In last week’s article, entitled ‘Jumping off the fence’, we covered the story of why Keith Duncan reluctantly decided to abandon his long-standing independence to become a government senator. As perhaps with recently appointed Senator Ramon Small-Ferguson, whose contribution Duncan also mentioned in his state of the nation speech, the need to pick a side may suggest we need to think again about whether independent senators should be part of our constitutional arrangements, as occurs in Trinidad and Tobago.

However, the main part of Duncan’s speech — ‘Breaking the Low Growth Cycle’ — was not the focus of our media. Of course, the media’s apparent cynicism is unsurprising, as much of our population have now lost hope in faster growth because we have been waiting so long.

Duncan offered a comprehensive review of our performance since 2016 and the issues we need to address, of which we will only touch the surface today.

Achievements

He started with our accomplishments, such as macroeconomic stability (particularly the reduced price volatility and increased availability of foreign exchange); the strengthened institutional framework, including an independent central bank and fiscal commission; all complemented by our recently tested “disaster risk framework” for climate shocks.

In addition, Jamaica has a resilient and well-regulated or “sound” financial sector, a far cry from the days of the Financial Sector Adjustment Company (Finsac).

Crime

Greater fiscal space has supported investments in infrastructure, and notably national security, in which a $90-billion investment in Plan Secure Jamaica has reduced murders from 1,355 lives in 2016 to a year-to-date October 24 low of 431, creating the possibility of what Duncan calls a “peace dividend” as an “economic strategy”.

The work on education transformation, Duncan noted, has been ongoing for decades and is now led by Minister of Education Dana Morris Dixon, with 47 per cent of the recommendations of the Orlando Patterson report being actioned, according to the Education Transformation Oversight Committee (ETOC).

Chaired by noted economist Dr Adrian Stokes, Duncan said Stokes advised him that “we are making progress”, but “we’d like to go faster”. Describing ETOC as a “social partnership”, Duncan suggested that it is an ideal basis for a true ‘One Jamaica’ effort.

Productivity

However, as Duncan noted, macroeconomic stability is not an end in itself. Jamaica continues to face the long-standing challenge of low economic growth and productivity, and in his presentation, he highlighted our low labour productivity of approximately US$8.81 per hour, compared with a regional benchmark of around US$20.50.

Energy

Critically, Duncan argued that we have to use the opportunity of renegotiating the Jamaica Public Service (JPS) licence to bring down the cost of electricity and reach our renewables target of 50 per cent by 2030 from our current 17 per cent, arguing that we need to give Minister of Energy Daryl Vaz “all the support he may need”.

At the Private Sector Organisation of Jamaica’s (PSOJ) recent energy summit with JPS, in a brief speech, Minister Vaz commended the JPS team for its successful grid restoration following Hurricane Melissa, but outlined that his primary goal was cheaper electricity and he would not entertain proposals that do not support this goal.

In the view of energy expert Stephen Wedderburn, the summit was a great initiative, giving JPS the opportunity to outline its vision for achieving reliable, cost-effective electricity.

Wedderburn observed that JPS emphasised technology flexibility, arguing against tying the system to a single technology, in contrast with the government directive requiring all new generation to be renewable. It also focused on system planning and grid costs, arguing that while it supported customer self-generation, it was concerned that customers using the grid as a backup should pay their fair share for grid availability.

The JPS also emphasised economic and demand growth as critical drivers of lower rates, recommending that Jamaica aggressively pursues transport electrification and host data centres.

Referring specifically to the first JPS panel session, Wedderburn thought the key point was made by Bruce Levy (founder of the BMR Wind Farm), who stated that the Government’s target of 50 per cent renewable electricity by 2030 is unachievable. “It took courage to declare that directly after Minister Vaz emphasised the goal, but Mr Levy is right. There is no credible path to hit that target. It highlights a common issue in the Caribbean where governments set renewable energy targets without clear implementation plans.”

National Reconstruction and Resilience Authority

Of course, this implementation deficit is the key issue to be addressed by the National Reconstruction and Resilience Authority (NaRRA). As Duncan noted in his presentation, “We have STEM schools to build; water and irrigation; health facilities and hospitals; housing; smart cities; relocation of informal vulnerable communities; port and logistics investments; airports and aviation with Vernamfield; and energy and digital.”

He expressed confidence that NaRRA will become “the implementation machine in all of those areas”, quoting Prime Minister Andrew Holness’s position that, “It will function as a single point of national coordination, eliminating the fragmentation and delay that have too often slowed us down.”

Duncan, despite being the past chair of the Economic Programme Oversight Committee (EPOC), stated that he would support the suspension of our fiscal rules given the US $6.7 billion envelope of funding available to invest in these various areas.

He expressed confidence in the Jamaica Reconstruction and Resilience Oversight Committee (JAMRROC) to provide the necessary oversight to deliver the economic and social returns to break us out of our current 1-2 per cent economic growth.

The wider goals and planned “social” metrics of this ambitious agenda seem tailor-made for the sustainability framework outlined at the United Nations (UN)-supported Global Compact Network Caribbean event held yesterday at Kingston’s S Hotel chaired by CorpCare’s Ali Matalon. She started by noting that after Jamaica’s Melissa experience, she had “learned what partnership looks like when it matters most”.

In his own speech, UN resident coordinator for the multi-country office in Jamaica, Dennis Zulu, noted that the UN had to shift its agenda in response to Melissa (the role of its World Food Programme is particularly noteworthy), but now needed to refocus on its pre-Melissa agenda.

A wider approach is particularly relevant to Jamaica’s challenges as most of these reflect historically interconnected constraints that need a holistic solution if we are to improve Jamaica’s growth potential. More anon.

Keith Collister