Jamaican businesses

At a time the global economy was relatively stable, Jamaica spiraled into a serious crisis that led to the collapse of over 44,000 businesses. With no external pressure or crisis, Jamaica’s economy experienced a severe shock in the 1980s that could have been managed by a knowledgeable economic team. But a combination of politicisation of policy options and incompetence made a bad situation dire.

In her book: Too Black to Succeed – the FINSAC Experience, Valerie C. Dixon chronicles the role of the principal characters and the failure of the political leadership.

In the wake of the failed exchange control and liberalisation of the economy in the 1980s, the government responded to the large scale collapse of businesses, most of which buckled under unsustainable debts, through the state intervention in the form of a special purpose vehicle – FINSAC (Financial Sector Adjustment Company).

Unfortunately, FINSAC was not only too little too late, but came with a warped perception of the distressed business community.

“We were presented to the usual unsuspecting ordinary Jamaicans as greedy people who did not know how to manage our businesses and who were now looking for bailouts and handouts from the government to save businesses that were not viable”, Dixon quoted Garfield Higgins, an educator, journalist and advisor to the Minister of Youth and Information as saying the misadventure that FINSAC turned out to be.

Omar Davies, the longest-serving Minister of Finance from 1993 to 2007 was expressly ousted as the architect of the policy measures that ultimately upended Jamaica’s real sector. His wholesale adoption of International Monetary Fund (IMF) inspired monetary charges and the high-interest rate introduced crippled local entrepreneurship in the 19990s.

Once exchange controls were lifted in 1991, without any arrangements or plans to contain domestic inflation or reserves or regulations to prevent rapid depreciation of the currency, the business landscape in Jamaica was radically destabilised.

“Thousands of honest businessmen and women, whose only crime was investing in the land of their birth, were ruined”, Dixon quoted Higgins article of June 18, 2017.

The Jamaican government’s high-interest-rate policy, revaluation of the local currency as well as reckless implementation of trade liberalisation measures promoted by the World Trade Organisation (WTO) eventually guaranteed economic collapse.

At the same time that high-interest rates and local inflation were driving up the cost of Jamaican production, the government was reducing import duties on competing imported products by as much as 60 per cent.

To compound the problem, the local currency was revalued by up to 60 per cent at a time to dictated devaluation in order to producers competitiveness.

“Too Black to Succeed: The FINSAC Experience” also traces the historic, cultural and systemic marginalization, discrimination and struggles that have thwarted and frustrated the progress of the Jamaican people since slavery; and how FINSAC has been a perpetuation of this insidious process, which continues to stymie and ruin the aspirations and potential of many Jamaicans.

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