Sun | Apr 30, 2017

World Bank project to spread prosperity beyond 'enclaves'

Published:Sunday | October 26, 2014 | 10:00 AM

As much as 90 per cent of food consumed in the tourism sector is said to be imported, but an industry-linkage project aims to redirect some of the business to Jamaican producers.

That effort is to get a boost under a US$50 million World Bank-funded programme aimed at assisting with the execution of large-scale projects and boosting small firms seeking integration with supply chains, otherwise known as market access.

The so-called Foundations for Competitiveness and Growth Project will be executed by the Planning Institute of Jamaica, the Development Bank of Jamaica, and JAMPRO. The programme spans six years to June 2020.

World Bank analysis has classified Jamaica's development model as an 'enclave' in which key sectors, those in which private sector investments tend to lead to economy-wide productivity spillovers, face limitations. Those roadblocks tend to prevent inclusive growth.

In the tourism sector, for example, which is one of Jamaica's biggest employers and top foreign exchange earner there are few backward linkages to other local enterprises, said the World Bank in its project overview.

Tourism earns around US$2 billion per year and employs about a tenth of the labour force.

"Industry estimates are that 70 to 90 per cent of tourism-consumed food is imported, limiting a potentially significant source of growth for domestic agribusiness," the World Bank said. "A similar lack of incentives in the business environment, or even disincentives to establish backward linkages exists in other industries as well."

The Growth Project will offer technical assistance in areas of government regulations, operations and expansion, logistics and trade, among others. The targeted sectors are agribusiness, energy, information and communications technology, logistics, transportation/ports, social sector public-private partnerships in areas such as health and education, tourism, and water and sanitation.

The World Bank's overview also notes that "the vast majority" of firms in Jamaica are micro or small, many of which operate in wholesale or retail trade, and the prevailing business environment has not led them to be included in job-generating productive supply chains.

It noted as well that existing private sector investment opportunities offer significant potential to increase competitiveness and growth but are constrained by the business environment.

Jamaica is in the process of rolling out tax reform after years of consistently low rankings on the ease of paying taxes from the World Bank in its annual Doing Business surveys.

avia.collinder@gleanerjm.com