Last week Tuesday, at the Pension Industry Association of Jamaica’s (PIAJ) annual luncheon, Prime Minister Dr Andrew Holness not only gave an excellent speech on the industry but made news by announcing that, “The Government will implement pension auto-enrolment.” It is notable that his previous sentence was, “The issue is worth serious consideration,” no doubt reflecting his prepared remarks.

He appeared to ad-lib, “I was convinced of this while speaking with your president. She is very passionate about it, and she gave me the thesis behind it while I was having lunch,” adding that PIAJ President Sanya Goffe had cited the work of behavioural economists as justification.

For those unfamiliar with the term, auto-enrolment means that workers are automatically enrolled in a pension plan and have to opt out if they don’t want to be in one, as opposed to the current situation in which they have to opt in. Of course, responsible employers typically make it a condition of employment for permanent staff, but it is not currently a legal requirement.

This was also a noteworthy example of the prime minister making a decision on the fly in response to good arguments. The last example of which I directly recall is former Prime Minister Bruce Golding, who after listening to Professor Emeritus Donald Harris at a Jamaica Chamber of Commerce economic conference in 2009 appeared to revise his entire speech and base it around the Harris presentation on the need to move Jamaica away from being a debt-propelled economy.

It is noteworthy, however, that it took two domestic debt exchanges in 2010 and 2013, both involving direct sacrifices by our pension funds in giving up higher interest rate instruments for lower ones (for further details see my Jamaica Observer articles leaning into a Godfather analogy — ‘An offer we can’t refuse part 1’ and ‘An offer we can’t refuse part 2’) as well as the two associated International Monetary Fund (IMF) programmes, the latter included the famous Economic Programme Oversight Committee (EPOC), to definitively break Jamaica from what Harris called a debt-driven economic model.

Harris was then involved, as the senior consultant, in the Planning Institute of Jamaica’s Growth Inducement Strategy, published in 2012, and for which a progress review was done in 2017. As an aside, we are now overdue a full update on our country’s growth strategy since the world has changed dramatically, both geopolitically (including the rise of China) and due to the ongoing revolution in artificial intelligence (AI) since 2022.

In previous presentations, the prime minister has correctly mentioned the need for a revolution in productivity. A core piece of this revolution needs to be getting the just-passed National Reconstruction and Resilience Authority (NaRRA) right.

As mentioned in the Observer editorial last week Wednesday, “NaRRA requires a revolution to succeed…[and] is intended not only to accelerate post-Hurricane Melissa recovery but to undertake the far more consequential task of reshaping key elements of Jamaica’s public service into a modern model of governance.”

The editorial noted that at its core, NaRRA “is designed to fast-track the identification, design, and execution of high-priority projects critical to Jamaica’s competitiveness in an increasingly complex global landscape of trade, finance, and geopolitics”.

It added, however, that, done right, it is not “a substitute for existing ministries. Rather, it proposes a new architecture — one that redefines how ministries collaborate with each other and function in service of national development”.

Finally, it observed, “NaRRA is thus called to act as both catalyst and exemplar. Its unusual degree of authority and independence must be leveraged to forge new modes of cooperation. In doing so, it must reconcile urgency with the enduring imperatives of transparency, consultation, and efficiency.”

Roughly half of the unprecedented US$6.7-billion financing package from multilateral development banks is meant to be for the private sector in Jamaica, and as the editorial critically notes, “These institutions will not alter their procurement frameworks to accommodate faster execution.”

So accessing this historic opportunity “calls for nothing short of a transformation — arguably a quiet revolution — within the public service”, as, based on both history and its regional ownership, the only multilateral likely to show funding flexibility would be the Development Bank of Latin America and the Caribbean.

This absolutely critical access-to-funding issue potentially makes the “regulations” for the NaRRA Act as or more important than the main act itself, because it will drive private sector access to funding. The best current example of this successful infrastructure asset “sweet spot” for pension funds is TransJamaican Highway Limited, up nearly five-fold since its listing, just as the COVID-19 outbreak began, at $1.41.

Just under a month ago, on April 16, Jefferies Caribbean “Bond King” Gregory Fisher thoughtfully brought his long-time colleague Caribbean “Bond Czar” Adam Groothius (for decades the key New York trader in Jamaica’s Eurobonds) to Kingston to prepare the local bond market players for the repayment of one-third of the principal of Jamaica’s 2028 Eurobonds, which occurred at the end of April.

The so-called guaranteed Jamaica bid, whereby local players buy our Jamaican Eurobonds to back the US-dollar repurchase agreements sold to retail investors, has long been one of the key international marketing aspects of Jamaica’s ability to raise money in the decades prior to 2009 when Jamaica’s debt would otherwise have been deemed unsustainable.

It is now beyond time, however, for our domestic capital market to be reorientated towards local productive assets, as the prime minister observed. The correct NaRRA regulations and project preparation facilities (such as provided by the Inter-American Development Bank’s One Caribbean initiative) would allow local capital to be married with global smart equity capital and multilateral debt financing. The possibility also exists to look at more socially orientated projects using Diaspora capital through expanding the social segment of our Jamaica Stock Exchange.

Making all this work will require trust, which is the core of both pension funds and venture capitals. The best approach to achieve this trust would be to immediately revive our social partnership initiative focused on a problem-solving, inclusive feedback process to drive the collaboration needed to rebuild Jamaica after Melissa.

Keith Collister