Keith Duncan | Jamaica can recover, grow and emerge stronger

As Jamaica emerges from 2020, hard hit from the COVID-19 pandemic, it is clear that many businesses and individuals were negatively impacted with the loss of incomes, revenues and jobs.

It is a testament to the sacrifices of the country that the Government of Jamaica (GoJ) was in a strong enough fiscal position to provide support for the more vulnerable individuals and small and medium enterprises (SMEs). In addition, Bank of Jamaica’s (BOJ) ability to provide liquidity and the forbearance to the financial sector was a significant positive. This enabled financial institutions to then put in place moratoriums and working capital support to customers and businesses as they sought to navigate the challenges of the COVID-19 pandemic.

We owe a real debt of gratitude to our public health, national security and essential workers in the private sector as well as the Government of Jamaica, as all worked diligently in Jamaica’s efforts to find the difficult balance between lives and livelihoods.

2021 TRANSITIONAL YEAR

As Jamaica is projected to close the fiscal year 2020-21 with a negative GDP of 10-12 per cent and current tax revenues (October 2020) are approximately $55.7 billion (17.6 per cent) behind the corresponding period last year, the country faces an uphill task to get back to pre-COVID-19 levels of GDP. Initially when the first supplemental budget was done, it was expected that the Jamaica economy would contract by approximately five per cent in 2020-21 and we would see recovery to pre-COVID-19 levels of GDP in two years. This is no longer the case as that recovery has been pushed out to three-four years.

With the advent of the COVID-19 vaccines, I view 2021 as a transitional year for the global economy and 2022 being the year when we return to a greater level of normality.

In this transitional year, we would expect that Jamaica will bounce off the lows of 2020-21 and begin to experience a return to growth in economic activity in 2021-22.

GROWTH AMID FISCAL CONSOLIDATION?

Jamaica’s Debt to GDP target is projected to close 2020-21 at 103 per cent. Therefore, in order for Jamaica to realise its Debt to GDP target of 60 per cent in 2027-28, the Government will be compelled to move into a fiscal consolidation mode which will reduce fiscal space and GoJ expenditure over the medium term, which will certainly slow Jamaica’s recovery.

PUBLIC-PRIVATE PARTNERSHIPS TO DRIVE INVESTMENTS

In order to close this fiscal gap created, there has to be a push for public and private sector partnerships to drive critical investments in the areas of technology, water, irrigation and storage, affordable low-income housing and infrastructure. These investments will be necessary to boost economic activity and increase the productivity of the Jamaican economy.

COVID-19 ECONOMIC RECOVERY TASK FORCE GOING FORWARD

A positive which emerged from the COVID-19 pandemic was the establishment of the COVID-19 Economic Recovery Task Force by Prime Minister Andrew Holness. The task force, which is led by Minister of Finance Dr Nigel Clarke and comprised of members of the GoJ, private sector and civil society, deliberated for close to two months around Jamaica’s recovery path with the intention of Jamaica emerging stronger from the COVID-19 pandemic.

Priority policy commitments were pulled out by the minister of finance, which had the support of this multi-stakeholder group.

SOCIAL PARTNERSHIPS

We are hopeful that these policy commitments will be reflected in the GoJ medium-term strategy and that these sectoral subcommittees would be re-engaged in the form of public, private and civil society partnerships to drive these policy commitments into execution. Social partnerships of this nature are very effective in ensuring individual and collective ownership, transparency and accountability and give Jamaica the best chance to achieve inclusive growth.

HUMAN CAPITAL – EQUITY AND GROWTH

Over 65 per cent or 822,000 of Jamaica’s workforce of 1.269 million have no certification (January 2020). This would have some correlation to Jamaica’s per capita GDP (2019) being US$5,461, one of the lowest in the region. This compares to Barbados at over US$18,069 and Trinidad and Tobago at US$16,366. This goes to the heart of Jamaica’s productivity levels which have been declining for decades.

We have to educate and train our workforce so that we can provide greater skills and competencies to drive greater incomes, greater value-added activity and increased purchasing power. That will increase demand for goods and services in our local economy, which will drive equitable growth.

