Going for growth: on the role of executive management

Densil A. Williams, GUEST COLUMNIST

The 2013-14 Budget Debate has come and gone, and as is customary, we are left with a plethora of grand announcements and proposals as to how things should and will be done.

So, the announcement effect has achieved its purpose, that is, to calm markets and to restore hope. However, announcement effects only last for a short time and the after effects can be worse than what existed, if the announcements are not realised.

The singular most important factor that will guard against the downside risks of the announcement effects is adroit executive management and leadership. What has been lacking in Jamaica over the last four decades is a clear understanding of the role of management in driving the growth agenda. We have some of the finest technical works outlining our many problems coming from local institutions, as well as international institutions.

What we have missed for a long time is a proper structure around how to ensure that we implement the recommendations from these fine works. This calls for strong and decisive executive management.

I am more convinced today than ever before that, besides the WTO agreement which Jamaica signed in 1995 which has restructured the economic landscape by eliminating some industries and led to the emergence of new ones, this new extended fund agreement with the IMF represents the most significant inflexion point in the country at this time.

We are either going to implement this agreement well and move the country forward or we can play around as if it is business as usual and allow the country to deteriorate further.

A close reading of the Government's commitment with the fund suggests that the job ahead is not an effortless one. The Government, in its application for balance of payment support and, in this extraordinary move, budgetary assistance as well, acknowledged that fiscal and debt unsustainability has been the main source of macroeconomic vulnerability in Jamaica.

As such, the Government's medium-term strategy aims at virtually eliminating the fiscal deficit and substantially reducing the debt burden. The Government committed to achieving the following objectives by the end of the fiscal year 2015-16:

A central government budget consistent with an overall fiscal balance of 0 per cent of Gross Domestic Product (GDP).

A debt-to-GDP ratio of no more than 100 per cent by fiscal year (FY) 2015-16. The important observation is that the government noted that: "Despite actions being taken in pursuit of this objective, current projections under the programme suggest that the target will not be achieved. Within this context, and based on performance during the programme, the Government may amend the Financial Administration and Audit Act to be consistent with actions to achieve debt sustainability."

A ratio of wages/GDP for the central government of no more than nine per cent of GDP.

Beyond 2015-16, these targets are to be maintained or, in particular, for the debt ratio to be improved further. The long-run objective is to reduce the debt ratios of the Government to around 60% of GDP.

SIGNIFICANT BOOST NEEDED

These targets cannot be met without a significant boost to production and productivity in the economy. Simply put, we will have to grow the economy substantially. Indeed, the Government did admit that the programme aims at yielding permanent growth dividends by raising growth to at least 2% by FY2016-17. This is a very modest goal, and seems way below what is needed to achieve the targets stated above.

However, in the agreement, the Government did note that this growth target is arrived at with significant upside potential, as investment plans are implemented and structural reforms result in improvements in the business climate and productivity.

In order to get growth going in the economy, the Government has identified a number of elements in what it has dubbed its growth strategy. These include:

Strategic investments.

Enhancing the business environment.

Enhancing access to credit and private-sector project finance.

Labour market interventions and reform.

It is important to note that each element has a number of activities that need to be accomplished in order to realise the level of economic growth envisioned in the agreement. For example, under the strategic investment pillar, the Government identified as important activities:

Establish Jamaica as a logistics hub, including expanding port, cargo and maritime facilities and economic zones.

Implement energy-sector initiatives to achieve fuel-source diversification, facilitate energy conservation and promote liberalisation in delivery to achieve progressive reductions in the cost of energy.

Strengthen the resilience of the country to natural disasters.

Measures to improve the business conditions for medium and small enterprises and small farmers, including, for the latter, specific projects aimed at increasing the resilience and adaptive capacity of rural communities that are vulnerable to risks from climate change and natural hazards.

It is not an easy task to properly plan and execute all these various activities. We have an environment that is generally not conducive to innovation and agility in business. There is also a high level of distrust for government, so any creativity to get things moving will be seen as corruption. As such, the bureaucrats become very timid in making bold decisions, although they may not be breaching any rules and regulations but merely using subtleties to get the job done.

Indeed, to move from the announcement effect to implementation, each ministry will have to establish a team with the requisite project management expertise, a track record for getting things done, and the ability to efficiently allocate scarce resources to get the optimum returns, to not just oversee the projects and programmes but to execute them once and for all. Similarly, there needs to be a major oversight project team which sits in the office of the prime minister. This team should co-ordinate all the various teams in the respective ministries and departments to ensure that the projects are being implemented in a timely manner and in an efficient way.

In this regard, the announcement of the team that will be chaired by University of the West Indies principal and pro-vice-chancellor, Professor Gordon Shirley, is a masterstroke by the prime minister. This team must report directly to the prime minister and the first mandate must be the development of a work plan which shows projects to be implemented in the next two years, detailed activities to be undertaken, expected outcomes, and key performance indicators.

The prime minister then needs to present this to her Cabinet for sign-off and, afterwards, to the country. This will help in transparency and greater accountability. The Shirley team should not be used as a mere monitoring committee but a real project-management team. Otherwise, the benefits from the deep skill set of the chairman and his members will not be realised.

SERIOUS APPROACH ESSENTIAL

If Jamaica is to move from business as usual to business unusual, we have to take the management of our resources more seriously. We cannot pay lip service to the issue of management and think that we can merely put some bodies into positions and hope that they get the job done. We have made this mistake in the past and we cannot make this same mistake again.

Persons who are put into management positions must be trained in the management discipline. If they do not have the requisite training, they need to be sent on short courses to improve their understanding of the management field. We have local business schools in abundance these days.

Twenty-five years ago, most persons who wanted professional management training would have to go overseas. Today, they can get this training at home, even while maintaining their jobs. We have the local resources here in Jamaica to improve the management talents of our people. Let us use them to move this country forward.

Dr Densil A. Williams is a senior lecturer of International Business at the Mona School of Business and Management. Email feedback to columns@gleanerjm.com and densilw@yahoo.com.