FINSAC, PWP and Port Antonio

(Part 3 in series on Partnership With People)

The Jamaica Government formed the FINSAC corporation in order to rescue not government but private institutions such as banks and insurance companies, the pillars of private enterprise. It monitors these institutions, determines their financial health, rescue them from bankruptcy, put them back in a healthy financial condition, establishes rules of operation, and then sells them back to some other private sector company or investor. In order to accomplish so complex an operation it hires its expertise usually at great expense. It is in the red, running up huge debts, but economic catastrophe and the loss of public confidence have been averted. So, despite the price tag, it has to be considered a success.

There are lots of similarities with the FINSAC operation and the Partnership With People (PWP), the concept proposed by Hot Calaloo. PWP, an autonomous government corporation, undertakes to run private enterprise operation with private sector partners. PWP hires expertise to run the operation. It investigates the operation for profitability potential. It establishes the rules of operation. It monitors it for efficiency and professionalism. PWP is designed to make a profit, not a rescue operation, like FINSAC so would select only operations that have profit potential. A reader raised a good question as to whether PWP would compete and displace some small struggling entrepeneur. It might, but so too would some big multinational chain operation if it could make a profit in so doing. At least PWP would consider this impact, ways to minimize this, and even invite the local entrepeneur to be a partner.

On my recent trip to Port Antonio, it was precisely this struggling entrepeneur that I saw many signs of how PWP could help.Here are three examples.

Hotel
I had lunch in this hotel high in the mountains of Port Antonio. It had an impressive spectacular view, the best in the area by far. But, that was all it had. Once a mecca in its heyday many many years ago, it was now antiquated. The rooms were deplorable and I was told that it seldom had any guests. How it stayed afloat was a mystery. Maids, attendants, cooks, waiters and the rest of the hotel staff would lose their jobs if the hotel closes. It would be a tragedy. I am sure PWP could save it. They could remodel, advertising blitz, establish shuttle to the beach, aggressive campaign to make it up to date and competitive and restore it to its former glory. At the least, PWP would obtain the expertise to make it financially sound. Or, shall we wait for Holiday Inn or some other financial multinational corporation, or bankruptcy?

Horseback Riding
I encountered a local resident struggling to make a go of horeback riding for tourists. This would be a real easy project for PWP. All it would take would be providing a cell phone, riding helmets, good advertising in the hotels, and some minimal training in running a business in a professional manner. Some additional horses would be good to accomodate the increase in business that would result.

Reach Falls Shop
I went to the beautiful Reach Falls. At the entrance I bought some delicious shrimp tea (soup) loaded with big tasty crayfish. It was dispensed from a ramshackle stall that many a tourist would probably avoid. There were other local vendors selling ital tonics etc. A nice inexpensive attractive even shed-like building plus some PWP business counseling would be a tremendous boost to the sales of these vendors.

In all of these ventures, PWP would invite these people to be partners. It would be voluntary. PWP could actually investigate the feasibility in advance and propose to accept payment for their services as a percentage of the increase in net profits above what the present owners are making now. PWP could easily become a pro-active extension of FINSAC.

Introducing Partnership With People (PWP)- the Solution to the Economic Crisis

Jamaica, the Caribbean and the World Economic Crisis
In Russia, this once mighty Soviet Union, government workers go three months without pay. Even in the recently privatised industry there, workers not only go without pay, but sometimes are paid off in goods produced. For example, they receive some manufactured clothing and have to hawk it on the streets to earn a buck. The former Asian tigers, symbols of prosperity, like South Korea, Malaysia, Indonesia, have seen their economy tumble and now face hard times and disillusionment. With the exception of the US and some of the European Union (EU), countries are mired deep in this economic crisis. Jamaica and the rest of the Caribbean are no exceptions.

Enough is Enough
In Jamaica like most of the world, the economic "salvation" was imported. Privatisation, globalisation, IMF imposed structural adjustment, currency liberalization, free trade, etc. have failed. How much longer shall we pursue these policies before our leaders realize this? Unfortunately, our leaders may be powerless to change course. Even in their own countries, they have no say. The fact is these policies have undermined the economic sovereignty of our countries to international organisations like the IMF, the World Trade Organisations, the World Bank, etc. These organisations are dominated by big rich countries and multinational corporations. Right now the WTO has imperiled our banana trade with EU.

