Jamaican diaspora a key partner for economic growth

While the economic and social ties between overseas Jamaicans and their homeland have always been strong, the emergence of remittances as the largest source of foreign-exchange inflows has reinforced public understanding of the powerful economic value of this relationship. It was, therefore, disturbing to hear last month of threats of a boycott of the biennial Jamaican Diaspora Convention for 2011 because of a dispute over changes to the format of the conference and the method of selecting delegates.

With these issues apparently now being resolved, leaders of the movement must be relieved that the convention, which was postponed from last June because of the unrest in west Kingston, will take place later this week at the Sunset Jamaica Grande hotel. Many people have dedicated a lot of effort towards building a more structured approach to the movement consistent with the central role of overseas Jamaicans in the economic and social development of our country. Indeed, relations with the diaspora have been put on a more structured footing since the Returning Residents Facilitation Unit was set up by former Prime Minister P.J. Patterson in 1993, and the Jamaican Overseas Department (JOD) was established as a formal part of the foreign affairs ministry.

jod limited

In more recent years, the Diaspora Advisory Board was formed to advise the Government on issues relating to overseas Jamaicans, with members being drawn from communities in Canada, the United States and the United Kingdom. But as Delano Franklyn points out in his book, The Jamaican Diaspora - Building an Operational Frame-work, the capacity of the JOD is too limited to manage the scope and volume of work flowing from the relations with the near 2.6 million overseas Jamaicans. In this regard, he drew attention to the sizeable section of the diaspora in the age group 18-30 years, and the keen interest and participation of third-generation overseas Jamaicans in the last convention in 2008.

This is most encouraging, but their continuing ties to Jamaica cannot be taken for granted. As stated by Phillip Mascoll, an original member of the Diaspora Advisory Board from Canada: "These young people need to connect with their homeland, the land of their foreparents, and to offer themselves to assist, where necessary, in building Jamaica. If they disconnect from Jamaica, a precious link will be broken, and their children and children's children will have no connection at all."

To understand the potential fallout from the lessening of the connection with the Jamaican diaspora, we could examine the data on remittances. Last year, these inflows amounted to US$1.9 billion and represented the largest source of foreign-exchange inflows despite the continuing recessionary conditions in the host countries of the diaspora. The increase totalled US$116 million, or 6.5 per cent more than the US$1.79 billion brought in 2009 at the height of the international economic crisis. And, importantly, these resources came in while the bauxite industry, another vital source of foreign exchange, had collapsed.

foreign-exchange inflows

Over the past five years, overseas Jamaicans sent home some US$9.5 billion, or an average of US$1.9 billion per year, far exceeding any other source of foreign earnings. And they outstripped loans and foreign direct investment as sources of foreign-exchange inflows. In this regard, the Jamaican diaspora is not unique, as the same pattern has been observed across developing countries in Latin America and the Caribbean, Africa, India, China and many other Asian countries.

A notable difference, however, has been shown in the deployment of remittance inflows with mechanisms being developed in an increasing number of countries to channel them into directly productive investments. Several countries in Latin America have made significant strides in this direction and the trend has spread to Africa. In China and India, their diasporas have long become the major sources of foreign capital inflows, and just as important, have been the interface with companies with access to consumer markets in North America and Europe.

A much-talked-about idea in Jamaica has been that of a diaspora bond as an instrument to raise financing for critical sectors such as education, or for other areas including infrastructure development. Other countries have moved ahead in implementing the concept. Could it be that in the current climate, when interest rates in the US, Canada and the UK are at historic lows, that Jamaica could launch this type of bond? Surely, it is time for our remittance companies to graduate to this role that is essential to spurring investment and economic growth in Jamaica.

Though the Diaspora Convention is not the forum to examine and map out strategies for this initiative, it is a part of the web of relations that will keep our Jamaicans abroad in close connection with the homeland. As we have seen from the scale of remittances, those links can deliver powerful economic returns.

Dennis Morrison is an economist. Email feedback to columns@gleanerjm.com.