Trustees to be Given Permission to Invest Five Per Cent of Pension Fund in Venture Capital

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Jamaica News: Finance and the Public Service Minister, Dr. the Hon. Nigel Clarke, says Jamaica’s pensions industry framework is to be revised to enable trustees to invest up to five per cent of the $550 billion accumulated, in venture capital.

This, he said, equates to $25 billion and will represent a “game changer” for business opportunities, innovation and growth, coming from a position where there were restrictions on pension fund investments.

The Minister was speaking at the opening of a two-day stakeholder forum, titled ‘Towards Exponential Growth in Jamaica’, at the Marriot Kingston Hotel, on Tuesday (November 20).

Venture capital is private equity financing used to fund small, early-stage, emerging firms deemed to have high growth potential or which have demonstrated high growth, in terms of the number of employees and/or annual revenue.

Dr. Clarke said the decision to facilitate pension fund investments comes against the background of the non-existence of institutional capital to pursue venture and risk-taking activities.

“Financing is the oxygen of business. You can’t operate a business without it having financing or access to finance,” the Minister emphasised.

He further argued that in the context of Jamaica’s entrenched macroeconomic stability where low, stable and predictable inflation is being pursued, “no longer will you be able to satisfy pension liabilities by investing in Government Paper… . You are going to have to take risks”.

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Dr. Clarke said Jamaica has an opportunity to make the most of the unprecedented opportunities now materialising as a result of macroeconomic variables that are all aligned, and resulting in the country “moving in the right direction”.

He said the Government’s thrust, in this regard, will be to pursue strategies that facilitate the creation of ecosystems of innovation and afford opportunities to all, based on individuals’ development, and the application and linkage of knowledge, “making sure that it can be monetised… and unleashing institutional capital to ensure that venture capital can be financed in Jamaica”.

“We intend to have a Jamaica where every [person] possessed with drive, ambition and motivation has an opportunity and that they have the avenue by which to access financing and capital to pursue that opportunity. As we know, from our own experience… there are Jamaicans with talent who just need an opportunity,” Dr. Clarke added.

The two-day forum brings together local policymakers and regional and global stakeholders to deliberate on the extent of support to develop an ecosystem that repositions Jamaica to tap into and take advantage of the fourth industrial revolution, incorporating greater technological adaptation.

It is being staged under the auspices of the Compete Caribbean Partnership Facility (CCPF), which delivers innovative and practical solutions that stimulate economic growth, increase productivity and foster competitiveness in 13 Caribbean countries.

The CCPF is a partnership involving the Inter-American Development Bank, United Kingdom Department for International Development, Caribbean Development Bank, and Government of Canada.

 

Source: JIS News

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