A STATE OF RIGHT

Jamaica 2018 | FINANCE | INTERVIEW

TBY talks to Audley Shaw, Minister of Finance and the Public Service, on the importance of business process outsourcing, introducing greenhouse technology to small farmers, and democratizing finance.

Audley Shaw,
BIOGRAPHY
Audley Shaw served as General Secretary of the Jamaica Labour Party (JLP) and has been a Deputy Leader of the JLP since 1999. In 2007, he was appointed Minister of Finance and the Public Service and later assumed the portfolio of planning. During his tenure, he introduced a fiscal responsibility framework for Jamaica that includes legislative criteria to promote accountability and transparency in the financial affairs of the country.

What is the role of your ministry in dealing with the issue of unemployment?

Unemployment is one of the most persistent problems in Jamaica. Part of it is a structural issue that relates to inadequate training for many of our young people who reach working age without being fully trained. There are a number of things we have to do; we need to ramp up training and are doing so with the Human Employment And Resource Training (HEART) program to train more young people who have gone through the high school system but dropped out without any formal certification. We are aggressively working on building more investment; however, with investment comes greater demand for trained workers, and we have to ensure we attract investment while having trained workers. A great example of that is the business process outsourcing (BPO) sector; Jamaica is the third-largest English speaking country in the Western hemisphere behind only the US and Canada even though we have about 2.8 million people. That is a large selling point for BPO and one for which we must ramp up the training of more young people. A few years ago, we had about 5,000 people employed in BPO, while today the figure is now 25,000. We are targeting 50,000 in two years and can reach 100,000 in five.

Are you working to overcome the inconsistencies of Jamaican farming?

We are working with farmers' groups that have come together and organized themselves. One example of a great program we are about to significantly expand is the Rural Economic Development Initiative (REDI) with the World Bank, where we introduce greenhouse technology so farmers can produce higher volumes in controlled climatic conditions. This could quadruple production in volume and quality. We have completed REDI 1 and are now applying to the World Bank to get REDI 2 going, a USD40 million project to get more small farmers across Jamaica involved. These projects are beginning to bear fruit, which is why unemployment has fallen from 12.9% in 2016 to 11.3% in 2017 in an environment where the actual labor force is growing, a great sign.

How do you encourage the private sector to provide more accessible financial services at better rates?

We have to push the private sector because some of our commercial banking institutions have become too comfortable with high interest rates. We have to bring in mechanisms and have two that are currently supported by the Inter-American Development Bank (IDB) and World Bank called partial credit guarantees. The idea is to sell off credit to SMEs that are compromised with collateral but have solid business ideas. We provide partial credit guarantees that can give them a chance to get a loan at a reasonable interest rate. We have also launched a financial inclusion strategy at the Bank of Jamaica aimed at creating an atmosphere of financial literacy directed at more formal economies. Currently, 40% of our economy is informal, and we need to become more formal. The more formal we get, the smoother we will be able to integrate into the global economy.

International institutions have highlighted the need for public sector reform in Jamaica. How do you plan to increase the efficiency of public services?

We are undergoing a fairly ambitious program of public sector reform and transformation, among which is building greater efficiency, re-training government workers, and outsourcing some of the activities that should be in the private sector. The wage-to-GDP ratio is too high in the public sector, and many activities should rightly be in the private sector. We have targeted 84 companies for closure, merger, and divestment into the private sector or put them back into central government. This is across the entire government; however, the first four I have targeted in my ministry are the Caymanas Race Track, the Jamaica Racing Commission to regulate horse racing, Betting Gaming and Lotteries Commission, which regulates overall gaming, and the Casino Gaming Commission.