PIOJ Growth-Inducement Strategy - Planning Institute of Jamaica

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Limited (formal) opportunities for networking between entrepreneurs and investors; A legislative and regulatory environment that is unclear, with underutilized tax incentives; Lack of trained advisors for the VC market, including attorneys, accountants and business advisors. However, on the positive side, there are several environmental factors which augur well for long term private capital formation, and which suggest that the current economic context provides a good opportunity for the development of venture capital financing. These include: The Jamaica Stock Exchange Junior Market, which can facilitate capital market exit by venture fund investors. Positive changes in the macroeconomic environment, including the lowering of interest rates, lower Government debt levels and a generally improved level of macroeconomic stability. A more credible yield curve and more rational risk-reward relationships. Pension-fund reform providing a deeper pool of funds for investment in risk capital. 4.0 Operational Goals of the JVCP The venture capital industry is expected to have developed a sustainable capacity over an initial three (3) year implementation period, with the engagement of private sector stakeholders and the mobilization of capital to provide the necessary future financing. The following outcomes are expected to be achieved from the implementation of the JVCP: • VC and private equity industry with appropriate taxation, regulatory and legislative underpinnings, transparent corporate governance policies; • A sustainable deal-flow of viable, ‘investment-ready’ enterprises characterized by: o Knowledgeable entrepreneurs with an understanding of venture capital financing and the requirements for accessing this method of financing; o Improved governance, operational and financial management skills; o On-going training, development and capacity building through business incubators and other supporting institutions; • Knowledgeable fund managers and other professionals, with the requisite skills and expertise to conduct due diligences, structure and manage venture capital funds and to provide timely and expert advice to entrepreneurs and investors; • Knowledgeable investors, particularly institutional investors, with a clear understanding of the asset class and the ability to evaluate fund managers, 157
oth local and overseas (including those from the Jamaican diaspora) investing in the local industry; • Formalized approach to accessing capital from angel investors and venture funds through angel investor networks and venture forums; • Establishment of venture funds and venture capital companies providing funding to SMEs at all life cycle stages. Several funds are envisaged, including seed and early stage funds as well as growth funds for established companies; • Products and services include equity, debt, quasi-equity financing as well as mentoring and advisory services to eligible SMEs; • Better capitalized companies able to access a wide range of financing opportunities and a greater flow of venture companies which eventually qualify for exit, by investors, through the Jamaica Stock Exchange (JSE); • Establishment of a Venture Capital/Technology Park with incubator facilities and linkages among the Universities, entrepreneurs and research centres, such as the Scientific Research Council (see appendix…. for a more detailed elaboration of the proposed Venture Capital Park concept); • Access by industry participants to ongoing training and educational programmes, ensuring a sustainable industry, operating in accordance with international best practices. This includes the development of a local venture capital association, facilitating sharing of knowledge and expertise with international associations such as Latin American Venture Capital Association (LAVCA) and the US Venture Capital Association (USVCA). 5.0 Proposed Implementation Timeline The project was initiated in June 2011, with preparatory work for full project launch being carried by the DBJ. Project activities currently undertaken in this project initiation phase, up to January 2012, include: Development of project document for submission to the International Development Partners. This includes the gap analysis and the identification of project components. Draft of proposal to undertake a study of the feasibility of developing a Technology Park. Engagement of stakeholders and conducting of stakeholder meetings and workshops Development of media information. Development of initial website for dissemination of basic information. Initiate plans for Conference to launch the JVCP. Development of contacts with external funding agencies, other country programmes and international associations. Development of a governance structure for the JVCP – Project Oversight and Project Steering Committees, the latter having representation from all major stakeholders . 158
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i A GROWTH-INDUCEMENT STRATEGY FOR
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To the many ordinary Jamaicans who
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Preface The Jamaican economy has ex
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for making a determined start on th
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the private sector groups, listed b
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Citibank N.A. Jamaica Branch Grace
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need for “additional fiscal space
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Chapter 2 ________________ Summary
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1.0 The Economic Situation Today 1.
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expected to provide an essential an
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Table 2.1. The Policy Framework: A
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programme of social inclusion that
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Strategic Focus Table 2.2. Growth S
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6.0 Short-Term Growth Stimulus 6.1
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decline of 2.0 - 2.2 percentage poi
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Table 2A.2. NWA Projects To be Fast
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Table 2A.5. Community Renewal Proje
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Table 2B.3. Impact of Repairing Far
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Appendix 2C Methodology of the Grow
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Part I _________ Overview 28
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2.0 Vision 2030 Jamaica Before delv
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3.0 May 2010 Security Event and Aft
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the longer than anticipated global
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April July October January April Ju
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Three industries recorded increases
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9.0 Proposals for Growth-Stimulus I
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targeted economic and social infras
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partnering with government to disco
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3.0 Growth Inducement Strategy The
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Growth-Inducement Strategy Alignmen
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50 Part II _________ Situational An
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inadequate provision of public infr
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2.0 Macroeconomic Assessment 2.1 In
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Increased global oil consumption wa
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$4,742.0 million and $688.4 million
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Non -Traditional Domestic Exports E
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negative impact of the Jamaica Debt
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ethanol and paint, whereas lower de
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Analysis of preliminary GCT data re
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The number of ship calls to the isl
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industry was, however, estimated to
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4.0 Projected Performance 4.1 Calen
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increased marketing and extension s
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Electricity & Water For FY 2010/11,
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J$ Million Figure 5.1. Private Sect
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2011/12). These extreme weather eve
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Chapter 6 ________________ Assessme
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creates allocative inefficiencies,
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Million $ Per cent Jun-10 Mar-10 De
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Table 6.1. Employed Labour Force by
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J$ million Mar-10 Dec-09 Sep-09 Jun
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FIGURE 7: GROSS NATIONAL SAVINGS RA
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4.10.2. However, the extent of the
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Part III ____________ Analytical Fr
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functional relationship between the
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It follows that: (5) s = I/Y = [S -
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However, the existence of measureme
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(d) v* = Y*/K* This is a measure of
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Page 165 and 166: 5.0 Expected Outcomes These measure
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ight. Where we as a society fail is
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and exclusion of the majority of th
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the elders, youth, children. What f
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C __________________ Enhancing Nati
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Figure C.1. National resilience is
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