EDITORIAL - Optimism blooms in the capital market

With less than stellar economic growth predicted for Jamaica and the region, it was encouraging to hear the recent positive outlook of Dolphin Cove's Stafford Burrowes.

As he moves to list his firm on the Junior Market of the Jamaica Stock Exchange (JSE), the tourism attraction pioneer was very upbeat, forecasting an "extremely exciting" future for Jamaica's tourism.

Mr Burrowes is in expansion mode but he wants to achieve this through equity rather than by incurring a debt. Therefore, he is looking to investors to take a stake in the company so that Dolphin Cove can grow in size and profit. Dolphin Cove's success is Jamaica's success, for it means employment and, hopefully, another magnet to draw visitors to our shores.

As he articulated the reasons for his optimism, it was one of the rare occasions on which an industry player appears to be embracing a relationship with Cuba rather than dreading competition from our Spanish-speaking neighbour. Mr Burrowes suggests that one of the spin-offs from Cuba's expanded tourism would be a joint offering to cruise passengers of Jamaica and Cuba.

Dolphin Cove is the seventh local company to seek listing on the JSE's Junior Market which was launched in April 2009, following in the footsteps of companies such as Access Financial Services, Lasco and Tetley Tea. The prospects of these companies have been greatly advanced via making an initial public offering (IPO), especially since they will enjoy full tax exemption for the first five years after listing.

positive way of lifting businesses

The significance of all this activity on the JSE should not be ignored, for it marks a positive way of lifting small businesses to the next level. For example, the rigours demanded of a company seeking to be listed ensure that the business has the fiscal and accounting discipline to draw investors to the table.

As the companies queue for listing they have had to strengthen their management, fortify their boards and develop a clear path to profitability, all of which have made them more palatable to investors and banks.

Having been burnt by sham investment schemes in the past, it is understandable that some Jamaicans have become risk-shy and may view these IPOs with suspicion. Like any other investment, an IPO has inherent risks. However, Jamaica has robust regulatory agencies with the necessary monitoring capabilities to ensure that IPO guidelines are strictly adhered to.

It seems the Jamaica Stock Exchange needs to do more to educate businesses, especially small ones, engaged in retail, agriculture and services, on how they, too, can seize opportunities to finance for growth.

In an anaemic job market, it is conceivable that clever people with a good business idea may be seeking to become entrepreneurs, and they should be encouraged to work with their financial advisers to gain access to the capital market. Persons with savvy and technical know-how should not be deterred by lack of cash; they should be encouraged to tap the capital market as a means of finding the resource base which they lack.

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