Official Launch of Amber UTECH
Keynote Address
By
The Most Honourable Andrew Holness ON, PC, MP
Prime Minister of Jamaica
At the
Official Launch of Amber UTECH
On
March 7, 2024
—————————————————————————————-
I was just thinking, what kind of speech should I give, should I attack Howard, or should I just be graceful like Chris? But let me first of all thank the Master of Ceremonies for her masterful handling of the event so far.
And acknowledge our Minister of Industry and Commerce, Senator Aubyn Hill.
Mr Aldrick McNab, our Pro-Chancellor of the University of Technology.
The very impressive Dr Kevin Brown, the new President of the University of Technology, with so much promise for the institution.
Allow me also to acknowledge the work of the newly appointed Ambassador Dushyant Savadia, Founder and CEO of the Amber Group.
And let me acknowledge all of you who are here. Thanks for coming, and thanks for being part of the audience. And as I sat and listened to the preaching, I decided that I would not deliver us another sermon, so I’ll make a few points.
I’m very pleased to be here today at this Amber UTech Launchpad event. This initiative is a critical one, particularly at this time in Jamaica. Entrepreneurship is an essential driver of economic growth and prosperity. It is the driver of innovation. It is what drives us to take advantage of opportunities. It hastens structural changes in the economy. It attracts new resources towards new products and services while reallocating services that are becoming obsolete.
The entrepreneur is therefore an important indispensable economic agent. So, I would like you to think of it in this way, most of us want to get a job and a good salary, we just want to be paid. We will go to work, and we will do what we are told, and we will try to do it to the best of our ability but what happens when a company gets a proposition to say, for example, we can now take pictures in a digital format and that company says, really, why would anybody do that? The greatest thing for film is the disposable camera, that is where the innovation is. What happens when resources shift from film to digital media? What happens to that business and those employees? But let’s look at the reverse. What happens to the company that embraces the innovation? What happens to the people who get employed in that? Of course, everyone here would know the story of what, what happened to one of our world-renowned companies that invested heavily in film and turned down the opportunity, Kodak. It’s the entrepreneur who did that. So, the entrepreneur is a very important agent in economic development.
We went through a period of time in Jamaica where entrepreneurship died. We went through a period of time when there was no motivation to be an entrepreneur. You know, there was a period of time in Jamaica where no one needed to take risks. There was a period of time where it was very hard to take risks, the business environment was very volatile. It is good in a sense that we have moved past that to the point where our population has forgotten it. The conversation has moved on to the point where we don’t recall that period of time to where when the budget is being read, a question can be asked about AI.
I have sat in the parliament for 27 years and during those difficult times no one was asking about innovation and new technology. They were asking about why we are facing new taxes. So whilst I always pay attention to my boss, Howard Mitchell, and his sometimes pertinent criticisms, I think the statements should be balanced by what our realities and our history and the context in which we exist. It is important in a democracy to have very strong opinion leaders and persons who are in positions of authority must listen very carefully to the critiques, especially ones that are constructive, but they also have to always connect the dots of history so that no one opinion leader dominates and influences policy all over the place.
And I do pay close attention, always make mental notes if not notes physically about some of the things that are said and need to be done, but as Howard actually said, we can’t do everything in 12 months. Not everything can be done in one budget cycle. There is a period of time for development, a period of time for execution, and a period of time for which results happen, and there is usually lags in between.
We’ve gone through an important event in our democracy and what you see happening generally is that people are expecting results and the conversation is not that they’re unreasonable, but the conversation is that, look, we have been suffering for a very long time. And governments, as Howard has always tried to push, and Chris, we have to develop our policy at greater speed and implement at greater speed and get results much faster than we are getting. That’s the truth. That’s the reality.
So, Howard, I started the year with a mantra focusing on two things, one was peace, and the other was productivity and I kept repeating that Jamaica must focus now on peace and productivity; those are two critical things. One of the greatest challenges I face, we’ve overcome the fiscal issues as you have said. We’re not short of ideas. We have all the ideas. We have all the ideas in government and all the ideas in the opposition and all the ideas on the Internet, all the ideas on social media; we have all the ideas. The challenge I face is how to get the public bureaucracy to increase its speed of delivery. That is the greatest challenge that the administration faces now.
The country is going through a series of simultaneous transformations in institutions. The public may not see the big picture, the arrangement of the architecture of transformation because the results have not yet started to come, but I’m here to tell you that the transformations are becoming entrenched, they are developing pace, and results will come but when you put that beside 50 years of suffering, people do get frustrated. When you put that beside some people seeming to be benefiting, and I am not benefiting, that leads to a kind of another set of inequity, unfairness, and frustration.