Consequences
In Jamaica the failure of these policies are so evident as shown by:

• - banks have been dropping like flies
• - the dairy industry recently had to dump 76,000 liters of milk part of which is due to cheap imported powdered milk
• - the privatised sugar industry collapsed under millions of dollars in debt and fell back into Government hands
• - the beef industry were forced into public protest at McDonalds which buys only imported beef because it is cheaper by 14 cents per pound.
• - the Jamaica cement company is millions of dollars in debt as cheaper imported cement makes big inroads into the local Jamaica market
• - farmers in the parish of St. Elizabeth leave their abundant crops unharvested because they cannot compete with cheaper imports
• - the banana companies have restructured into one Agris Services company to be more competitive with the "Dollar" bananas of multinational US corporations led by Chiquita. Every worker was made redundant and the new company rehired about 2000 of them, but at lower wages and decreased benefits. The workers are not happy but "glad to have a job".
• - these "Dollar" bananas are so much cheaper than the local ones, if they were imported into Jamaica, would wipe out the Jamaica banana industry. So we could not only lose the EU market, but even our own local market

For Whose benefit?
Who is benefitting from these policies? Not the people of Jamaica. But, multinational corporations, like Chiquita, are. Not only here, but all over the world, even in NAFTA countries. They bear down on the local industry, driving them into bankruptcy, like a Wallmart up against a mom-and-pop store. Privatisation, globalisation, free trade...they all play into the hands of multinational corporations.

Partnership With People (PWP) - the Way to Prosperity
Still the IMF is calling for more aggressive privatisation for Jamaica and most other struggling countries. This privatisation is a bound-to-fail policy. Governments end up selling off their money-making entities, for which there is demand, and get stuck with the money-losing ones. This is a clear formula for failure. If it were the other way around, then I would be an enthusiastic supporter. But this privatisation is not the only game in town. I am proposing a new game, Partnership With People (PWP). PWP will not only bring prosperity, but has the potential to restore the country to its people and from the clutches of powerful insensitive multinational corporations.

Introducing Partnership With People (PWP)
The Govt will set up PWP corporation. PWP will in turn form subsidiary corporations specifically to provide goods or services at a profit. These PWP corporations would be relatively autonomous but under the umbrella of PWP. Some features of these PWP corporations will include:

• -extensive feasibility study to ensure profitability potential
• obtain marketing and other technical expertise on short term contract
• -take advantage of Govt contacts and access
• - determine formula for success by comparison with like corporations not only in Jamaica but worldwide
• - this formula will then be followed rigidly
• -PWP would run the corporation for a limited time to ensure profitably and high standards
• -PWP would then sell the enterprise to private individuals, partners, but maintain control by an iron-clad contract which would spell out very rigid terms such as:
• -the name (Trademark) of the enterprise could not be changed
• - sale to a partner would be in the form of a down payment with a % of sales coming to PWP in perpetuity or for some defined period.
• -PWP would control management style deciding such fundamentals as training standards and salary of employees
• -PWP would provide advertising, and state of the art professional marketing and management
• -Supplies would be bought only from PWP sources
• -Buildings would have to be maintained according to PWP standards with no changes without PWP authorization
• -Since PWP policies and management techniques are obtained from established successful companies, failure to follow to the letter would void the contract and the private partner could even lose the enterprise and forfeit their deposit. This is a vital aspect of this plan as it depends on following what works, and models like these have a greater than 90% success rate.

An important aspect of PWP is that since unlike other Govt. operations, this one is for profit, employees salary would depend on the profits of PWP. Basically, the bigger the profits, the better the pay. Given a certain time to turn a profit, PWP should not only pay for itself but provide revenues to the Govt.

