The signs indicate diversify, diversify, diversify

Lance Neita

Sunday, April 19, 2020

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The need for Jamaica to begin to plan for a post-coronavirus economy is becoming more imperative with the increasing devastation that the pandemic is unleashing around the world. The centrepiece of such a plan must be an economic diversification strategy, as we can no longer afford the luxury of depending on two or three industries to provide the basis for economic growth. Our industry and commerce will need a strong push-start and should be prepared to leave the blocks running whenever we enter the recovery period.

A heavy toll has been taken on tourism and remittances, our two top earners of foreign exchange. Strong medicine will be needed to revive these two areas for revenue growth. Tourism is tied with remittances as Jamaica's top source of revenue. In 2018 tourism hard-currency revenues represented 20 per cent of gross domestic product (GDP). This is already being wiped out as the industry is now in total shutdown.

Last week Fitch Rating Agency projected that tourism receipts will decline by 20 per cent in 2020, pointing out that: “This could well be steeper if an easing in the global pandemic does not materialise by the key northern hemisphere winter season… In 2018 tourism hard-currency revenues represented 20 per cent of GDP...” The agency also reported that remittances will be adversely affected by deteriorating labour markets in the US and UK, particularly affecting service sector jobs, given social-distancing measures.

Remittances were 16 per cent of GDP in 2018 and are expected to fall by 10 per cent in 2020. These assumptions are now looking modest in the light of current realities.

This leaves the other primary industries, mining and agriculture, to bear the brunt of present economic resilience at this time, and into the post-recovery and rehabilitation mode.

With tourism now down to almost zero, and some 150,000 direct jobs and 100,000 indirect jobs lost, it cannot escape us that the bauxite/alumina industry is holding its own, with Noranda in St Ann, Jamalco in Clarendon, and Rusal Ewarton in St Catherine continuing to produce and to export.

“I think a lot of people are talking at home now about the need to not put all our eggs into the tourism basket, but to ensure that we have vibrant agriculture, digital economy, manufacturing (mining), and logistics. These are sectors to be focused on going forward,” says Jampro President Dianne Edwards.

The closure of the JISCO/Alpart plant in 2019 saw a 17.6 per cent decline in output from this important sector and has left a gap in foreign exchange earnings. But, notwithstanding the loss of Alpart, the returns from the sector in economic and social contribution will be a lifeboat that will underpin the diversification of our economy.

The industry accounted for 53 per cent of all exports in 2019.

The bauxite and alumina industry represents a huge investment in Jamaica, plays an important role in the country's economic and social development, has a reputation for outstanding corporate social responsibility, and is well equipped with human resource qualities that can help to direct the process of rebuilding and reshaping Jamaica under the new dynamics of a post-COVID-19 world.

Historically the bauxite and alumina industry has always been a cornerstone of the economy, and for near 70 years has been through national crises after crises with Jamaica, including hurricanes, floods, recessions, and now still weathering the COVID-19 storm. The industry will no doubt have to make some timely adjustments as, like others, it is under threat from the global impact of COVID-19, but those who are recommending that Jamaica's bauxite/alumina industry should be shut down need to look at this pandemic and recognise how much worse the situation would be without that pillar of the bauxite and alumina sector and its foreign exchange earning capacity.

In relation to agriculture, the sector will have a leading role to play in the reconstruction and rehabilitation period. During 2018, the total value of food imports to Jamaica was US$902 million, with approximately 44 per cent of these imports supplied via sources in the United States. Conversely, exports amounted to US$218 million. Approximately 60 per cent of food imports are supplied to the hotel, restaurant, and institutional (HRI) sector.

There is much room here for re-directing our energies into ensuring food security for Jamaica. We are challenged to produce significant quantities of consistent high quality agricultural goods “to eat what we grow, grow what we eat”. There are opportunities in agricultural innovation and developing the supply chain to counter these challenges.

“Agribusiness/agriculture, we think, will be one of the most resilient businesses to come out of COVID-19,” according to Edwards. “It is one of the industries that underpins the economy, because we have to eat, we have to feed our children through the school-feeding programme, we have to feed the tourists who will return to our shores, and we also have to feed the population.”

Diversification, then, obviously means not only diversification across industries, but within industries. Steps are already being taken to salvage the hundreds of thousands of tons of food crops going to waste as farmers lose markets in the hotel trade. Government agencies are joining with private firms to revive the agro-processing business and, at the same time, seek innovative ways to supply local domestic need outside of supermarkets and town markets.

“I think the agribusiness will be a very strong business,” says Edwards, “and I think the opportunity that we need to take advantage of in this period is to focus on how we can shore up our agribusiness sector and make it much more viable, efficient, and technologically-driven.”

Establishing linkages between industries will also be a viable path forward for industries as we seek innovative ways to strengthen the new economy.

Shortly before his passing last year, former prime minister, the late Edward Seaga commended the initiative taken by Noranda Bauxite to pioneer greenhouse technology for small farmers on mined-out lands. In a column in this newspaper, published July 22, 2018, he wrote: “I was delighted to see one of the bauxite companies in a press photo of land in a mined-out pit which, with technological help, had become a farming complex with greenhouses and other modern agricultural features.

“This could accommodate several farmers who would be moving away from obsolete, back-breaking agricultural practices to embrace modern agriculture. Given the fact that there are many such bauxite locations, it is not hard to foresee a new farm life created by a mini technological revolution. My hope is that this will succeed, because 36 per cent of the population is employed in agriculture.''

Dynamic changes will be needed in our approach to reconstruction and rehabilitation. The Jampro president said that, in going forward, we will have to begin to take full advantage of the tools and skills as well as embrace and explore new technologies that will lead us to innovative development of the different areas of the economy.

Tourism, agriculture, bauxite, remittances, business process outsourcing (BPO), and the services sector will continue to be the major pillars of our economy, with current experience warning us that we cannot rely on any single sector in our production planning processes.

In a sense, it will be a brave new world that we are facing with opportunities and challenges to re-culture ourselves, to rewrite and reconstruct not only business, but also essentials of education, health, security, technology, climate change and adaptability, sports, civility, child protection, values and norms, justice and human rights. None of these will be 'business as usual'.

Altogether, a comprehensive review and action plan is required based on innovative approaches and respect for each other.

The pandemic will be defeated, and Jamaica and the world will breathe again. We can be confident that we will not only defeat it, but will recover under God's grace, and make Jamaica great again.


Lance Neita is a public relations consultant and author. Send comments to the Jamaica Observer or


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