So, thank you, Dushyant, for allowing me to use this platform to kind of set some context to explain to our listening audience what is happening in the country. Sometimes a bit of history does help to place things in context, and I always consider myself to be young not recognizing that there is a generation much younger than I am who have no clue, absolutely no clue of what happened in 1983, no clue of what happened in the 90s.
You know, between January 1983 and March 2010, that’s 27 years. The Bank of Jamaica three-month treasury bill yield was in double digits, meaning that it was higher than 10%. The worst period of these very high interest rates, which was a policy, was the period between June 1990 and August 1999 when the T-Bill yield was in excess of 20 per cent for the entire period and it went as high as 50 per cent in May 1992.
Now, some people may not know what a T-Bill is and so forth and I’m not going to go into that because that’s not the essence of what I’m saying. The essence of what I’m saying is, if you were a bank, if you were an investment house, if you were a securities dealer, if you were in any way minded to do investments, you did not have to think up of a new product, a new app; you didn’t have to innovate. All you needed to do was to take the little money that you have, and they say invest, but that’s not what they were doing. That’s not investing, precisely. They just lend it to the government or to be more, they saved, put it that way. And much of the businesses that we have today that claim to be financial gurus to be some wizard of economic innovation and ingenuity, that’s what they came out of including those who pontificate today about how an economy should be run and how they have a better perspective on how an economy must be run. I just thought I would put that into context so the next time you speak Howard, you can speak on that and speak on it powerfully as you speak on other things.
Jamaica had an inflation rate of 77 per cent in one year. We’re quarrelling about just after the pandemic we went up as high as 12 per cent and we’re now at about 5, there about 6 per cent; we’re hovering somewhere there. I’m looking at the audience at the young people there who would have been around in the 1990s or would not have been born in 1992, 1993, would know nothing about this, but that is where we’re coming from. Seventy-seven per cent inflation in one year under the government of the people who would want to tell this administration how to manage inflation.
The government itself during that period of time was borrowing and crowding out private sector investment. Essentially what it meant was that the private sector couldn’t get funds at a lower manageable rate because they had to be competing with the government that was just born. That conversation has just evaporated. We don’t remember those days. The government itself was borrowing at rates of 20 to 50 percent and that essentially became the base rate at which the banks would lend the private sector we were literally stifling entrepreneurs and then we had the fatal blow of FINSAC. This was a kind of final blow that killed off entrepreneurism, killed off innovation in Jamaica. So, for those who weren’t born in the 1990s and for those who are wedded to that period of the 1990s and for those who are uncomfortable by what I’m saying, it is the reality that we have to confront when we speak about our situation today.
So, I raise it because I want to make a connection with what we are doing here today. For us to move to the next level of Jamaican development, we have to treat with productivity so I’m supporting your point, Howard so we’re not at odds about this issue of productivity.
As a country, all of us made a sacrifice to solve the fiscal issue, that’s really the macro issue. The macro issue gives you the platform of stability. Once you solve the fiscal issue, then you don’t have to worry about whether or not you’re going to have to face new taxes. The risk of new taxes always exists if exogenous shocks happen but in a well-planned fiscal ecosystem, you put in place buffers so that you can withstand exogenous shocks. So, we were able to withstand a shock such as COVID and we didn’t need to put on an additional tax.
The problem with why we have to keep reminding people about the importance of maintaining the fiscal discipline is that the indiscipline of expenditure driven by political expediency is always there. Politicians are always going to be tempted to win over the electorate by making expenditure promises that will end up ultimately, inevitably in new taxes. Why? Because the electorate does not always make the connection that every new dollar of expenditure, if it does not come from economic growth and expansion, it must come from borrowing or new taxes. And if it comes from borrowing, inevitably it is going to come from new taxes. I wish that the Jamaican electorate would not fall for this. It is time that our electorate makes the connection that any increase we’re going to have in the government’s revenues, in what we are able to spend, it must now come from productivity. Each and every one of us in this room and everyone listening on social media and wherever this is going to be repeated, all the wishes that we have, all the desires that we have, all our ambitions, it comes from what we are able to produce; that’s it.
I am committed and I’ve committed my administration to run the economy in such a way that we will never become a burden on you, that’s number one. And secondly, we’re running the economy in such a way that we will care for the most vulnerable, for the poor. We will also run the economy in such a way that we will create the opportunities for persons who are these special agents in the economy, the entrepreneurs.
