Friday, September 19, 2014

What is Jamaica's growth potential?

Planning Institute of Jamaica Director General Colin Bullock. The PIOJ is targeting three per cent growth for next fiscal year.

THE Planning Institute of Jamaica (PIOJ) is targeting real GDP growth of three per cent in the fiscal year 2015/16. This is against the previously targeted 1.5 to two per cent, under the current IMF agreement. I have long indicated that Jamaica has the capacity to grow at rates of between three to five per cent, in the short to medium term, and also that if we are really to see meaningful growth that will impact the man on the street, then growth must be upwards of three per cent.

I am sure that many will wonder if the PIOJ is being objective in targeting three per cent growth, when for the past 42 years Jamaica has averaged less than one per cent per annum. In fact, the only time that we saw growth over three per cent consecutively was in the 1980s. We have, however, seen one or two years of three per cent growth since then, but the problem we have had is it has not been consistent.

Another question to ask, therefore is: Even if we can achieve growth of three per cent in 2015/16, how sustainable is it, because one year of three per cent growth is not good enough for us to show any significant improvement in the standard of living for the average citizen.

It is also very true that even if we were to achieve a sustained period of growth of three per cent, many persons could still be disillusioned, as they could end up not being impacted positively. This is because macroeconomic growth does not guarantee growth for an individual or organisation, if that individual or organisation is not equipped to take advantage of the growth. Therefore, even in times when there is no growth many persons and businesses will still do well, because they have prepared individually.

In order for us to achieve growth of three per cent and above consistently, we must first understand if we have the capacity to do so, and secondly, what would prevent us from achieving that growth. It should be noted that the PIOJ targeted 2015/16, and did not address the years beyond, based on their expectation of certain projects coming on stream. Therefore, it is very possible that, based on the projects, there could be three per cent growth in 2015/16, but then we return to one per cent in 2016/17. I believe, however, that as a country we have the capacity to grow at three per cent, even beyond the 2015/16 year.

I say this because I don't think that Jamaica has fully exploited our comparative advantages, and there are just a few tweaks that need to be done for us to do so. Many of these changes are being made under the legislative and economic programme by the Government, at which Phillips and Golding are leading the charge. However, there are still some other adjustments to be made, if we are to sustainably achieve three per cent and above GDP growth. In other words, while the economic and legislative programme provides a platform for growth, there are some other things that must be done.

These include addressing the law and order problem, and I don't mean serious crimes like murder alone, but general indiscipline in the society. I am heartened by the position taken by the new police commissioner, and supported by the statement by Minister Bunting, who, I think, has been making the right strategic moves, and in fact, his policy initiatives and work of the former commissioner did have a positive impact on crime in general, and homicides in particular. So this has given the present commissioner an easier wicket to play on. One thing I find, though, that has changed for the worse, is that since Radcliffe Lewis retired from the Traffic department, I have noticed that the indiscipline by the taxis and buses (including JUTC) has got worse. I don't see the same presence by the police on the roads as when he was there. I also continue to notice the blatant disregard that people have for the night noise laws.

If we cannot maintain discipline in a society, then we are going to continue to negatively affect our growth prospects. No one wants to invest, and live, long-term in a society where there is so much indiscipline. A lot of this is personal responsibility by our citizens, who seem to thrive on indiscipline, but still the authorities must enforce the rules. I wouldn't even bother to mention the way we discard our garbage, which is most disgraceful.

This indiscipline extends to the parish councils, who over the years have been some of the biggest let-downs. I think that recently there has been some effort from some parish councils, but we must maintain the discipline of zoning laws and ensure property tax collection. How difficult can these be to enforce?

I have discussed bureaucracy on numerous occasions, and this continues to be the number one challenge that most business persons (large, medium, and small) face. All I will say on this is that I support the call by Minister Phillips for the Public Sector Transformation project to be fast-tracked. When the unit was being set up, I think in 2008/9, I indicated at the time that nothing would come of it, as the way it was set up and the implementation model made it impotent. We must ensure that bureaucracy is addressed, however, as failure to do so will stunt the growth of businesses, particularly at the much needed MSME level.

Energy is another obvious area, which I have discussed a lot also, and nothing more needs to be said as this is an obvious stumbling block to the much-needed value-added exports, which of course means more foreign exchange earnings.

There are two areas which are going to be critical if we are to see sustainable growth of above three per cent. The first is the education system. I believe that Minister Thwaites has been taking the right approach to the challenges the system faces, and I also believe that the stakeholders are coming around to seeing the best way forward. What I will say is that economic growth depends on growing income levels of consumers, and the only way for us to have a growing middle class is for the workforce to become more knowledgeable/educated and hence more productive. This cannot happen in an education system with over 50 per cent of our secondary school leavers graduating without one pass at CXC level.

Finally, there needs to be greater linkages between areas such as agriculture, manufacturing, and tourism. Minister Wykeham McNeill has a Tourism Linkages council, which has successfully been making a lot of this happen, and I am optimistic that the direction it is heading in will bear fruit. So he has been quietly making some positive impact there. This is an important aspect of our growth journey.

