JAMAICAN DIASPORA SHOULD SUPPORT A THIRD PARTY TO ENSURE GOVERNANCE CONDITIONALITY

Despite playing a significant role in stabilising the foreign exchange plight of the 1970’s and helping to add value to our financial institution including expanding the Bank of Jamaica Net International Reserve (NIR), Direct Remittance Investment (DRI) as in the case of Jamaica creates difficulty for significant social and economic reform and changes to occur.

“DRI pose a moral hazard problem by reducing the political will to enact policy reform since it allows for the insulation of the public against adverse economic downturns and by protecting them from government’s bad economic decisions thereby reducing the incentive to pressure the government to implement reforms to facilitate good governance .”

According to World Bank estimates in 2013, “a quarter of Jamaicans in the Diaspora have investable wealth or annual earnings of US$100,000 or more. More than 70 per cent are interested in investing in start-ups and small and medium-sized enterprises, and 63 per cent are also interested in Diaspora bonds.” However, they have made it clear to the government that loyalty to country is not enough to get their investments, especially in a Diaspora Bond. Jamaicans overseas need “Governance Conditionality” beyond Direct Remittance Investments (DRI) to protect their investments in other areas of the economy from economic mismanagement and government corruption.

As it relates to IMF, World Bank, and China Exim Bank their Policy Conditionality as the basis for investment loans has failed to stem the tide of bad governance and corruption in Jamaica. “Whilst policy conditionality is clearly disastrous, I think there is some role for what I’d call governance conditionality, where we’re not trying to get a government to do something that is against the …The wishes of that society. We’re just trying to get a government to enforce its own laws. In no society is corruption legal, but many societies, many public officials are corrupt. So it’s perfectly reasonable for aid to say a condition for receiving aid is that you build effective checks against the looting of public money by public officials.”- Sir Paul Collier, Professor of Economics and Public Policy at the Blavatnik School of Government at the University of Oxford.

The failure of the public also to pressure successive governments in Jamaica to enact strong anti-corruption measures to promote economic growth and development is evident from the huge role remittance based personal consumption plays in our Gross Domestic Product (GDP). Most Jamaican although poor can afford basic food and shelter especially in urban areas. “Happy consumers do not protest”.

While Direct Remittance Investment (DRI) accounted for approximately sixteen (16 %) percent of our GDP the multiplier effects from personal consumption is estimated at some 74% of GDP, significantly reducing the poverty rate from forty (40%) percent a decade ago to sixteen (16%) today. Yet we have not seen any significant social or economic policy shift to put an end to corruption in order to encourage growth and development through Direct Foreign Investments (DFI) in areas of energy, infrastructure, and water resources management.

For instance, without DRI “the typical evaluation of an economy’s ability to sustain its debt level relies solely on a comparison of the growth in the country’s domestic income vis-à-vis the interest rate on its debt”. The exchange rate effect of Direct Remittance Investment, therefore, serves as a potential channel for offsetting the upward adjustment in the debt stock from a depreciation of the domestic currency but despite this tendency, we continue to see covert currency manipulation to deeply devalue the Jamaican dollar to encourage tourism investments which in turn creates enormous development pressures leading to underdevelopment.

The policy of government not to allow the Jamaican Dollar to increase in value with the increased flow of Direct Remittance Investment represents a continuous transfer of country’s wealth to the benefit of the rich instead of the poor through the transfer of wealth to private investors by adding the cost onto our national debt. If Direct Remittance Investment is being used to enrich special interest groups at the expense of the poor then it is the duty of the Jamaican Diaspora to demand that the question of Diaspora Voting be put to a referendum for the people to decide the extent of their relationship with Diaspora Jamaicans.

Diaspora voting is therefore to ensure a form of “Governance Conditionality” necessary to unlocking the potential of the Jamaican Diaspora to transform Jamaican into a prosperous and modern economy. Empowering the Jamaican Diaspora will break the stranglehold of special interest groups on the political and economic system who are refusing to support Diaspora Voting Rights to demand greater transparency, good governance, and prosperity for all so we don’t have to work so hard to send remittance home.

JAMAICAN DIASPORA SHOULD SUPPORT A THIRD PARTY LED BY GREG CHRISTIE TO ENSURE GOVERNANCE CONDITIONALITY

by Silbert Barrett