The World Bank today (May 6) highlighted high-value agriculture and business process outsourcing (BPO) as two lucrative areas through which Jamaica could reposition itself for sustained private sector-led economic growth.

The World Bank, in launching the Country Private Sector Diagnostic (CPSD) at the AC Marriot Hotel in St Andrew on Friday, argued that Jamaica has “great investment potential” and identified ways the island can reduce cross-cutting constraints with feasible interventions that could reap substantial positive impacts on growth.

The 86-page document was created by the multilateral organisation, through its International Finance Corporation (IFC), to coincide with the working visit to Jamaica of Mari Pangestu, World Bank managing director of development policy and partnerships.

LIVE from Kingston, JA 🇯🇲: @IFC_org and the @WorldBank launch the Country Private Sector Diagnostic (CPSD) for Jamaica, which examines opportunities for Private Sector-led Growth. Minister of Finance @NigelClarkeJa and Keith Duncan, President of @thePSOJ, join the conversation. pic.twitter.com/Cz5Z6RnyQC

— IFC América Latina y el Caribe (@IFC_LAC) May 6, 2022

In the CPSD’s executive summary, the World Bank Group disclosed that the report was prepared for Jamaica as part of ongoing efforts to boost private sector participation in key sectors over the next three to five years.

“Weighed down by structural constraints, Jamaica’s real gross domestic product (GDP) expanded at an annual rate of less than [one] per cent over the last three decades and economic activities remain concentrated in few sectors. The stock of public debt is among the highest in the region, which limits government’s capacity to provide complementary public goods for growth,” the report read.

“This report identifies ways to reduce cross-cutting constraints to private investment, with a focus on making agriculture and outsourcing services more competitive. Jamaica has an opportunity to produce high-value horticulture crops for export to existing and new markets. In outsourcing, the country can leverage its success with call centers to move toward higher-value services including knowledge process outsourcing (KPO), information technology outsourcing, and eventually digital services for creative industries,” the summary continued.

The diagnostic acknowledged Jamaica’s political stability, region-leading infrastructural assets as well as its geographic and linguistic/cultural edge but noted that, similar to other small island developing states (SIDS), these advantages are stymied by limited export diversification and natural disaster vulnerabilities.

The country’s woes are made all the worse by the impact of the COVID-19 pandemic on tourism and the ever-increasing fallout from climate change. This, the report detailed, comes as 90 per cent of the US$14-billion GDP is generated within the coastal zones of Jamaica.

The state of Jamaica’s private sector also came under scrutiny, with the World Bank noting a disparity between large-scale company employment and low production and innovation from smaller businesses. The report further considered that micro-, small-, and medium-sized enterprises (MSMEs) employ the largest chunk of the Jamaican labour force.

Business productivity in Jamaica is closely correlated to size and ownership structure, with large, foreign-owned companies and retail enterprises being the “most productive” in terms of sales per worker. The report found that firms in manufacturing and other services are the least productive.

“Although large firms contribute significantly to GDP, they account for just under a third of jobs. They are most active in tourism, finance, electricity, and agro-processing. MSMEs, on the other hand, provide more than two-thirds of jobs and are mostly engaged in wholesale, accommodation and food services, and agriculture. International trade is primarily conducted by large firms and some successful MSMEs, many of which are not linked into global value chains (GVCs) and have low local value-added components. Only 4.5 per cent of small firms are involved in exports, compared with 33.5 per cent of large ones,” the CPSD posited.

For Jamaica to tap into greater earning potential, the Country Private Sector Diagnostic listed the following opportunities:

Much of the country’s rich endowment of natural and human capital remains untapped, according to the World Bank, despite Jamaica’s advantageous geographical location.

“Greater private participation in sectors with significant untapped potential could accelerate economic growth and development, with enhanced job creation, productivity, and other positive spillovers. This CPSD examines two such sectors, which have also been identified by the government as priority areas: agriculture and outsourcing. Agriculture accounts for 15 per cent of jobs and outsourcing accounts for about [three] per cent of jobs in the country. The emerging prospects in these two sectors could attract private investment to spur recovery and growth, with the necessary reforms. They also hold significant potential to contribute to greener, inclusive, and sustainable growth, while increasing diversification and boosting [labour] productivity,” the report indicated.

Additionally, the report stressed that with the opportunities, Jamaica should maintain themes of climate-smart approaches and digitisation.

“Climate-informed policies are central for private sector development and Jamaica’s efforts to restore growth. Reforms to stimulate investments in renewable energy and energy efficiency can reduce production costs [and] accelerate decarbonization,” noted the World Bank.

“Accelerated technological adoption, innovation and digitization can be transformative for Jamaica’s economy. Digitization of logistics services could boost exports, reduce trade costs and informality, and improve traceability of export products. Digital finance services could cut costs and facilitate access to credit and payment systems,” the multilateral organisation added.