My answer to the question, therefore, would be that Jamaica does have the potential to grow sustainably above three per cent, as we have the areas of comparative advantage that will attract investments. However, real sustainable growth will only come when we see the environment changing to become a place where people want to do business, live, and raise families, not just for the large investor, but more importantly, for the small and medium size business.

Friday, September 05, 2014

What is the role of personal responsibility in development?

The persons responsible for Mario Deane’s death must be held accountable.

THE recent Global Competitiveness Re-port has shown that Jamaica is seeing some international competi-tiveness return from the current set of policies being instituted. It has been a while since our competitiveness has improved, and this is indeed welcome news. We still need to bear in mind, though, that the report shows that both GDP and GDP per capita, in US dollars, has declined from the previous year, but that is to be expected if we are making adjustments in an economy with low productivity. After all, exchange rates are primarily a reflection of a country's relative productivity.

Even though we have seen some improvement in the competitiveness index, the economy still remains very fragile, and there is still a lot of work to do, so we must not become complacent. I know it is very difficult for the average man on the street, and the temptation will be there for persons to take advantage of the hardship and call for greater welfare, which will just put us back where we were. We have had over 50 years of welfare government, since independence, and it has not worked. So if we continue to do the same thing we cannot expect different results.

We also have seen improvement in the homicide rate, reducing by 40 per cent year on year; education seems to be making some improvement; agricultural production is up; the unemployment rate has decreased; and there seems to be a greater awareness in the public sector of the need to improve customer service. Also although I am hurt by incidents such as Mario Deane, as any well-thinking Jamaican should be, and the responsible persons must be held accountable, I am encouraged by the response from INDECOM, the security minister, police high command, and civil society. I also welcome the US pathologist and his remarks, as it brings a very objective view.

There is, however, one consideration that we must all be mindful of as persons who want to see Jamaica move forward, and that is understanding what is our personal responsibility to development. It was John F Kennedy who said to the American people in the 1960s, "Ask not what your country can do for you but what you can do for your country." Although I don't believe that we are still at the same levels of nationalism as in the 1960s, because the world is now like a global village, the message is one of personal responsibility.

In my interaction with persons over the years, on social media and other methods of communication, I have found that many of us don't understand the role of personal responsibility. For example, I have always said, and it is still true today, that many of the political party supporters are much more tribalistic in their views and utterances than the politicians. In fact I find most politicians fairly objective in their reasoning, but not so with many supporters.

I also sadly find that many Jamaicans are very pessimistic about Jamaica to the point where even when something good happens they are cynical about it. So if the homicide rate is reported as going down, then it is because World Cup was going on, or there is underreporting. Similarly when the unemployment numbers are reported as going down. I just can't imagine living with that sort of pessimism, as one must lead a very miserable life doing so.

The fact is that while we should hold our leaders, and those in authority, responsible and accountable for things that go wrong (such as Mario Deane), we must also commend them when they do good, or else they won't be encouraged to do so next time. This is why I have taken the stance to commend the efforts of TAJ, Phillips, Thwaites, Ellington, INDECOM, civil society groups, etc. Because we must encourage what we want to see happen rather than be cynical when there is no evidence to the contrary.

In mature democracies also, the reason why they develop is that citizens understand their responsibility to speak against things that are done incorrectly or unfairly. So look at the outcry about the Mario Deane case, and the results we are seeing. It is not enough to just criticise privately, as the voices of the people in democracies are extremely important for progress.

One other disturbing thing I have always noted is the need of the environmentalists to clean up after Jamaicans. I mean, why do we need an annual beach clean-up day, and each year there seems to be more garbage than the year before? I have seen situations where people are driving and just wind down their windows and throw the garbage on the street. Even as we speak about things like beach erosion and tourist harassment, we must understand that these things are not caused by government policy, but rather individual actions.

When I look at countries like the US, I recognise that these countries were built by citizens understanding their individual responsibilities to act in a way that promotes development. So I read an article in the news only this week that parents were protesting the price of lunch at the school, instead of them maybe preparing a less expensive, more nutritious lunch for their child to carry to school. Or the article that speaks to teachers and book stores working together to unnecessarily place books on the booklist.

We also have the situation where schools are strapped for cash, and unable to provide adequate education, and when they ask for a mere $20,000 per annum ($400 per week) for a child to attend school, they are told by parents with $20,000 hairstyle and hair, or while they are protesting they are on the phone the whole time, using phone credit, that they can't afford it.

One of the reasons why I have to be objective, and applaud effort and good works, is because I want to live in Jamaica and nowhere else. And if that is something we all want to do, then we have to ensure that we are objective in our analysis, to ensure the best action for the country at all times. The generations before us have failed to take this country to prosperity, and it is time for those who are currently in leadership positions to make sure that we don't mess it up further and leave our children in a further mess. If we are to do so then we must be cognisant of the role our individual actions play in economic and social development, and act and talk accordingly.