Jamaica Needs Innovation to Grow

Omar Newell

The Global Entrepreneurship Monitor’s (GEM) recent corroboration of a long-held notion that we have become a nation of traders underscores Jamaica‘s lack of innovation.

Innovation fuels industry and promotes economic and human development. The GEM’s report should, therefore, be met with the full commitment of the Government and private sector to provide financing opportunities for young would-be entrepreneurs with innovative ideas.

Gleaner Business writer, Avia Collinder, in her coverage of the launch of the 2011 GEM report, noted the researchers’ displeasure with the “penchant for retail among new entrepreneurs”. It is my belief that this addiction to retailing is a direct result of the structure of our financial system. On the most basic level, the major primary challenge in curbing our retail lust is the absence of equity financing for new businesses.

Debt is a terrible option for most innovators seeking to convert an idea into a prototype. Even if the banker is convinced that there is a market for the idea, is confident in the start-up’s management team, and is sympathetic to the project, the first loan instalment would likely be due long before the prototype goes to production.


The same problem also exists with respect to services. I quickly learned this is true while seeking to raise capital for my own start-up, an idea based on providing services, which various ministers of government, government agencies and bankers confirm is practical and timely and for which exists an identified growing market.

Equity-based financing differs from debt-based options in that the financiers are not seeking repayment in the form of instalments and interest. They are part owners of the business, receive dividends, and as such have vested interests in the success of the businesses.

Equity financing brings more than money. It brings management skills. Common business-school wisdom suggests that most failed businesses collapse because they lack both money and management. Equity investors will generally identify weaknesses in management and assist to fix those before pumping money into a venture. Further, they will generally earn the right to appoint board members to represent their interests.

In the absence of a venture-capital industry, we need a creative way to bring together Jamaicans with money and Jamaicans with ideas.

Various prominent members of the private sector have, from time to time, lamented the need for venture capital…

Read more: The Gleaner

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