Targeted policies needed for entrepreneurial growth in Jamaica

Targeted policies needed for entrepreneurial growth in Jamaica

-GEM national report


Panos Caribbean, 11 October 2012 – Government procurement policies, permits, licenses and inadequate government support for growing businesses are among the factors restricting the growth and survival of new firms in the island, according to the most recent Global Entrepreneurship Monitor (GEM) national survey.

The report was launched by UTech, Jamaica on Wednesday, October 3, at a forum for the dissemination of its findings. It took place at the Technology Innovation Centre , UTech Papine Campus.

The GEM research team based at the College of Business and Management at the University of Technology (UTech) with researchers including Dr. Girjanauth Boodraj, Mrs. Vanetta Skeete, Dr.Horace Williams and Mr. Orville Reid, point to the National Expert Survey component of the project which indicates that a majority of respondents (67%) disclosed that Government’s Public Procurement Policies do not favour new firms.

The length of time involved in securing licenses and permits was also cited as reducing the opportunity for new startups to respond to opportunities in the marketplace.

According to lead researcher, Dr. Girjanauth Boodraj , “there is a need for government to work with universities and the private sector to create an enabling environment supportive of new and growing firms. This support should be there to take firms through the various stages of their development, providing good services at affordable prices. “

Boodraj states that nearly half of all experts (48%) disclosed that taxes and other government regulations are not applied to new and growing firms in a predictable and consistent way. The majority of experts (81%) maintained that coping with government bureaucracy, regulations, and licensing requirements was unduly difficult for new and growing firms.”

The Global Entrepreneurship Monitor (GEM) project is an annual assessment of the entrepreneurial activity, aspirations and attitudes of individuals across a wide range of countries.

Initiated in 1999 as a partnership between London Business School and Babson College, the first study covered 10 countries; since then nearly 100 ‘National Teams’ from every corner of the globe have participated in the project.

GEM Caribbean is a three-year project, supported by Canada´s International Development Research Centre (IDRC), to establish, train and strengthen entrepreneurship research teams in five Caribbean countries: Colombia, Jamaica, Trinidad & Tobago, Haiti, and Barbados.

The research by these teams measures the levels, underlying factors, and environmental constraints of entrepreneurship within each national environment, as well as comparatively within the region by using the Global Entrepreneurship Monitor (GEM) methodology.

Findings are intended to assist policymakers, educators and researchers in creating supportive environments that encourage job creation and inclusive economic development through growth in entrepreneurship.

The 2011 report indicates that from 2006-2011, the established business ownership in Jamaica rate has fallen by about 50%.

The same holds for new businesses over those years. In the case of nascent businesses, it fell significantly from 13% in 2009 to 5.5% in 2010 but recovered to 9% in 2011.

Total early stage Activity (TEA) in entrepreneurship in Jamaica is struggling to recover after a 50 per cent decline in 2010, rising marginally to 13.7 per cent last year.

Nascent activity is defined by GEM as entrepreneurs who are in the first three months of running a new business. New business owners are those who have been in business for more than three months but less than three-and-a-half years. Together, new and nascent entrepreneurs comprise total TEA. The report indicates that while in 2008, at the start of the global recession, the Jamaican TEA rate was only 15.6 per cent and jumped to 23 per cent in 2009, it fell by half to 10.5 per cent in 2010.  Recovery was marginal bringing the rate to 13.7 per cent in 2011.

By way of comparison,  TEA increased significantly from 2010-2011 in many economies and across all levels of economic development — emerging, developing, and mature; and rose 25 per cent among 16 developing economies with China, Argentina and Chile displaying above-average rates in 2010 and even higher rates in 2011.

Dr. Girjanauth Boodraj notes that most of the experts (72%) in the national survey agreed that it was completely false that a wide range of government assistance for new and growing firms can be obtained through contact with a single agency.

“Most of the NES experts (64%) disclosed that there was an inadequate number of government programmes for new and growing businesses. Additionally, the majority of experts (61%) stated that persons working for government agencies were not competent and effective in supporting new and growing firms. There was a constant beckoning from the business sector for an enabling environment for business.

“The vast majority of experts (73%) disagreed that almost anyone who needed help from a government programme for a new or growing business can find what they need,” the researcher notes as well. He adds “most experts (62%) disagreed that government programmes aimed at supporting new and growing firms were effective.”

Most experts (80%) stated that new and growing firms cannot afford the cost of market entry.

The researchers recommended that a more targeted approach based on the documented needs of new and young businesses be developed and implemented. More government subsidies are required also for technology acquisition, according to the survey.

Policy recommendations further outline the need for a pooled investment fund to be made available to support promising research ideas.

Fifty-one per cent of experts said that government programs are highly selective when choosing recipients of entrepreneurship support and that more initiatives must be created that are specially tailored for high-growth entrepreneurial activity.

Experts surveyed expressed the majority belief as well that people working in initiatives which support entrepreneurship should be given more skills and competence to support high-growth firms.

It was further noted that, based on data collected , the government needs to ensure that anti-trust legislation is well enforced to the benefit of all the players in the business arena, both small medium sized and large.

The researchers also suggest that government should continue efforts to bring “increased competition to the electricity sector as this has the potential to produce improved access and cheaper prices for all consumers.”

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