Jamaica Stock Exchange to Develop Pooled Funds for Driving Diaspora Investment in Productive Capital
The COVID 19 pandemic has Jamaican and Caribbean diasporans rethinking how they can use remittances to drive the economic development of their home countries.
While remittances contribute 15% of Jamaica’s GDP and is a significant source of foreign exchange—it remains a low contributor to economic growth.
Marlene Street Forrest, Managing Director of the Jamaica Stock Exchange and Director of its subsidiaries pointed out that only 7% of remittances went to productive capital.
She noted that the lion’s share of remittances went to single– headed–female households. Such households account for more than 22% of Jamaica’s poverty.
She was speaking at “Wealth and Community Impact—COVID 19 and Beyond”; the 7th of the Outride: COVID 19 Business Threat Seminar series hosted by Magate Wildhorse Consulting and The Community of Practice for Caribbean Immigrant Entrepreneurs.
The backdrop for the discussions was presented by Meegan Scott, event host and principal at Magate Wildhorse. “There is an urgent need to increase and shift the mix of remittances to include more contribution to productive capital and climate risk reduction”, said Scott. “The shift is crucial for driving growth in home countries and for reducing poverty among diasporans” she continued.
Entrepreneurs in the diaspora need opportunities to invest in home-based Caribbean businesses to succeed at their COVID 19 pivots (for both personal and business) economic recovery. “We need solutions for driving the appetite for investment-based wealth creation and transfer by families as well as businesses”. “We need solutions for the diasporans who earn $10 – $15 per hour as well as for the more affluent”, said Scott.
Street Forrest reassured the gathering that the Jamaica Stock Exchange (JSE) is there to facilitate wealth creation and Diaspora Direct Investment (DDI) through its online investment platform. “Diasporans can invest with as little as two Jamaican dollars (J$2.00)”, she said.
“The 50-year-old, JSE is considered to be one of the best performing exchanges. It was rated number one in 2015 and 2018 and within the top five in 2019 by Bloomberg”. “It is transparent and operate main markets, with trading driven on the NASDAQ platform.
The Exchange “has never had a failed settlement”, said Street Forrest. It comprises ten billion US dollars (USD 10 Billion), and ninety-one (91) listed companies representing 127 securities”. She emphasized that the companies are all regulated and included “several industries”, among them “banking, finance, and technology businesses”.
Investment in the JSE yields returns as high as 500%. Government of Jamaica uses the exchange to divest assets, among them— the Trans Jamaica Highway Ltd and Wigot Wind Farm shared, Street Forrest. She continued, of “ two hundred and forty (240) investors, less than 5% are from outside Jamaica.” “I encourage hard working individuals to take advantage of the opportunity to invest in the market; and to invest in companies that are listed on the exchange”, said Street Forrest.
“How can we invest from overseas ?”
Street Forrest replied, “We have designated exchange representatives in Canada. The JSE online investment platform makes it easy to trade and invest”. Diasporans can visit the JSE’s JTRADEPRO investment platform at https://jtraderpro.jamstockex.com/ and create their accounts.
“The JSE has recently cross listed a Canadian company on the exchange” she said, in reference to the medical cannabis company Tree of Knowledge International Corp. Investment solutions are available to diasporans in the USA and UK as well. However, not all solutions are currently available to those in the UK. The JSE is currently in the process of securing direct market access for allowing citizens in diasporic country markets to access the exchange through brokers in Jamaica.
But how can diasporans help to capitalize micro, medium, and small enterprises? The JSE Junior Market allows investors to put capital into legitimate MSMEs”, explained Street Forrest.
What about opportunities for those of us who serve in the social enterprise and social product sectors? Street Forrest shared the possibilities available through The Jamaica Social Stock Exchange (JSSE) with the inquirer. “ The JSSE is structured to provide a channel where one can invest; it reports on social capital and social impact which builds the fabric of the society” noted Street Forrest.
She invited Dr. K’adamawe A.H.N. K’Nife, Board Director of the JSSE and event guest speaker for the topic “ Perspectives: Imperatives for moving MSMEs – Diaspora Direct Investment Strategy (DDI) and Not Foreign Direct Investment (FDI)” to expound.
Dr. K’Nife recounted the growth and development of the society as a result of the addition of the Junior Stock Exchange. But noted that there was room for growth in the volume of investment and listed companies.
K’Nife commended diasporans for their commitment to home. He noted that remittances decreased to 8% during the novel coronavirus pandemic despite its impact on diasporans; and that it had increased in May”. “To support meaningful growth and development, there must be vested interest in the country; not just FDI but also DDI”. “Decision makers must create diaspora investment strategies; favourable to attracting diaspora capital”, he said.
“Local manufacturing houses and banks are fast on investing in the stock exchange; leaving little opportunity for individual and small businesses in the diaspora” said K’Nife.
“ The current framework needs to be amplified for the diaspora to invest in business, manufacturing, and stock exchange”. “There must be an action plan and a specific policy for including diasporans. You cannot treat strangers and family the same way; family must be special”. “The emphasis on FDI versus DDI have left Jamaica with the bad end of FDI deals. Jamaicans have a vested interest in Jamaica”, he remarked.
Stephen Snider, Jamaica student of Sustainable Finance and Development at Harvard University asked if the JSE would be pursuing environmental, social, and corporate governance (ESG). Street Forrest answered in the affirmative. “We are currently working with the Green Climate Fund (GCF)” for improving that”. She was referring to a project that will facilitate the listing of a Caribbean Green Bond on the Jamaica Stock Exchange (JSE).
Scott asked about the performance of Jamaica’s Catastrophe Bond. Street Forrest said the CAT Bond is on hold as a result of COVID 19.
“What diaspora specific investments can we co-create through the stock exchange?”, asked Scott. She stressed the need for a social market solution and campaign for families and SMEs. In response, Street Forrest committed to working with diasporans to develop pooled funds for families and businesses. Food, pharmaceuticals, and agriculture were the best sectors in which to invest at this time she shared. “Agriculture in Jamaica will be more scientific and modern going forward”, she said.
About the author: Meegan Scott, B.Sc. Hons, MBA, ATM-B, CL, PMP., is Jamaican-born Strategic Management Consultant, at Magate Wildhorse Ltd in Toronto & New York.. This is a syndicated column and article.