Rushing pell-mell into a ‘hustle culture’

There is a saying that if you want to know where TT’s economy will be in ten years time, you just have to look at Jamaica’s economy now. A brief look at the current situation in Jamaica provides a frightening picture. The information provided here was gathered recently during a week of interviews by this author across sectors and industries in Jamaica.

The informal sector is threatening the stability of legal traders. A recent study showed that some 43 percent of the annual GDP of Jamaica is generated by the informal sector, which competes with the formal sector in every conceivable product. Container loads of products are brought in duty free, oiled in its passage through customs by bribes to customs officers and security guards. Liquor is smuggled into the country from the Cayman Islands and elsewhere, and sold at a much lower price than the legal traders could afford to offer. For every case of Johnny Walker Black sold legally, at least 10 or more cases are sold illegally. Workers steal the local liquor from the factory and re-fill bottles and sell them on the black market. There is grave concern about the quality of the products being offered by informal traders. Used car tyres are brought in with no guarantee of quality, and retailed at what is cost price for formal traders, who just cannot compete.

The market is very price conscious. It is not a disincentive that there is no guarantee of quality. Food that has been rejected in the US is brought into Jamaica and Haiti. Food vendors do not have to go through the rigorous scrutiny by health authorities to get a certificate. They simply buy it. According to one interviewee, one can buy any licence in Jamaica. Health problems are magnified by the lack of infrastructure for the large mass of higglers who use the facilities of fast food shops if they are available. Moreover, the sector is growing. It has become standard practice that those who lose their jobs set up a stall to sell imported goods.

In response to this challenge, many legal traders have started “fronting”, that is, supplying goods to higglers. “If you can’t beat them, then join them” is the guiding philosophy for most now. In the process, the economy is becoming increasingly destabilized, with the private sector facing possible demise. Government is losing a lot of revenue that should be derived from customs duties and taxes on businesses. Indeed, there was the view that the private sector is being punished by having to follow the rules and compete with those for whom there are no formal rules. Interestingly, there is no black market for pharmaceuticals because the customs duty is very low. Maybe lower tariffs may go some way to resolving the problem.

Money laundering is another source of unfair competition for the private sector. Imports of “deportee” cars, or what we call “foreign used”, has become a prime avenue for money laundering. Car parts also feature high in the outlets for money laundering. The legitimate car dealers are having a hard time surviving, and there are other sectors that are plagued by money laundering. The cost of these goods is so low that the legal traders cannot compete. There seems to be a complete breakdown of law and order in Jamaica, spanning corruption in the wharfs, the reign of Dons administering justice according to their norms and values, and bandits taking over the society. Construction was started on Highway 2000, but the project was brought to a standstill because, for every truckload of materials dropped, the government had to give the local bandits US$300.

A local newspaper began constructing a new building, and the Don in the area demanded the security job. The owners conceded, materials began disappearing, and so they removed the bandits and hired a real security firm to take control. The security guards were beaten just short of death. The construction project was shut down. Legitimate security companies are competing with the Drug Dons and Zeek, the feared downtown Don. Businesses have to pay such high costs for security that their cost of production is considerably higher than the rest of the region. They cannot use their equipment to full capacity and take advantage of cheaper electricity rates at night by having night shifts, since workers are unwilling to work beyond 6pm. How can they compete?

We are witnessing a serious case of poor governance and lack of social equity. Without the massive unemployment problem, and the rampant corruption on the wharf, and other government institutions, the illegal traders would not have grown so phenomenally so as to now threaten the very existence of the legal private sector. The society is under siege from the drug lords, to the point where a simple matter of construction a building cannot be done because demands for “security” payment are outrageous. One interviewee described the Jamaican culture as a hustle culture, where crime pays and the thief prospers. Is this where TT is heading? Should we not take pre-emptive action?

The views expressed in this column are not necessarily those of Guardian Life. You are invited to send your comments to guardianlife@ghl.co.tt