To come up on a platform, I don’t know if you were listening very carefully, so Dushyant came and explained what he’s going to do and Chris said, I’ve been doing that. And I said, I’m happy for that. I’m happy for that because more companies need to start doing this. This is such an important part of increasing, not just productivity, but just increasing our general output. We need new businesses in our economy and how do new businesses arise?
Firstly, let’s make sure there’s a good fiscal environment. Ensure businesspeople don’t have to worry about taxes, which are or could be unpredictable. You keep an interest rate policy that is stable. There’s a stable outlook for inflation. We have rules based in how we manage the fiscal side of things, and you can have confidence that government will manage expenditures to not create the pressures for new taxes. Once you’ve solved that, then you’re going to see a lot of people come up but then growth is not a macroeconomic endeavor only. It is really a microeconomic pursuit. You literally have to go firm by firm by firm by firm and so this is part of it. Government has developed a very comprehensive growth driving policy.
In the DBJ, we have the BIGEE Programme, and that programme, I was very pleased to launch an app, a new business process for a 100-year-old company in Mandeville last week and so far, the BIGEE Programme has assisted over 1,335 MSMEs in developing their business. It is a US $25 million project financed by the Inter-American Development Bank and executed by the Development Bank of Jamaica. In 2021, based upon the performance of the programme, the European Union awarded a non-reimbursable grant of 8.2 million dollars to support the initiative.
The objective of BIGEE is to promote sustainable and robust growth among startups and micro, small, and medium enterprises in Jamaica. Specifically, its objectives are to promote innovation and productivity among established MSMEs, with a high growth potential to promote sustainable and disruptive growth in scale of the startups and to create a sustainable pipeline of high growth startups and a strong supporting ecosystem for entrepreneurship.
The BIGEE Programme has since its startup in September 2020, invested US 4.97 million dollars in the MSME sector and that includes supporting projects, patents, and improving the quality of business management, improving their scalability, improving their business processes, and including the integration of technology into business. So, we are literally working to create new businesses in Jamaica.
Howard made a profound point about there are companies in Jamaica that are doing well and you called the name of a few of them, I won’t call any names, but they are companies that are doing very well. They’re growing and if you talk to the businesspeople there are temporal issues with the outlook, but the long-term outlook is that they can invest, and they can expand but we don’t have enough businesses in Jamaica. We believe that the businesses that we have, they’re great, we need to double the number of businesses that we have. We need to double the number of businesses and we need to double them in size.
What I’m trying to do is to shock the country out of its slumber because there’s still this lag from the 90s and that psychological impact is not just a devastation in the business, but it is a devastation in the enterprising culture, and we are naturally enterprising people. We have become afraid to fail in business. In other words, the view is we can’t afford to fail in business, so no one takes any risk, and therefore there is no innovation. And because there is no innovation, there is nothing new and so this critical agent that should be the catalyst of the expansion of the economy, that critical agent is stifled.
So the question therefore is, with all fiscal constraints, can government provide venture capital? Can the DBJ become a venture capitalist bank? And the answer is, not yet. We still have to manage government resources to be very careful but how do we leverage government resources with private sector. They don’t have to face the fiscal issues that we do so you might be wondering, why am I standing here promoting this? Precisely because government has to take its resources and leverage it with the private sector so that we can build this ecosystem of venture capital. Where we are going to put our money is to support, as I said earlier, the integration of technology in business processes, the protection of patents; those kinds of things where, if you go to parliament and somebody chooses to say, why you did this and make a political issue of it, it’s defensible.
But if a private sector person decides, I’m going to put down, 50 million dollars on an idea, you don’t have to come to parliament and face the criticism if it fails. If the government put down the money and it became a unicorn, nobody would give the government any praise. They would not even remember that the government put 50 million in there but let it fail and therefore governments can’t take that risk. Not yet, but we pair with private sector. The private sector can take that risk. Ninety per cent of startups fail and I believe it’s probably about 1,300 startups have reached unicorn status, meaning they have a market value of a billion dollars of the millions of startups that happen each year.
We only need one to be successful, that’s the truth and therefore, we have to invest in a pool, in a number. The way in which Ambassador Savadia is going about it, is to try and democratize it to open it to the public, to have public participation, to increase the kind of buzz around it and who knows, maybe that will pull people from all over who have excellent ideas to come in. There is no loss there. Once you go through that programme, you are going to be trained, you’re going to get exposure. You say the shark tank idea. I was reading before I came here, there’s a company that’s a multibillion-dollar company now, and they went to pitch on the shark tank and the idea was to have a doorbell with a digital footprint so you could stay from anywhere in the world, press the doorbell, and it comes up on your phone and they ran him out of the room. They didn’t take the idea. That company is Ring. Eventually Amazon ended up buying it, a multi-billion-dollar company so there’s no loser.
