Prime Minister Andrew Holness injected an extremely welcome note of leadership, transparency and accountability (in short, an emphasis on good governance) for his first Cabinet meeting earlier this week. He both invited the press, and emphasised the importance of the Ministerial Code of Conduct.

The 2002 code, which was signed by former Prime Minister PJ Patterson, is based on the recommendations of a UK committee headed by Lord Nolan, “The Nolan Report”, which laid out the seven principles of public life: Selflessness, Integrity, Objectivity, Accountability, Openness, Honesty, and Leadership. It can be argued that three of these characteristics: openness, accountability and honesty together define transparency in government.

It is the Government’s obligation to share information with its citizens that enables them to hold their public officials accountable. Furthermore, governments exist to serve the people, and in an ideal world, their representatives would take decisions “solely in terms of the public interest”, thereby exhibiting “selflessness”.

While it is not a precise analogy, one way to look at our situation is that the shareholders (voters) at their annual general meeting (the election) have appointed new directors, and in particular a new managing director (prime minister) to be the stewards of the company called Jamaica.

This company, Jamaica, however, is still badly in need of a turnaround. In addition to better governance, it needs, in the words of my late father “not more debt, but more equity”. It can be argued that the same Nolan principles for public life are also necessary in private life, operating instead as agents of shareholders (and other stakeholders) accountable to a board of directors, rather than the public interest, the typical venture capital or private equity model of “stewardship” of other people’s money.

After two debt exchanges, and a succession of balanced budgets, Jamaica now has sustainably low government interest rates. This means the Government is no longer competing with the private sector for capital at interest rates north of 20 per cent, the latter being the rate of return that should be expected from what is supposed to be higher-risk equity.

Another piece of the puzzle dropped into place with the doubling of Jamaica’s stock market in 2015, a consequence of reduced macroeconomic risk, so that already established businesses no longer trade at a huge discount to their book value.

However, macroeconomic stabilisation is not enough. There is a huge shortage of equity capital, particularly for the industries that don’t yet, but could exist in Jamaica.

VENTURE CAPITAL

One of the answers is to encourage venture capital — a term broadly used here to include private equity (also infrastructure funds), as well as some junior stock exchange companies. Other measures to promote equity development include privatisation, and the more attractive employee share ownership schemes (ESOPs).

However, the most powerful way of unlocking equity would be a combination of reduced titling costs and the acceleration of approvals and other titling procedures, combined with a sharp reduction in stamp duties and transfer taxes to unfreeze the massive amount of “dead” capital residing in land — as outlined forcefully in the Planning Institute of Jamaica’s growth-inducement strategy of 2011, the key consultant/author being Professor Donald Harris.

As suggested in my 2006 online paper for the Economic Commission for Latin America and the Caribbean (ECLAC),

A new approach to development banking in Jamaica, the Development Bank of Jamaica (DBJ) has correctly sought to be a catalyst for the creation of multiple private sector-led venture capital funds, rather than provide capital directly as a state-owned Development Bank, or as subsidised credit through approved financial intermediaries.

It has, therefore, chosen a high-risk, high-return model that is likely to couple long-term sustainability with financing the new industry creation that Jamaica desperately needs.

The key sign of the initiative’s long-term sustainability is that the vast majority of the money for the first funds will be raised locally.

Private venture capital funds have been set up in Jamaica before, approximately one every decade, with the first being Trafalgar Development Bank in May 1984. Although the initial equity for the private sector-owned Trafalgar Development Bank (an approved venture capital corporation) was raised from a number of large local businesses, it was reliant on the international development finance institutions for its main funding.

Most of the money for such regional initiatives, like the Caribbean Investment Fund in 2000, and other more recent regional venture capital funds have also come from either international development institutions or a limited number of private investors based outside the region.

This time, however, the high level of preparation by the DBJ, including the coupling of local capital with multiple teams of Jamaican investment talent based here in Jamaica, and the Government’s continuing drive to improve the overall business environment, suggests the initiative should be a long-term success.

The early implementation of the Jamaica Labour Party manifesto promise to extend the junior stock exchange tax benefits will also be key to the creation of a sustainable venture capital ecosystem by the Development Bank of Jamaica, as this will provide a viable exit strategy lacking in previous venture fund attempts.

It is therefore worth highlighting a few of the speakers from the Development Bank of Jamaica’s very successful third venture capital conference, held last week between March 7 and 9.

The keynote speaker, US-based Nigerian Chinedu Echeruo, chronicled his entrepreneurial journey with his five Cs – Creativity (one can only solve a problem that one can imagine in one’s mind’s eye), Conviction (the crisper your visualisation of your end goal, the more likely you are to be successful), Clarity (how big is the opportunity and does the solution work for the customer), Capital (financial and human, the inevitable deficit being solved through networking) and Concentration (remaining confident in your vision is key).

Serial entrepreneur and venture capitalist Paul Ahlstrom gave a seminar on his “Big Idea Challenge”, see

www.bigideacanvas.com for his excellent monetisable “pain point” methodology, exciting over 250 mainly young Jamaican entrepreneurs — five teams of whom got to pitch their idea in 30 seconds. The youngest team, a group of sixth form girls from St Andrew High School, emerged as the winners (chosen by the crowd) of $30,000 cash ,plus a personalised copy of his bookNail it Then Scale It.

Futurist David Houle, author of

The Shift Age, explained the absolute necessity of faster innovation for Jamaica as a country. Global trends, happening now (including climate change) reveal that we no longer have any time to waste.

Finally, Monday’s infrastructure workshop by Adam Nicopoulous of ADN Capital Ventures was extremely timely, given the need for the funding of infrastructure assets, and the public sector not having the resources or fiscal space. Private equity funding provides an opportunity for the funding of these projects as well as providing investment assets for pension funds seeking long-term, stable cash flows.