TECHNOLOGY

We are pleased to see the commitment of the Government of Jamaica to the digital transformation of our economy. We really have no choice in this matter as Jamaica is lagging in this area as broadband/Internet penetration is low compared to our peers in the region, and if not addressed will see our ability to compete further hampered. We therefore must prioritise broadband roll-out across Jamaica and find that right balance between public and private sector investment with the optimal commercial model to drive this effort.

Training our workforce and our citizens is critical to ensuring that adoption of technology is relatively high. Jamaica has no choice, we must prepare our workforce for the fourth industrial revolution or we will be left behind.

NIDS

Our national digital identification remains a national priority and has been one for decades. Finally, there seems to be alignment on the process to realise this outcome that will drive greater efficiency and productivity in the delivering of services by the public and private sectors.

CRIME REDUCTION FOCUS

While there has been significant investments of close to J$50 billion in the past four years in modernising our backward national security architecture, crime still remains a drag on our economy and significantly compromises citizen safety.

The deputy PM and Minister of National Security, Dr Horace Chang, has repeatedly said that Jamaica for a myriad of reasons has not been able to get the desired results from the billions of dollars spent on social intervention over many years. Despite the spend, many of our youth and families in our inner-city urban and rural poor communities are not getting the required support to empower them to see beyond crime as a means to achieving a better quality of life, and are therefore easy prey for the gangs.

CRIME MONITORING OVERSIGHT COMMITTEE

With the formation of the Crime Monitoring Oversight Committee (CMOC) to provide oversight, guidance over Jamaica’s crime strategies, it is of utmost importance that there is a heightened focus on crime reduction to address the root of Jamaica’s crime monster. This will go a long way in providing support to our security forces as they focus their efforts on crime reduction.

CMOC must ensure that these programmes are monitored and evaluated to deliver effective solutions in these vulnerable crime-producing communities. In experiencing tangible benefits and other opportunities, residents of these communities can then engage as productive citizens of Jamaica, which will significantly contribute to a sustainable reduction in crime.

FORMALISATION OF MSMEs

Micro, Small and Medium Enterprises (MSMEs) will have to intensify their efforts to be formalise themselves, and the banks should also step up their efforts to seamlessly bank MSMEs. This will ensure that this critical sector which employs over 70 per cent of Jamaica’s workforce can increase their ability to access finance to grow their businesses.

DIVERSIFICATION OF THE ECONOMY

If Jamaica is able to achieve real movement in the above areas, our country will experience increased growth in areas of our economy that can create and sustain greater competitive advantage.

A few of these growth sectors include agro-industry, light manufacturing, information technology, e-commerce, logistics, business process outsourcing and the creative industries. This would enable greater diversification and sustainable, value-added growth which would lift other industries such as financial services, real estate, as well as wholesale and retail.

TOURISM LINKAGES

As tourism returns we need to deepen the linkages with the Jamaican economy. The tourism sector must look to the domestic suppliers, especially in the areas of manufacturing, agriculture and entertainment, to increase the value addition locally and create more jobs in these sectors.

ENTRENCHING MACROECONOMIC STABILITY

Under the Economic Reform Programme, significant strides have been made in establishing Central Bank Independence and the Fiscal Council. These are very important institutions in safeguarding the macroeconomic stability that we have sacrificed for as a country. The addition of these to the institutional framework will protect the Jamaican citizenry for generations to come.

JA CAN EMERGE STRONGER

Our people have demonstrated resilience and creativity in surviving decades of an underperforming economy which has not delivered the great promise of independence.

While the COVID-19 crisis has exposed Jamaica’s vulnerabilities and stark inequalities, it can create the opportunity to bring us together as a people. Let’s convert this crisis into actionable steps so that we can all take ownership and help our country to realise its true potential of equitable and inclusive growth for all Jamaicans.

- Keith Duncan is the president of Private Sector Organisation of Jamaica and the chief executive officer of the JMMB Group. Send feedback to columns@gleanerjm.com.