Sunday, February 1, 2009

Thoughts on Entrepreneurship in Jamaica

I grew up in a family business in Jamaica, studied business, taught Entrepreneurship to MBA students at the Mona School of Business, and continue to start and run entrepreneurial ventures. Here are some of my thoughts on entrepreneurship in Jamaica.

Jamaica is one of 43 countries studied in the 2008 Global Entrepreneurship Monitor. The report can be downloaded at:
http://gemconsortium.org/download/1233413864484/GEM_Global_08.pdf

This report is useful in identifying the factors that influence entrepreneurial activity. I have watched it emerge over the past 10 years and used it extensively in my course preparation and delivery. I commend it to anyone who would like an understanding of entrepreneurship not just in Jamaica, but globally. Remember that it is a relatively new field of study.

As illustrated in the report, Jamaica actually has a high level of entrepreneurial activity – take a look of any lane in Jamaica and you will see a plethora of business activity. The challenge is that this activity is defined as necessity-forced entrepreneurial activity rather than opportunity driven. The former is about being pushed into entrepreneurial activity because one has no option ("cyan do nuh betta") whilst the latter is motivated by pull factors – identification of an opportunity, desire to increase independence and income levels. Most entrepreneurial activity in Jamaica is focused on job replacement. It is presented this way by government agencies, and support programs are designed around getting people who can’t get a job to start their own business. It is a dangerous road to tread in my opinion, as we set up people with very little education and experience for failure.

Opportunity entrepreneurship is driven by the identification of a viable business opportunity and tends to be pursued by those with higher levels of education. This is where rapid growth businesses emerge. It is the opportunity entrepreneurship that we need to encourage. But this is where we find much frustration and discouragement.

Here are some thoughts from my own experience.

There is no doubt in my mind that there are serious deficiencies in our education system that inhibit entrepreneurship. While I acknowledge the importance of the sciences, entrepreneurship is essentially a creative act. Therefore, education that is exclusively or heavily science-driven gives short shrift to the development of right-brained thinking that is essential to identify new ideas and convert them to opportunities and then new and growing ventures. In our British-based system the underpinning of which was the development of cogs in the industrial wheel, the curriculum still focuses on rote learning, multiple-choice exam formats, and regurgitation of the “right” answer. In entrepreneurship, there is no “right” answer.

In Jamaica, the arts are viewed as subjects to be pursued by those who are not smart enough to do the sciences. I insisted that my daughter, who is sitting the GCE examinations in June, do Art and Design Studies in addition to Chemistry and Biology. This was viewed askance by many but to my mind, it was non-negotiable as I consider that I am raising my children to compete and thrive in a new and different world – one where creativity and adaptability are critical.

I have had students in my MBA class cry “living eye-water” when given an assignment to identify and develop new business ideas. They insisted that they were not creative and just couldn’t do it! I also taught a group of students who were doing a joint MBA/MIS degree. The best business ideas actually came from them – but many couldn’t express them coherently, and were unable to expand the concept from product or service to business opportunity with high growth potential. These were the “bright” students at high school who excelled at the sciences, yet who were unable to expand their thinking beyond the limits of their technological know-how, much less to expand and present their business idea.

It is my firm and impassioned belief that our education system in Jamaica needs to be overhauled. It remains elitist, but even the elite are not receiving a relevant education any more. Frankly, most “graduates” i.e. young people who have warmed seats for 15 or so years and have been shunted from grade to grade, are barely literate. They are bright. They want to excel. They want to make good in life. Yet the system is failing them. Layering business courses on such a base will do very little to stimulate the type of entrepreneurship that will contribute significantly to the growth of the Jamaican economy.

There are two other serious impediments to entrepreneurship in Jamaica which I would like to mention – monetary policy and government bureaucracy.

The prolonged period high interest rate policy which was intended to "protect" the Jamaican dollar has failed miserably. The Jamaican dollar has continued its slide. It is more lucrative, and indeed the rational thing, to invest in Jamaican government paper which is risk-free or low risk and requires very little effort. If you have capital, it is unattractive to go into an entrepreneurial venture. Allied to this is a very, very common misperception held by senior people in finance that equity is cheaper than debt. Thus their argument is that when debt is expensive, due to higher interest rates, then entrepreneurs should look to equity for their financing. Debt, no matter how expensive will always be cheaper than equity – equity only provides a short term cash flow benefit. Thus, in a high interest rate scenario, businesses are unable to access financing to start, grow and expand. It is my belief that the Jamaican dollar is undefendable. We don’t have the economic base to support it, and are simply throwing “good money after bad” to delay, but not halt, the slide.

The government bureaucracy is convoluted, unnecessary, and I swear, designed to keep people down. The default response is "NO". Businesspeople spend endless resources of time and money just to traverse the maze. It is difficult to pay your taxes. It is difficult to get permits and licenses if they are necessary. It is difficult to clear goods. It is difficult to do everything. When you come to Kingston you will see an army of motorcycle bearers buzzing around town all day long. Much of their job is about wading through the swamp of bureaucracy, trying to get papers shunted from one office to another in order for business to go on.

That’s it from me for now. I am off to continue growing businesses, and helping others to grow theirs – regardless.

3 comments:

ESTEBAN AGOSTO REID said...

An extremely poignant piece that should be mandatory and urgent reading on the part of all and sundry in the Jamaican business community, and also crucially required for individuals who are intersted in becoming entrepreneurs/businessmen/business women.Indeed,the three areas or factors that you have selectively emphasized or underscored in terms of entrepreneurial activities are definitely apropos,i.e.,the poverty and inadequacy of the Jamaican educationnal system, which in essence requires --- a sea change --- radical overhaul and a paradigmatic shift from its conventional/traditional moorings and archaic philosophy(ies) and objectives; the astronomically high interest rates to, supposedly, buttress and reinforce a perennially and chronic falling currency, which ironically does not stop the precipitious sliding and constant decline of the dollar, as is currently/presently being witnessed from going over the cliff,but in essence,confounds, stymies and thwarts the possible growth, expansion and development of old and new businesses, and indeed entrepreneurial activities; and of course, a governmental bureaucratic apparatus which is antithetical and basically contradictory to the promulgation and advancement of business and entrepreneurial growth and development, as a consequence of the numerous, convolutions, labyrinth and imbroglios that persons have to traverse or persue in establishing a business.

Undoubtedly, the three areas underscored in THOUGHTS ON ENTREPRENEURSHIP IN JAMAICA are totally correct. Notwithstanding, and hopefully, such thoughts are not conclusive or final. Because, one is of the perspective,that the question, issue or element of CRIME needs to be introduced in this negative and unwholesome troika in some manner form or capacity, although qualitatively different from the explicated troika,i.e.,education,interest rates,and bureaucracy.Indeed,CRIME in its sundry forms and capacities has been one of the multi-headed monster -- hydra -- that/which has ravaged/shattered entreprenurial and business activities creating a silent legitimacy crisis, which concomitantly haunts,torments and intensifies other crises within our society.NUFF RESPECT!!

ESTEBAN AGOSTO REID said...

Correction is in order re the incorrect spelling of the term term pursue.Please read pursue as opposed to the incorrect spelling persue. Thanks!

Janvi said...

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