Economic Independence Requires A New, Indigenous Entrepreneurial Class
Below is an excerpt from a speech delivered at the Mona School of Business & Management Annual Conference on Thursday, July 11.
The Enterprise and Entrepreneurship in the Caribbean Region paper by Minto-Coy, et al, (published by the Mona School of Business & Management) focuses on the domestic and enterprise level constraints to entrepreneurship and small business development in the Caribbean, and emphasises the role of policy and entrepreneurship in achieving developmental goals.
A number of constraints to entrepreneurship are identified, some of which we will recognise as the usual suspects: access to and cost of finance, taxes and bureaucracy, an inadequately trained workforce and crime and corruption. Despite these barriers, the research finds that versus a number of developed-country comparators, fear of failure is lower in the Caribbean and entrepreneurial intentions are higher.
Troubling, however, is the finding that entrepreneurship in the region appears, at least in its current state of development, to have a lower potential to contribute to the economy with respect to employment and innovation; and points to relatively low levels of research and development transfer and entrepreneurial education.
The paper also provides vital historical context. Perhaps the most significant and resonant for me is the contention that Sir Arthur Lewis’ vision for economic development, involving industrialisation by invitation and a hoped-for parallel emergence of an indigenous entrepreneurial class that would learn the tricks of the trade from foreign entrepreneurs, has not been fulfilled.
The authors point out that “while the invitation to industrialise was accepted … limited enfranchisement of the indigenous entrepreneur actually took place”. And even when during the 1990s efforts were made to address the development of indigenous micro and small businesses, those efforts had a largely social focus targeted at unemployment and poverty alleviation. Policymakers paid far less attention to the role of entrepreneurs as innovators and risk-takers whose collective enterprise had the potential to transform local economies.
An important related point is made about the “lack of an explicit understanding of entrepreneurship being defined based on outcomes”, that is, the manner in which entrepreneurial practice can actually lead to economic growth.
The authors suggest that this lack of clarity is the most likely reason for the ineffectiveness of policy in generating a robust entrepreneurial culture in the region. I believe they are correct. If we don’t know what outcomes we are seeking to achieve through entrepreneurial development, it is very difficult to envision what success looks like, and more so, to identify the right policies and interventions that would get us to that place.
I have long felt, while the Caribbean people, and Jamaicans in particular, are possessed of what I have described as an “innate entrepreneurial bent”, we seem never to have been able to fully mobilise those entrepreneurial tendencies, largely because of the lack of a policy and institutional framework that recognises the developmental potential of entrepreneurship and truly nurtures and supports our high-potential entrepreneurs.
I also concur with Sir Arthur Lewis’ contention that true economic independence, for Jamaica and the region, will only come with the emergence of a new and indigenous entrepreneurial class, which will drive the key elements of innovation and productivity that are essential prerequisites to sustained high levels of economic growth, job creation and improved standards of living for all Jamaicans.
The authors cite three key approaches in addressing the Caribbean’s entrepreneurship deficit and it is worth repeating them here:
1 The conceptualisation and definition of entrepreneurship in a developmental context.
2 Clarity as to what the strategic goals are for entrepreneurship, and the development of strategies to match goals; that is, growth is required, but growth in what?
3 And finally, identification of the core constraints to achieving the desired strategic goals and addressing their underlying causes.
The paper recommends an ecosystem approach be taken to entrepreneurial development, a recommendation which I strongly endorse. It is worth noting that this is precisely the approach which has guided the Development Bank of Jamaica’s efforts in the last six or seven years through the Jamaica Venture Capital Programme (JVCP) in partnership with the IADB, as well as related initiatives such as the Ignite programme, the partial guarantee programmes through the Credit Enhancement Facility, the voucher programme for technical assistance, and the National Business Model competition which was conceived within the JVCP and is now an annual event with teams fielded from a wide variety of our tertiary institutions.
I want to use this opportunity to challenge our local institutions to take their rightful place in the entrepreneurial ecosystem; to refocus and redouble their efforts, including by taking on the role of convenor and providing thought leadership, allocating greater resources to entrepreneurship education and training, making it easier for entrepreneurs to gain licensed access to intellectual property derived from their research; and fostering closer collaboration with private-sector actors in designing and implementing acceleration and incubation programmes which can provide the mentorship and support required for aspiring entrepreneurs to thrive.
Development of a vibrant entrepreneurial ecosystem is hard work, much of it not terribly sexy, and momentum only builds gradually. But I am convinced that there are rich rewards for Jamaica and Jamaicans that will flow from that effort; and it therefore behoves all of us as stakeholders: government, private sector and academia to put our shoulders to the wheel in partnership and collaboration.
If we do this, I have no doubt that we can achieve Sir Arthur Lewis’ vision of a dynamic and innovative indigenous entrepreneurial class that in economic development terms can and must, I believe, play an outsized role in also fulfilling our founding fathers’ so far elusive dream of genuine economic independence.
– Joseph Matalon is chairman of the ICD Group Holdings Limited and the RJRGLEANER Communications Group. Email feedback to firstname.lastname@example.org.