EGC smoke and mir­rors

Jamaica Gleaner - - OPINION & COMMENTARY - Ron­ald Ma­son Ron­ald Ma­son is an im­mi­gra­tion at­tor­ney-at-law and Supreme Court me­di­a­tor. Email feedback to col­umns@glean­ and na­tion­

ON SEPTEM­BER 25, the Eco­nomic Growth Coun­cil (EGC), chaired by Michael LeeChin, is­sued a call to ac­tion that ac­cu­rately re­flects the real­ity of Ja­maica’s decades-long low eco­nomic growth.

Growth in gross do­mes­tic prod­uct (GDP) for the quar­ter ended June 2016 was 1.4 per cent. This is very anaemic, but it is an im­prove­ment over the re­cent past. The EGC has as­pi­ra­tional goals of el­e­vat­ing GDP to five per cent an­nual growth in four years’ time. There have been cir­cum­stances in our past when we have had spurts of sig­nif­i­cant growth in GDP, but the last 40 years have av­er­aged 0.8 per cent.

The var­i­ous sec­tor in­ter­ests who have signed on to the as­pi­ra­tions of the EGC are im­pres­sive. They have the in­her­ent ca­pac­ity to drive eco­nomic growth. The Small Busi­ness As­so­ci­a­tion, Real­tors As­so­ci­a­tion, Ja­maica Man­u­fac­tur­ers’ As­so­ci­a­tion, and Ja­maica Em­ploy­ers’ Fed­er­a­tion are num­bered among them. Th­ese or­gan­i­sa­tions are re­quired to work in synch, but one must ques­tion whether the plat­form to fa­cil­i­tate this kind of eco­nomic growth over the long haul is, in fact, avail­able and primed for growth.

A num­ber of things come to mind that need to be ad­dressed. The cost of do­ing busi­ness in Ja­maica is very high. Busi­nesses spend, on av­er­age, 17 per cent of their rev­enue on se­cu­rity costs. Seventy per cent of the labour force is un­trained. The re­spite from util­i­ties could soon come to an end. The price of a bar­rel of crude has risen to more than US$50.

Ac­cess to cap­i­tal, at rea­son­able rates, is often out of the reach of small and medium en­ter­prises. And the bank­ing sec­tor pays lip ser­vice to as­sist­ing small and medium-size busi­nesses. The banks speak to the high BOJ re­serve ra­tios that limit loan­able funds.

Land ti­tling is de­signed to main­tain the for­mer glory that came with land own­er­ship. It takes months to com­plete a land trans­ac­tion and the cost could range up to 16 per cent of the value of the trans­ac­tion. Fi­nan­cial in­sti­tu­tions al­ways want to have col­lat­eral val­ued way in excess of the amount sought in a loan trans­ac­tion. Pen­sion funds must be most con­ser­va­tively in­vested and very lit­tle of it can be in­vested in hard cur­rency. And we do not truly have a sig­nif­i­cant man­u­fac­tur­ing base, as we im­port ev­ery­thing, fab­ri­cate it, pol­ish it and sell the end prod­uct to the con­sumer as ‘Made in Ja­maica’.


Agro-pro­cess­ing, for the most part, is a stag­nant in­dus­try. As an aside, there is no cen­tral pur­chas­ing fa­cil­ity to en­able the farmer to pro­duce for ready, iden­ti­fi­able mar­kets. Oh for the full im­ple­men­ta­tion of the con­cepts be­hind the Agri­cul­tural Mar­ket­ing Cor­po­ra­tion.

How many yel­low yam farm­ers pro­duce by the mini-sett tech­nique, a prod­uct geared to­wards meet­ing strong de­mand in ex­port mar­kets? Farm­ers can­not buy the plas­tic cov­er­ing, nor can they han­dle the car­ry­ing costs of large-scale cul­ti­va­tion for the nine months be­fore reap­ing.

The EGC says it will pur­sue a re­form of the bu­reau­cracy, im­prove ac­cess to finance, build hu­man cap­i­tal, and catal­yse the im­ple­men­ta­tion of strate­gic projects. It pro­poses to do this from sit­ting in the driver’s seat and di­rect­ing the im­ple­men­ta­tion, but none of them have to an­swer to a po­lit­i­cal elec­torate. None of them will face re­jec­tion when the grandiose plans fail to ma­te­ri­alise for what­ever log­i­cal, ra­tio­nal, sane rea­son.

No­body has stated the time frame to re­form the po­lice force to im­pact crime. No­body has said when the pen­sion regime is go­ing to look like Chile’s. On build­ing and de­vel­op­ment ap­provals, can we get some pos­i­tive move­ment in the turn­around time? Any­one re­ly­ing on a 90-day turn­around is set­ting him­self up for a night­mare.

The jus­tice sys­tem is an im­mov­able mass mired in its own in­er­tia. The Govern­ment owns sig­nif­i­cant prop­erty in down­town Kingston, yet can­not do any­thing about ex­pand­ing the Court of Ap­peal un­til an­other en­tity moves out of a struc­ture that has to be re­ha­bil­i­tated.

The EGC may just be our last and best hope. The threat of a nat­u­ral dis­as­ter a week ago leaves one with trep­i­da­tion as to what we es­caped. We must get se­ri­ous and build a so­ci­ety that is founded on trust, good­will, in­clu­sive­ness and na­tion­al­ism, and not the un­stated be­lief that given half a chance all Ja­maicans would steal.

We won’t progress without gamechang­ing ini­tia­tives. Poor peo­ple won’t es­cape the clutches of de­pri­va­tion, be­cause banks refuse to trust them with a loan un­less they have a ti­tle. The pro­ce­dures in­volved in set­ting up and main­tain­ing a busi­ness are so tor­tu­ous that they dis­in­cen­tivise tax­pay­ing, and an un­der­ground econ­omy thrives be­cause the sys­tem is more puni­tive to, than fa­cil­i­ta­tory of, en­trepreneur­ship.

Wel­come to the smoke and mir­rors! If we don’t set the foun­da­tion for growth, the EGC will be noth­ing more than a photo op and pub­lic re­la­tions stunt.

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