A little over 10 years ago I wrote an article entitled ‘Dreams of my father’ for the Jamaica Observer. The article noted that having been a member of several bank boards for most of his career, my father believed Jamaica’s banks were obsessed with lending against real estate collateral when what they should have been lending against was cash flow. As a consequence, he argued, “Banks never lent money to people who need it.”

Consequently, one of his favourite sayings was that, “What Jamaica needs is not more debt, but more equity.” In pursuit of this goal, he was one of the founders of the Trafalgar Development Bank (TDB) in early 1984. The TDB was the predecessor to a number of venture capital funds that came after (effectively one per decade), the history of which is outlined in my 2007 paper ‘A new approach to development banking in Jamaica’.

The paper forecast the critical role of the Development Bank of Jamaica (which partnered with the Inter-American Development Bank) in creating “a financial market that funds entrepreneurs” over the last 15 years.

Last week Thursday at the Pegasus, just before Father’s Day, the Development Bank of Jamaica (DBJ) took another concrete step in this long road, as it helped organise an angel investor pitch for three entrepreneurs — two Jamaican and one Trinidadian — working with a team from Canada. The Canadian team, catalysed by Nobellum (a business accelerator) founder Melissa Ellis, comprised largely Jamaicans who had moved to Canada and first-generation Canadians of Jamaican descent reconnecting with the land of their fathers. The Canadian team also included Export Development Canada (EDC), BKR Capital, and the Black Opportunity Fund (Jamaican CEO Craig Wellington).

Representatives of the African Union also attended as part of an associated CEI Global initiative (an innovation exchange dedicated to accelerating global innovation in trade and investment between Canada, the Caribbean, and Africa).

In addition to the DBJ, the team connected with Jamaica Technology and Digital Alliance (the former Jamaica Computer Society) and the Jamaica Business Development Corporation in its search for potential Jamaican entrepreneurial partners.

On the same evening, at the same place, the Jamaica Chamber of Commerce (JCC) held its awards function under a very similar theme, ‘Driving productivity, championing equity, inspiring entrepreneurship’. JCC President Phillip Ramson emphasised that in today’s environment of global economic uncertainty, there was a strong need for a continuous growth mindset that is inclusive, strategic, and future-orientated. He argued that with the current pressures on the Caribbean Basin Economic Recovery Act, Jamaican businesses need to diversify into new markets, new suppliers, and new pathways to growth, including the markets of Central and South America, Africa, and Asia. Encouragingly, he observed, “Across Jamaica there are countless men and women who, even now, are imagining, planning, and launching new ventures inspired by possibility, even in the face of ambiguity.”

Ramson cautioned that despite Jamaica’s strong macroeconomic numbers, growth in gross domestic product has eluded us, and our good macroeconomic performance cannot be taken for granted.

The latter point was echoed by our former Finance Minister Dr Nigel Clarke in his Demas lecture for the 55th annual general meeting of the Caribbean Development Bank in Brazil last week. Now an International Monetary Fund (IMF) first vice-president, Dr Clarke observed that recent IMF analysis finds that most Caribbean countries had significantly slower growth over the last two decades — 2001 to 2023 — when compared with the previous two decades, and that for tourism-dependent Caribbean economies, like Jamaica, the IMF estimates a decline in potential growth.

He notes, “This presents the Caribbean with an aggravated challenge to reverse the trend of slower growth at a time when global growth is also declining. That is, the challenge is to reverse the trend of slower growth when the wind in the proverbial sail is weaker and has changed direction.”

Clarke is right. In this regard, future small business development in Jamaica should be driven by increasing private sector connectivity, particularly with our professional and entrepreneurial Diaspora globally, rather than through the Government, but the latter can have a critical, catalysing role.

In my father’s analysis of TDB, which formed the core of my paper, he observed that TDB experienced similar problems to those experienced by government entities. Borrowers sought cheaper funds than those available from the commercial banks for projects the banks considered too risky to finance. As a former member of TDB’s Finance and Credit Committee, he noted that, “Such projects were often the brainchild of the entrepreneur who wanted to keep for himself all the potential gains of the project. On the other hand, he was either unwilling or unable to put up the capital to seed the project…In short, the entrepreneur’s goal was to get TDB to take all the risk that should [be] borne by the company’s equity without TDB having any of that equity. Thus, TDB would be limited to a low rate of interest on its development loans.” But we now have an opportunity to complete the venture capital ecosystem.

In the US, where capital is plentiful, Silicon Valley venture capital firms are able to make many bets and are thus able to take more of a portfolio approach. In the Caribbean, where capital is scarcer and failure less accepted, more of a “shepherding” style, with more support for the entrepreneur, seems better suited. A key requirement, however, is access to bigger markets, which is where the models of entities such as Nobellum or Afrexim Bank could come in.

As a retired banker recently put it to me, Jamaica suffers not just an implementation deficit, but an “execution deficiency syndrome”. If we want to accelerate the progress in our entrepreneurial ecosystem, the time to revamp the venture capital laws and change the allowable investments in The Pensions Act is now.

We need to include our Diaspora in this conversation, which would be a true “fore” Father’s Day present for them also.

Phillip Ramson

Keith Collister