSME deadlines
My third point is that I believe we have been largely immobilised by the fact that we have missed most of our deadlines for implementation of aspects of the CSME. The reality is that, in some cases events have overtaken us which make it more difficult, if not impossible, to implement some of these action items. The answer is to be honest about those things that are simply not going to get done in the short term, and concentrate our efforts on those things that are not only doable but urgent.
One of these 'doables' is the movement of capital and improved regulation of our financial services sector.
At GraceKennedy, we are fortunate that we have the ability, because of our scope of operations, to raise capital directly in more than one country through our capital market relationships. As you may be aware, we are listed on four regional exchanges. We have discovered this to be a most onerous position to be in because of the disparate reporting regulations and the costs associated with them. What we need is a single, Caribbean stock exchange and regulatory framework, in order to make the markets truly efficient to raise capital and function as one economic space.
If this doesn't happen soon, we will find more and more that our larger companies will have no choice but to list outside of the Caribbean region, which is certain to be an irreversible set of decisions.
We need to move past our traditional xenophobia as it relates to our regional counterparts and liberalise those areas that will allow for truly free ownership of capital across the region. The reality is there is not enough capital within the region to meet the aspirations of all of our people. So having free movement of this capital no matter who owns it, in order to create economic development, is completely in keeping with improving the standard of living of all our people.
An issue whose achievability is under debate is the free movement of qualified persons within the region. In the 21st century, this is a fundamental underpinning of, and a prerequisite to, economic growth. GraceKennedy and other companies like ourselves cannot compete effectively with extra regional entities if we are not able to employ the best people possible from within the CSME and without the hassle of onerous immigration or work permit requirements. This is not a demand for carte blanche movement but purely to honour what was agreed to in the Grand Anse Declaration.
Remember one other fact, the future of the Caribbean is inextricably linked to the export of services, including export of people to work overseas as the developed country populations age. We will weaken our own argument for outward migration to meet those needs if we have not fully resolved that issue among ourselves regarding internal migration in CARICOM.
Another issue that I believe can be addressed fairly quickly is greater Customs cooperation and removal of trade barriers, formal or artificial. We seem to be in the throes of what is referred to by regional media as a "brewing trade war" between some CARICOM countries, often manifesting itself in excessive red tape in the entry of goods, even where they represent a minor value.
resolving trade issues
The manufacturing associations of Trinidad & Tobago, Jamaica and Barbados issued a joint statement a few weeks ago calling on their governments to quickly and effectively resolve these regional trade issues. The communiqué noted, "It is imperative that at this time, given the current global economic downturn, decreasing global demand and increasing extra-regional competition, that governments of the region work together to remove all non-tariff barriers and unfair trading practices."
The statement calls for all border agencies to be strengthened and more proactive in dealing with trade issues; and for adoption of clear regional standards for goods and services.
What we in the private sector need our governments to do is create a climate that allows us to be more nimble in response to global trends, and to expand our businesses across borders.
managing social implications
However, it is not just about the private sector doing well. It is also a political issue. Traditionally, migration by our nationals to the OECD countries has served as somewhat of a safety valve, allowing our professionals and other skilled nationals to achieve the standard of living they would like to enjoy, and also providing direct economic benefits through remittances.
However, in the context of the current global financial crisis, job opportunities have already contracted dramatically in these countries, and will slow down the level of migration. Our governments must develop plans, and act to manage the social implications of this reality in their various countries, or they will not remain in power for long.
The early proponents of Federation had a vision for a united region and though, for various reasons, this was not realised, successive generations of Caribbean leaders have understood the benefits of working together to overcome the limitations of small size.
Over these four decades, we have seen examples of larger, more developed nations exploiting the benefits of regionalisation. We in the region can no longer afford the luxury of trying to compete as individual countries in this global environment. Now, more than ever, if we do not hang together, we will certainly hang separately.