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THE impact of Tropical Storm Nicole last week has not only left the island in a state of despair, but also tremendous disrepair, once again bringing to the forefront the need for a complete overhaul of the country's infrastructure; particularly our drainage system. It has also reintroduced the subject of effective planning and foresight as road maps toward sustainable development.
THE impact of Tropical Storm Nicole last week has not only left the island in a state of despair, but also tremendous disrepair, once again bringing to the forefront the need for a complete overhaul of the country's infrastructure; particularly our drainage system. It has also reintroduced the subject of effective planning and foresight as road maps toward sustainable development.
Approximately two years ago, Tropical Storm Gustav caused extensive damage to Jamaica's road network, bridges, water mains and to a lesser extent electricity and telecommunication facilities, racking up a cost of $12 billion. And yet, here we are again — in a similar situation, requiring a similar amount of financial resources.
Discernibly, natural disasters will occur from time to time leading to financial burdens, environmental damage and in the worst case scenario, loss of life. However, it is the preventative mechanisms (in some cases drawn from past mistakes) that determine not only how well we bounce back, but importantly how much better we will fare the next time around. With regard to Jamaica's current infrastructure catastrophe -- the problem is clear -- valuable resources have been expended putting Band-Aids on wounds that in fact require surgery. Thus, it is no surprise that the same roads sink and the same bridges collapse each time we experience heavy rainfall. Moreover, the gullies that were created to alleviate the impact of heavy rainfall have become a source of additional strife due to a lack of proper maintenance and enforcement of building codes. Therefore, it is not spending alone that needs to be considered, but also the quality of work if we wish to achieve growth and sustainability.
Recognising this, the GOJ launched the Jamaica Development Infrastructure Programme (JDIP) in September, a five-year multi-billion-dollar project funded by the Government of China aimed at restoring major and parochial roads, bridges and walls, as well as periodic road maintenance. This initiative is not only aimed at improving infrastructure but is also geared toward stimulating the economy via job creation and the expansion of demand. From a long-term perspective, a programme designed to overhaul Jamaica's infrastructure could potentially allow for future resources to be routed to other sectors which need jump-starting, such as manufacturing and agriculture that are vital drivers of the economy.
Certainly, Tropical Storm Nicole has been a major setback in this equation. As anticipated, there will be some rechannelling of JDIP resources towards cases that need urgent attention. On Monday, Transport and Works Minister Mike Henry presented a multibillion-dollar repair bill for Cabinet approval. Henry noted that it will cost approximately $1.5 billion alone to clear roadways, drains and gullies that are currently blocked. Additional resources are needed to begin repair work, and as funds from JDIP are insufficient, the Government is already in the process of seeking supplementary funding from multilateral agencies and other sources.
Nevertheless, the issue at the heart of the problem is still not being addressed -- that is the structural reform needed to overcome the grave burden of constant rebuilding. The Planning Institute of Jamaica (PIOJ) said it best when it noted in its October 2008 report on Tropical Storm Gustav that "the combination of natural hazards, poor planning decisions, and abuse of the natural environment will continue to increase vulnerability, particularly among the poor, and adversely affect the country's goals towards economic development".
Coming out of this assessment, the PIOJ reiterated several recommendations to this end. Measures included declaring and enforcing "No Build Zones" across the island, effecting forced relocation of communities along gully and river banks as well as preserving the natural drainage systems and retrofitting and maintaining man-made drainage systems to accommodate increased run-off and debris flow. Had some of these initiatives been effectively implemented subsequent to Tropical Storm Gustav, potentially the cost of the most recent storm may not have mirrored that of Gustav.
Rather than dwelling on past oversights, we are now charged with devising a plan to ensure that we do not face as many setbacks from the inevitable effects of Mother Nature. Government spending is needed to kick-start the economy that contracted by 1.6 per cent and 3.5 per cent over fiscal years 2008/2009 and 2009/2010 respectively. We must bear in mind however that if resources are not deployed with foresight, we will only end up in a deeper hole in the long run. Jamaica should not only increase spending to stimulate aggregate demand and boost output and employment, but efforts should also be stepped up to ensure that resources are allocated efficiently and for the greater good of the population.
While private sector input is recognised as an important contributor, it cannot be relied upon as the only major driver of the country's economic growth initiative. In other words, it is also the Government's objective and not only the private sector's to fuel productivity. Though the GOJ has taken the right steps toward strengthening fiscal policy resulting in a stable macro economy, with interest rates at the lowest level in more than three decades, stability in the foreign exchange market and single-digit inflation, it is clear that a key link is missing. While infrastructure spending may be the norm in any society, we must view effective planning as critical to building a solid foundation for stimulating our productive sectors, thus steering us down a smooth road towards achieving economic growth.
