KINGSTON, Jamaica (CMC) — The Planning Institute of Jamaica (PIOJ) is welcoming the government’s decision to revise its framework to enable pension funds to invest up to five per cent in venture capital as a “positive development”.
PIOJ Director General Dr Wayne Henry says the move augurs well for Jamaica, in terms of facilitating increased investment opportunities that can potentially spur heightened economic activities and higher levels of sustainable growth.
“What you want in any entrepreneurial space is the ability to take risks and implement ideas, which we are not short of in Jamaica,” he told reporters.
Finance and the Public Service Minister Dr Nigel Clarke made the announcement at a Compete Caribbean Partnership Facility (CCPF) forum in Kingston earlier this week.
He said the move will enable trustees to invest $25 billion in venture capital to generate funds for business start-ups, based on the US$550 billion in pension funds.
Venture capital is private equity financing used to fund small, early-stage and emerging firms deemed to have high growth potential or have demonstrated high growth, in terms of the number of employees and/or annual revenue.
Clarke said the decision comes against the background of the “non-existence of institutional capital to pursue venture and risk-taking activities”.
He said that the move would represent a “game-changer” for business opportunities, innovation and growth, coming from a position where there are restrictions on the utilisation of pension funds for investments.
“Financing is the oxygen of business. You can’t operate a business without it having financing or access to finance,” Clarke said, adding that “no longer will you be able to satisfy pension liabilities by investing in Government Paper.
“You are going to have to take risks,” he added.
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