Even if you don’t get sponsorship, the exposure of the idea and that’s what we want. We want to get our young people feeling now that they can have the freedom to innovate, the freedom to think, the freedom to put ideas together and have an economy that will support it, meaning it will bring resources to ideas. So, the role of government is the market maker, that’s why I’m here. That’s what I’m doing. That’s what the Ministry of Economic Growth and Job Creation does, we make the market. We bring the people with ideas, and we bring the people with resources together, put them in the same room, and we step aside and allow the magic to happen and that’s essentially what we have done with this Launchpad.
Again, we did it for training with the Amber Heart Academy where we are now training people for coding developing a coding ecosystem in Jamaica. Now, an important point was mentioned about our labour shortage because labour is now a binding constraint on growth in the country so if we were to double the number of businesses we have, do we have the labour? The participation rate in Jamaica is about 70.5%. The participation rate is essentially the percentage of the labour force that is relative to the entire population.
In the United States, it’s something like, on average, maybe, 62.5%. In Trinidad, it’s about 60 or 62%. In Singapore, it’s 70% so our labour participation rate is not off. In fact, it’s very high. So already a large number of our working age population is participating in the labour force.
Remember, we’re still going to need people to take care of mummy at home. You’re still going to have people who, for varying reasons, decide not to participate in the labour force. Jamaica is now at this very unique point in its development trajectory where we have to consider ourselves an environment for doing business. That’s what we should consider ourselves. We are an environment where it’s good to do business like Dubai or Singapore where people choose to come and do business, that’s where we’re heading to. Just think for a moment, if we got rid of crime, as we say, we wouldn’t have hands to receive the businesses here and that is where we’re building our economy. That’s where we want to go, and I think we are on a very good runway to achieve that, but I close where I started.
We have to improve our productivity. I share some statistics with you and the next time you speak, Howard, you might be inclined to use these statistics. I tell you, it’s better than being a spokesman for the Opposition.
In 2021, Jamaica’s wage bill was 241.75 billion dollars, that was our wage bill. In 2022, the wage bill increased to 338.13 billion dollars, it’s a 39 per cent increase. In 2023/ 2024 fiscal year, the wage bill increased to 404 billion dollars, that’s an increase of 66 billion dollars, a 19 percent increase over the previous year and a projected wage bill for this fiscal year is 442 billion dollars, an increase of $37.5 billion dollars. So, between 2021/ 2022 fiscal year to now, that’s 200 billion dollars increase in the wage bill. Cumulatively the wage bill has increased, this is since the restructuring the compensation review by 82.9%.
Now, let’s place that in context with everything that is said in the public domain. If you listen to just what is said in the public domain, it is as if this has never happened, that 200 billion is not now in the pockets of public sector workers.
I am not saying that this solves the problem of low wages, which we have traditionally suffered from. I am not saying that this is what is the limit that you should get. I am not saying that this solves the anomalies that exist but the context of the conversation has to incorporate that a massive shift in the fiscal arrangement of the budget has been done in favour of labour.
I will be the first to tell you that more must be done and the government commits to doing more and will do more but there is a parallel conversation that must happen. The only way to do more without collapsing the fiscal stability is to increase productivity. In the conversation about more, please talk about increased productivity.
Let me say this, the history of wage, and by the way no other administration has given this kind of wage increase. None. There’s none. The history of Jamaica’s wage increases is that the government gives the wage increase and then takes it back with a wage freeze. In fact, almost every time there is a wage increase of any massive significant jump, a year or so after there is a wage freeze because the wage increase also increases the fiscal pressures. This is the first time that we’ve been able to plan it properly so that we can even present the budget without the pressures, but we must all as Jamaicans be careful how we exert pressure because it will collapse our fiscal ecosystem and governments have to be strong to manage this.
Not to be disrespectful. Not to appear not to understand what our workers are saying but we have to be brave enough to raise the issue with our workers to say, listen, we want to do more, and we have demonstrated that we want to do more by virtue of what we have done, but to do more we have to grow the economy and our workers are such a critical part particularly our public sector workers, you are essential, it can’t happen without you growing the economy.
So, I just thought I would make these points and I hope that I have enlisted the support of Howard Mitchell, my greatest critic in reinforcing these points and I hope that I was not too sombre in my presentation.
You have been a lovely audience. Thank you so much for listening.