Cedric Stephens | Lessons in financial resilience

Why has Jamaica trailed Barbados on the path to sustained growth? Orlando Patterson, the John Cowles Professor of Sociology at Harvard University, and who served as special adviser to former Prime Minister Michael Manley, posed and answered this intriguing question in chapter one of his 2019 New York Times Editors’ Choice book, The Confounding Island: Jamaica and the Postcolonial Predicament.

Two years later, Professor Patterson chaired the Jamaica Education Transformation Commission. The commission drafted a 342-page report which, according to government news agency JIS News, creates “a blueprint for the establishment of a comprehensive strategy to improve student performance and educational productivity across the sector”.

Barbados led Jamaica on the path to sustained growth, “not by physical force, nor by foreign ideological compensation, but by capturing, mastering, refashioning, and deploying to their own ends the institutional knowledge and know-how of the ruling class and the broader cultural, political, and economic context within which they were embedded … it is their remarkable success at this cunning counter-hegemonic strategy that explains why Barbados has so greatly outperformed Jamaica in the post-colonial struggle for economic prosperity and growth,” he wrote.

Prof Patterson’s ideas are also helpful in the context of last Wednesday’s general elections and the start of a new administration, and Jamaica’s annual average growth rate of 0.3 per cent in gross domestic product 2019-2024.

My last article, ‘Financial Regulation at a Crossroads’, raised questions about the country’s transition to financial entities’ supervision under the twin peaks model. The LinkedIn network, for some reason, sent to my mailbox parts of a recent speech given by governor of the Central Bank of Barbados, Dr Kevin Greenidge, at the Cave Hill campus of The University of the West Indies. His talk was at a conference that sought answers to what was called the defining question facing the Caribbean: ‘How can shocks be managed and potentially turned into opportunities for growth?’

The answer arrested my attention. Barbados operates a dual-regulator model for its financial system. Oversight is split between the Central Bank of Barbados, CBB, and the Financial Services Commission, FSC, in that country. The central bank’s role is to formulate monetary and fiscal policy, in association with the government and regulate banks, other deposit taking entities, and trust and finance companies. FSC’s functions are similar in many respects to its local namesake.

Dr Greenidge named six policies that contributed to ‘Boosting Financial Resilience: Managing Risk and Uncertainty for Macroeconomic Stability and Growth’. He called them ‘lifelines, forged to protect both economies and families’.

Resilience, he said, is not a slogan, “it is strategy lived out daily: the discipline of execution, the foresight to prepare before disaster strikes, and the courage to keep our people at the centre of every plan”.

His comments echoed many of the things that I wrote were missing from Jamaica’s central bank’s and the FSC’s approach to the execution of the market conduct and consumer protection regulation pre-SSL and during the twin peaks pilot stage, the subject of last week’s article. Dr Greenidge vision extended beyond the shorelines of Barbados. “If we remain disciplined and people-centred, the Caribbean will not merely weather the next storm. We will emerge stronger, more confident, and more united,” he said.

My article last week concluded that the author of a recent Gleaner editorial understands the rationale behind the market conduct and consumer protection element of the Twin Peaks regulatory framework – something that neither the Jamaica Observer reporter nor the technocrats at Nethersole Place appear, thus far, to have grasped.

Are we open to learning from the institutional knowledge, expertise, and history, of our neighbours in Barbados and other local regulators?

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com