Just weeks after an article in the 2018 Annual Report of the Guyana Manufacturing & Services Association (GMSA) voiced a thinly veiled criticism of the lending policy of local commercial banks, describing their interest rates as “notoriously high,” a Jamaican-born global economic expert, David Marston, appears to be making a similar case to the effect that lenders and financiers in the sister CARICOM country are “too narrowly focused on the types of assets they are willing to back,” according to a report in the Jamaica Gleaner.
Speaking, it appears, out of concern that Jamaica’s commercial banks are inclined towards prejudice in their lending policies that might exclude what are considered to be historically important sectors of the country’s economy, risk management expert Marston asserted that the country’s banking sector must begin to look beyond what he described as their “comfort zones,” exploring possibilities that may repose in sectors such as the creative industry for opportunities.
Marston, whom the Gleaner says was the keynote speaker at the Private Sector Organization of Jamaica Annual Economic Forum, recently called for what the newspaper described as a “change [in] the narrative on financial inclusion” to include the country’s internationally recognised creative industry.
The report coincides with an article published in this issue of the Stabroek Business that is based on a sharp critique in the GMSA’s 2018 Annual Report which takes local commercial banks to task over lending policies that are squeezing the country’s construction and engineering sector and calling on government to ‘pick up the slack by instituting a “Development Capital Institution.”
In Jamaica, Marston is reported as asserting that support of the small and medium-sized entities sector should be seen as an opportunity to diversify and bring other sectors into the mainstream. “As a financial industry, we are all exposed to more or less the same assets – government assets and a few corporates. The whole system is chasing a few assets. That’s the status quo,” he said, reportedly pointing to a 2018 World Bank assessment of local financial institutions showing a need for them to diversify their portfolio.
The Gleaner report states that Marston is a retired Director for Risk Management with the International Monetary Fund (IMF) who has also served as an enterprise risk management advisor to the Central Bank of Georgia in the United States. Recently, he was recruited by the Jamaican government to help update the investment framework for the non-bank financial sector. Part of his mandate in this regard is to contribute to the process of reforming and restructuring the country’s non-banking financial sector. He is currently a member of the Eminent Persons Group of the G-20 and is known for his work in providing advice to central banks and governments around the world.
Marston is quoted by the Gleaner as saying that he wants to see “financial inclusion” approached not just from the point of view of the provision of loans but also as a means of “leveraging neglected assets such as music and culture.” Contextually, Marston, according to the Gleaner, noted that Jamaica’s global brand recognition came from reggae music, a segment which was consistently underfunded.
“There are 140 reggae festivals in 46 countries between June and November 2019. That is how invasive that brand is. There may be no one brand of that magnitude, globally,” the Gleaner quotes Marston as saying. He notes, as well, according to the newspaper report, that the domestic supply chain linked to the monetising of reggae has been largely self-financed, the brand’s international dominance notwithstanding.
By contrast, Marston noted that in New Orleans in the United States, the entire economy of the French Quarter was organised around jazz music, while the economy of Nashville, Tennessee, was geared towards music and culture. Conversely, he said, according to the Gleaner, that “the international deference for Trench Town as the home of reggae appeared to be underappreciated locally.” Alluding to the global popularisation of Jamaica arising out of the country’s ‘invention’ of reggae music, Marston is quoted as saying that “an irony for Jamaica is that the brand that Jamaica has globally, has been created by those who are financially disadvantaged.”
Here in Guyana and setting aside the construction and engineering sectors, similar but less high profile lobbies have been made for a shift in lending policy by local commercial banks to take greater account of the broadening of the range of sectors not least, in recent times, the agro-processing sub sector of the wider small business sector. The establishment here of the Small Business Bureau (SBB) in 2013 represented an attempt to provide a borrowing option for small businesses that continued to voice frustration over what they regarded as the conservative prejudices of commercial banks in their selection of the types of businesses that benefitted from commercial bank lending.
Recently, with official urging that the advent of oil and gas as a facet of the Guyana economy not be allowed to turn the country away from agriculture, its traditional economic mainstay, Chief Executive Officer of the Small Business Bureau Dr. Lowell Porter said in a recent interview with the Stabroek Business, that there is now all the more reason for sectors like agriculture and agro-processing, areas in which he said there was evident potential for further growth, to receive a more generous measure of financial backing. Porter believes that the Guyana economy has arrived at a juncture where there needs to be an injection of more generous amounts of resources into investing in local small businesses that have a clear potential to grow, to generate jobs and to contribute meaningfully to the country’s economy.