In a nutshell, PWP is a franchise operation in which the Government is the franchiser and private individuals, partners, would be franchisees. Currently franchises are very expensive, making it difficult to find partners. So, creative financing. substituting products and services for financing, manipulation of fees and royalties, and such flexibility might have to be used to ensure supply of partners, each with a real stake in the business.

Background
Recently I was in France. There, I obtained a map of Paris. The map was free and produced by the McDonalds Fast food corporation. There were little golden arches all over the map, each indicating where a McDonalds was located. I thought something was wrong with that picture. Well PWP will fix that picture without doing like Bermuda, which banned McDonalds from that country.
Franchises are everywhere for everything here in the US, from Kwick Copy printing shops, maid service, Post Office boxes....everything. Besides they have a greater than 90% success rate and soon I predict they will be sweeping the Caribbean. All that money leaving the Caribbean, unless PWP is launched......

Success
Back to McDonalds... A very good friend of mine, a fellow Jamaican, attended high school here in the US. He then went to college, my alma mater, Howard University. Upon graduation, he went to England and became a barrister. He then returned to Jamaica. About 4 years later, he threw in the towel, abandoned Jamaica, and returned to the US. A barrister in the US! Worthless. In a few months I heard he had exchanged his legal wig for an apron and had become a manager at McDonalds. Now, years later, he has 2 McDonalds franchises and is wealthy!

The Challenge
The immediate challenge is can the Government successfully set up its own franchises? Now is the time to find out before we have to compete with more multinational corporations coming in and taking the bread out of our mouths. There are lots of information and expert consultants on franchising. We do not have to re-invent the wheel. A visit to the Internet will show a wealth of information on all sorts of franchises.
Ben and Jerry Ice Cream deserves special mention and real consideration as a model. They are a franchise corporation with a social conscience and proves that this is not incompatible with profit. Their highest paid employee up till recently by policy made no more than 8 times the lowest paid employee. Of course, this ratio is probably too low to attract partners, but it shows how this can be an incredibly fair and equitable system. "Yes Virginia...we can use the incentive of the profit motive, but without the contamination by greed."

Sources of PWP Franchises

• Government Divestment - instead of the traditional privatising, each enterprise should be evaluated for PWP feasibility, and adopted if prospects for profits look good.
• Existing successful private enterprises - Historically, franchises usually have started out as a single business. With success, the operations are then spread by franchise to other areas, even internationally. In this instance, PWP will look at certain successful private enterprises in the country, evaluate their feasibility for PWP, and if good, invite the owners to expand via PWP. So branches might open up in other areas all over the country. This way ensures a proven product, and an expert partner (the owner), who would derive additional benefits for his or her expertise and extra managerial duties for each additional store.
• Existing struggling private enterprises - Some business are struggling because they need professional management, capital investment, and/or better organisation. PWP could seek out such businesses, invite owners to join, and reorganise them professionally under PWP guidelines and terms.
• Create brand new enterprises - Instead of waiting for private sector, Govt would set up a profitable business to fulfill some need in the community, establish its profitability and value, then turn it over to PWP. As they say, the way to entrepreneurial success is to "find a need and fill it".
• Also, private individual could identify a business potential, for which he needs help to set up. He could then convince the Govt to set it up as a PWP project with him as the partner if he or she qualifies.

The Choice
Recently I saw in the Jamaican papers much fanfare about the opening of a Century 21 Real Estate office in Jamaica. More franchise profits to a foreign company and also getting free advertising advantage over our own Jamaican real estate companies! That map of Paris...roads of money leading back to McDonald corporation! These multinational corporations are coming and it will be "join them or go out of business". We'll become like the little stores in the US when a WallMart comes in the area. They all die!
These franchisers do provide excellent management, but they all follow a proven formula. In this information age, PWP too can follow that formula, elevate the level of service and business standards extensively, make money for our partners and the Government, and rescue our respective countries from rich multinational corporations. PWP is flexible too as it can decide what operations to undertake, and the rate at which to spread these operations. It can select the more feasible. PWP invites partners to join it without forcing anyone. Critics might contend that PWP is not new. To be sure, franchising is not new, which is good, because it has an established record of success. But, PWP is a new role for Government. The choice is clear. Is it the enfranchisement of our people by PWP or our continued disenfranchisement by rich multinational corporations? The choice has got to be PWP or at least it deserves a try!

