Amid widespread praise for what has been described as the shrewd handling of Jamaica’s financial affairs by Finance Minister Nigel Clarke during his tenure thus far, Finance Ministers and other members of the Board of Governors of Inter-American Development Bank (IDB) on Monday elected the Jamaican representative as president of the bank and its private sector investment arm, the IDB Investment Corporation, or IDB Invest.
Clarke’s elevation to head the multilateral finance institution comes after the IDB announced what it says is record US$1.3 billion in funding planned for Caribbean countries this year, in addition to US$2.5 billion worth of projects underway, and the Jamaican government rolling out a $10 billion spending spree to boost businesses. This package includes state participation in small businesses to help them grow; and an arm-raising venture capital for start-ups, endowed with $750 million from the IDB’s $8.6 million or $1.3 billion funding for entrepreneurship in Jamaica.
IDB President Mauricio Claver-Carone, in his address to the bank’s governors at their annual meeting this week, stressed the role that venture capital financing must play in economic recovery from the COVID pandemic. -19 after enhanced finance for the private sector. -investment in the sector through IDB Invest, which he dubbed IDB Invest 2.0.
“We are lucid about the needs of the region. Some of our member countries have recouped their losses and, indeed, some sectors are booming. Latin America was the fastest growing region in the world for venture capital in 2021, with a record inflow of US$20 billion,” Claver-Carone said.
Advocating for even more venture capital flows to large companies, but especially to micro, small and medium-sized enterprises, MSMEs, the bank’s chief executive said that following record business closures , the job recovery has not kept pace with GDP gains, a fact he points out is particularly true for young people and women.
the financial gleaner was unable to determine the IDB’s total financing expenditure for venture capital and equity, nor the total envelope for Jamaica in the next five-year country strategy, as the overall program is called for each beneficiary country. The new program is expected to start this year. The document was due to be signed at Monday’s annual meeting and no announcement has been made since on its details, which were worked out with the government during a visit to Jamaica by an IDB team led by Claver-Carone. in December last year.
The additional equity and venture capital announced by Clarke in his recent budget presentation to Parliament, and the government’s stated intention to match multilateral funding for business development, show a priority shared by the IDB and the government of Jamaica for start-up companies. funding. It also aligns with what Claver-Carone has previously described as part of his displeasure with the IDB’s past approach to development assistance, which he says emphasized sovereign debt rather than debt. private sector loans and equity investments. This pet peeve fueled her decision in December not to renew the employment contract of Therese Turner-Jones, the Caribbean development economist who headed the Caribbean division of the IDB run from Jamaica.
While the commitment to business incubation and private sector-led growth extends across multiple jurisdictions in the Jamaican government and at the executive level of the multilateral agency that funds economic and social development initiatives in Latin America and in the Caribbean, Clarke seems particularly enthusiastic about the power and vital importance of seed capital for micro and small businesses. It’s about giving them the boost they need to evolve and grow into large, profitable businesses that generate economic activity, create thousands of jobs, increase gross domestic product, GDP and overall prosperity for nations and Peoples. It’s a passion that the entrepreneur-turned-politician has had since before entering government.
“Through the pursuit of sustainable fiscal and monetary policies, we are entrenching a stability that facilitates private sector-led investment and growth. In order to make the most of these opportunities and ensure that these opportunities are equitably available, we aim to commoditize capital, and in particular equity. We expect this to create a fertile environment for innovation, investment and value-added and risky activities,” Clarke told the financial gleaner in Washington’s comments this week.
The government’s $10 billion package includes $2 billion in private equity investments under the banner of the administration’s $60 billion social and economic stimulus and vaccine (SERVE) program, funded by a payment of one-time dividend of $33 billion that the government received from central bank operations last year. Public business support is mainly channeled through the Development Bank of Jamaica, DBJ.
DBJ vehicles, which include a $6 billion credit guarantee program, innovation grants to help MSMEs develop new revenue streams and integrate digital strategies into their operations, are complemented by support government at the existing business acceleration labs at the Jamaica Business Development Center and the Branson Center. , as well as Kingston Creative’s Rev-Up Caribbean technology incubator. Micro, small, and medium enterprises can also access start-up grants of up to $7 million.
According to Clarke: “The main objective is to promote inclusive growth and productivity by encouraging innovation in the private sector. The aim is to kick-start economic growth by creating an ecosystem that supports vibrant entrepreneurship and innovation in MSMEs. We promote innovation and productivity among established MSMEs with high growth potential; promote sustainable and inclusive growth in scalable start-ups; and the creation of a sustainable pool of entrepreneurs and start-ups with high growth potential. Entrepreneurship and innovation activities that address gender and climate issues will be targeted and implemented.
The new Chairman of the IDB Board of Directors told the Annual Meeting in his opening remarks on Monday that although Jamaica has been hit hard by the COVID-19 pandemic, the economy has begun to recover” robust” jobs and economic activity.
“Jamaica looks forward to deepening its partnership with the IDB as we continue to recover and reform, and seek to position ourselves as an open economy ready for private sector investment that can catalyze sustainable growth. and inclusive, even as we pursue public investments focused on human capital, social development and infrastructure,” said Clarke.
He expressed his support for the capital increase ambitions of the IDB, describing the plan as a timely tool for the economic reconstruction of the region.
“The COVID-19 pandemic has eroded the hard-won gains of several countries in the region. It has also exacerbated pre-existing vulnerabilities and development challenges, such as high inequality, high poverty, high debt and low growth that existed in much of our region. As such, it is timely that there is a rigorous discourse on positioning the financial and institutional capacities of the IDB to respond decisively to the various economic and development challenges of borrowing member countries. The IDB’s capital increase to better support the private sector-led recovery in the region could hardly have come at a better time,” noted the Jamaican Finance Minister.