Kimberly Thelwell is a manager, research and analyst, corporate finance and advisory services at Stocks & Securities Ltd. You can contact her at kthelwell@sslinvest.com.
THE impact of Tropical Storm Nicole last week has not only left the island in a state of despair, but also tremendous disrepair, once again bringing to the forefront the need for a complete overhaul of the country's infrastructure; particularly our drainage system. It has also reintroduced the subject of effective planning and foresight as road maps toward sustainable development.
Approximately two years ago, Tropical Storm Gustav caused extensive damage to Jamaica's road network, bridges, water mains and to a lesser extent electricity and telecommunication facilities, racking up a cost of $12 billion. And yet, here we are again — in a similar situation, requiring a similar amount of financial resources.
Discernibly, natural disasters will occur from time to time leading to financial burdens, environmental damage and in the worst case scenario, loss of life. However, it is the preventative mechanisms (in some cases drawn from past mistakes) that determine not only how well we bounce back, but importantly how much better we will fare the next time around. With regard to Jamaica's current infrastructure catastrophe -- the problem is clear -- valuable resources have been expended putting Band-Aids on wounds that in fact require surgery. Thus, it is no surprise that the same roads sink and the same bridges collapse each time we experience heavy rainfall. Moreover, the gullies that were created to alleviate the impact of heavy rainfall have become a source of additional strife due to a lack of proper maintenance and enforcement of building codes. Therefore, it is not spending alone that needs to be considered, but also the quality of work if we wish to achieve growth and sustainability.
Recognising this, the GOJ launched the Jamaica Development Infrastructure Programme (JDIP) in September, a five-year multi-billion-dollar project funded by the Government of China aimed at restoring major and parochial roads, bridges and walls, as well as periodic road maintenance. This initiative is not only aimed at improving infrastructure but is also geared toward stimulating the economy via job creation and the expansion of demand. From a long-term perspective, a programme designed to overhaul Jamaica's infrastructure could potentially allow for future resources to be routed to other sectors which need jump-starting, such as manufacturing and agriculture that are vital drivers of the economy.
Certainly, Tropical Storm Nicole has been a major setback in this equation. As anticipated, there will be some rechannelling of JDIP resources towards cases that need urgent attention. On Monday, Transport and Works Minister Mike Henry presented a multibillion-dollar repair bill for Cabinet approval. Henry noted that it will cost approximately $1.5 billion alone to clear roadways, drains and gullies that are currently blocked. Additional resources are needed to begin repair work, and as funds from JDIP are insufficient, the Government is already in the process of seeking supplementary funding from multilateral agencies and other sources.
Nevertheless, the issue at the heart of the problem is still not being addressed -- that is the structural reform needed to overcome the grave burden of constant rebuilding. The Planning Institute of Jamaica (PIOJ) said it best when it noted in its October 2008 report on Tropical Storm Gustav that "the combination of natural hazards, poor planning decisions, and abuse of the natural environment will continue to increase vulnerability, particularly among the poor, and adversely affect the country's goals towards economic development".
Coming out of this assessment, the PIOJ reiterated several recommendations to this end. Measures included declaring and enforcing "No Build Zones" across the island, effecting forced relocation of communities along gully and river banks as well as preserving the natural drainage systems and retrofitting and maintaining man-made drainage systems to accommodate increased run-off and debris flow. Had some of these initiatives been effectively implemented subsequent to Tropical Storm Gustav, potentially the cost of the most recent storm may not have mirrored that of Gustav.
Rather than dwelling on past oversights, we are now charged with devising a plan to ensure that we do not face as many setbacks from the inevitable effects of Mother Nature. Government spending is needed to kick-start the economy that contracted by 1.6 per cent and 3.5 per cent over fiscal years 2008/2009 and 2009/2010 respectively. We must bear in mind however that if resources are not deployed with foresight, we will only end up in a deeper hole in the long run. Jamaica should not only increase spending to stimulate aggregate demand and boost output and employment, but efforts should also be stepped up to ensure that resources are allocated efficiently and for the greater good of the population.
While private sector input is recognised as an important contributor, it cannot be relied upon as the only major driver of the country's economic growth initiative. In other words, it is also the Government's objective and not only the private sector's to fuel productivity. Though the GOJ has taken the right steps toward strengthening fiscal policy resulting in a stable macro economy, with interest rates at the lowest level in more than three decades, stability in the foreign exchange market and single-digit inflation, it is clear that a key link is missing. While infrastructure spending may be the norm in any society, we must view effective planning as critical to building a solid foundation for stimulating our productive sectors, thus steering us down a smooth road towards achieving economic growth.
Kimberly Thelwell is a manager, research and analyst, corporate finance and advisory services at Stocks & Securities Ltd. You can contact her at kthelwell@sslinvest.com.
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