This article and the following letter were sent to selected Caribbean Officials. The letter is as follows:

(As of 1/10/99 I have had response from 1 official)

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IMF REPORT FAULTS JAMAICA

Whither .... IMF Privatisation or PWP Real Prosperity?

The International Monetary Fund (IMF) through its executive board of directors gave Jamaica a bad report on its economy. It called for

• more aggressive privatisation
• new taxes
• reduced tax exemptions
• reduced expenditures

Sounds like more bitter medicine, although Finance Minister Omar Davies has already defied the report by promising "no more taxes". Worse yet, for this bitter IMF medicine, not one single country has shown positive results from adopting it.
Privatisation Bound to Fail
In most countries, privatisation has been imposed by outside experts and is supposed to be the savior of the struggling economies of these countries. Jamaica and most of the rest of the Caribbean fall in this category. Privatisation is no savior. It is bound to fail and leave countries worse off. The government is busy selling off all its assets as ordered. The plums, the moneymaking ones, are grabbed up eagerly, and the moneylosers are hard to unload. Often these moneylosers were primarily intended to provide a service to the public. So, the Government gets stuck with them. At least before, the moneymakers could subsidize the moneylosers. The Jamaica Government railroad is a perfect example. It privatised by selling of easily the moneymaking freight sector. However, they have been unable to unload the moneylosing passenger sector for years. So the Jamaican citizens are deprived of this service and their trains have been deteriorating unused except for the occasional goat or other errant farm animal.
Privatisation sure did not help the recently privatised Jamaica sugar industry which for the 1997/98 production year is J$1.2 billion in the red with a sugar production of 185,000 tonnes, the lowest in 20 years! Jamaican banks, with their supposed superior private enterprise skills have been tumbling and it is the government with taxpayer money to the rescue in reverse privatisation.
Examining the IMF
So, does the IMF have a track record to be proud of in this area? In 1987 the IMF expanded its existing structural adjustment program to create an "Enhanced Structural Adjustment Program" (ESAP). To obtain loans countries had to agree to certain conditions such as:

• reducing government spending and involvement in the economy
• promoting exports and removing trade restrictions
• deregulating the economy
• privatising government run enterprises
• eliminating price subsidies, including essentials like food and housing
• imposing consumption taxes

The IMF would follow up by checking if countries continued to comply with these elements and would award a passing or failing grade. A fail means the country is denied further drawings on previously agreed to loans.
These 'structural adjustments" have been hated by the masses and have sparked dramatic and often violent protests worldwide wherever imposed. They have brought hardships especially to the poor. Now the word is out. Countries which have followed this IMF recipe have done no better than the ones that did not. Instead of the economic growth by these draconian measures, a majority of these participating countries "have experienced profound economic crises, low or even declining growth, much larger foreign debt and the stagnation that perpetuates systemic poverty." (Ravaging the Poor, IMF Indicted by its Own Data by Gabriel Kolko, Multinational Monitor, June 1998)
But all's not well for the IMF. The US house of Representatives voted not to authorize $18 billion in new funding to it. Even right wing Republican Speaker of the US House of Representatives, Newt Gingrich, blasted the IMF as " an international bank institution, that is totally secret, that is run by bureaucrats whose major policy is to raise taxes on workers in the third world to pay off New York banks".
The alternative to IMF Privatization PWP
But, is there an alternative to this IMF forced privatisation? Hasn't everything else failed? There is an alternative. It is not feasible at this time to reveal the details of this, which I call the Partnership With People Plan (PWP). I am confident that PWP can bring prosperity, yes prosperity, to Jamaica and any other Caribbean country in less than 10 years! Although the plan is new, it is based on tried and true procedures with success rate of over 90%. It is flexible, requires no austere law and will enable us to take back our country and reverse the selling off of it as privatisation does. (Details of this plan will be forthcoming in future issue of Hot Calaloo. I will be sending these details to selected Caribbean officials.)

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