Jamaica FDI at decade low, recovery expected by 2022
Published:Friday | September 3, 2021 | 12:08 AM
Foreign direct investment, or FDI, flows to Jamaica fell to a one-decade low in 2020, but activity in the business process outsourcing market is expected to help recover some of that lost ground by 2022.
Jamaica earned US$325 million in FDI last year, half of the US$665 million of flows reported in 2019, according to ECLAC, a regional United Nations body.
“The magnitude and characteristics of the recovery, both in 2021 and 2022, will depend on the pace of the global economic recovery,” stated ECLAC in its 2021 FDI report for Latin America and the Caribbean published in August.
The fall in Jamaica’s FDIs reflects the wider global economic fallout, due to the pandemic, with global FDIs at their lowest levels since 2011.
ECLAC said last month that Jamaica’s tourism sector was hit hard by the COVID-19 crisis, but that new projects in the business process outsourcing sector ameliorated the fallout in FDIs.
Companies that invested in Jamaica included the Founders Agency, a digital marketing firm based in the United States, which announced the opening of a new office in Kingston to serve clients in the Central American and Caribbean markets; while C4GlobalSolutions, a provider of outsourced customer services, expanded its facility in the Montego Bay free trade zone.
“Despite representing a very small amount, the sector is a major job creator,” ECLAC said in its report.
Over 60 outsourcing firms operate in Jamaica, generating US$700 million in revenue in 2020 and employing roughly 40,000 persons, according to data from the Jamaican Government’s marketing agency, Jampro.
The report also noted that remittances, which are usually associated with personal consumption, “in many cases” formed the fuel to start small businesses. Remittance flows to Jamaica in 2020 amounted to US$2.9 billion, up 21 per cent over the previous year. The rise in remittances, said ECLAC, “more than offset the decline in FDI inflows”.
FDIs inflows across the Caribbean also declined on average by 25 per cent to US$5.3 billion in 2020. Suriname, for example, registered just US$1 million of FDI, a 99 per cent decline from US$84 million in 2019.
The economies registering FDI growth were The Bahamas, up 47 per cent to US$897 million from US$611 million; and Barbados, up 22 per cent to US$262 million from US$215 million in 2019.