Building Creative Businesses in Jamaica

Nov. 2013 / 01

Policy Brief 11-13-02

Building Creative Businesses in Jamaica

by Hopeton Dunn and Richardo Williams

This study builds on Global Entrepreneurship Monitoring (GEM) models of Data Gathering and Analysis

INTRODUCTION Jamaica is recognised globally for its broad and deep range of cultural and creative industries.

Yet, the creative industries have not featured highly in economic strategies designed to reverse the adverse economic fortunes of the country. Despite the global appeal of Jamaican culture, it is insufficiently embedded into the strategic fabric of mainstream economic planning.

A recent study on the subject was conducted by the Global Entrepreneurship Monitor, in association with the International Development Research Centre (IDRC) of Canada. The outcome of this study forms the basis for this Policy Brief. It addresses the impediments to entrepreneurship and business activity within the creative industries in Jamaica, with the explicit aim of proposing strategies to strengthen these sectors to become dynamic economic industries within the country's economy.

The main motivating idea of this Brief is that creative industries, if properly supported and resourced, can become a forceful contributor to achieving socioeconomic development in Jamaica. Furthermore, the entrepreneurs in Jamaica's creative enterprises face the perennial problem of being unable to benefit from affordable and accessible sources of financing. They also encounter limited or inadequate government support for the sector.

KEY POLICY RECOMMENDATIONS •

Government Intellectual regimes;

to strengthen Property Rights

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Government policies are needed to minimize the cost of doing business for micro, small and medium sized entrepreneurs in the creative industries;

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Existing government entities to collaborate more closely to build capacity among creative entrepreneurs;

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The formal financial sector to be enabled by both government and industry lobby groups to better grasp the business models and products within the creative industries.

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Explore public-private sector partnerships for the funding of cultural content

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Explore opportunities in co-production arrangements as facilitated by the EU-ACP Trade Agreements.

Policy Brief Nov. 2013 / 01

These problems emerge as a consequence of the nature of ‘creative products’, in the sense that they are not given to easy financial valuations. This is perhaps the defining difference between creative entrepreneurs and other general entrepreneurs.

Consequently, the recommendations are geared towards altering the existing approaches and to improving the support systems for the creative industries.

KEY ISSUES EMERGING FROM THE STUDY Jamaicans are cultural creators and innovators Jamaican creative entrepreneurs are mainly (83.2%) involved in the creative industries at the primary value chain level, and the overwhelming majority do their business in the music sector, followed by visual arts, multimedia and architecture.

Among the specific deficiencies identified by the study are the following: Narrow access to capital and undiversified sources of revenue The results of the study indicated that about two thirds (66.1%) of investments in Jamaican creative enterprises came from the owner’s personal resources, as distinct from other sources such as loans from the formal financial sector. Revenues generated by most of the creative enterprises in the study came from within the country. Just over four out of every ten (40.9%) of the respondents indicated they earned all of their earnings from customers within Jamaica. This places some constraints on the total revenues these enterprises can make. In Jamaica, no more than 21% of the sample had ever reported annual earnings above US$100,000. The results further showed that 63.2% of the respondents indicated they do not have an e-commerce business platform.

There was consensus among the national

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FIGURE 1  KEY CONSTRAINTS ON CREATIVE INDUSTRIES GROWTH

Inconsistent and unpredictable application of taxes and regulations

Limited government policies favouring new firms

Limited support for new and growing firms

No single agency contact to address needs of new and growing firms

High tax burden on new and growing firms

Unease in complying with government bureaucracy regulations and licensing

The Data in this Research Project was collected by the following institutions:

Source MICT, UWI respondents that in Jamaica, there is insufficient equity, debt and government subsidies for enterprises in this sector. There was also insufficient funding from venture capitalists in the creative industries.

Inadequate Governmental Programs and Policies The diagram above shows the key deficiencies in governmental support, which the national experts in Jamaica identified as being especially critical for raising the profile and profitability of the creative industries. They include a more consistent tax regime, better support for start-ups, improved government agency co-ordination and the need for tax breaks for what is a fledgling sector.

Weak enforcement of Intellectual Property Rights (IPR) regimes There is consensus among the experts about the existence of a strong local Intellectual property Rights (IPR) regime. While calling for additional legislative reforms to the Copyright

University of Technology

Policy Brief Nov. 2013 / 01

Act, these analysts lament how poorly the existing regime is being implemented and enforced. They cite the continued and widespread illegal sale of‘pirated’ software, videos, CDs and other protected products, as evidence of the poor implementation of IPR regulations, policies and laws in Jamaica.

CONCLUSION On the basis of the primary data analysis, and on available secondary data, it is clear that Jamaican creative entrepreneurs are notably industrious in creating value from cultural and creative products, particularly in the music industry. Given the institutional and financial support, such as provided in certain other jurisdictions like the United Kingdom and Canada, Jamaican entrepreneurs in the creative sector would excel and expand more rapidly into global markets.

Moreover, the data suggest that the main constraints besetting the creative industries are institutional and governmental rather than a paucity of ideas and inventiveness among creative entrepreneurs.

POLICY RECOMMENDATIONS If the institutional deficiencies identified in the research study are not addressed, it is inevitable that the Jamaican creative industries will not grow to become a forceful enabler of economic and social development, which it has the potential to accomplish.

Additionally, it is also likely that more stakeholders external to Jamaica and the Caribbean region who perceive the value of the Jamaican creative industries would invest their own funds in the sector to make handsome profits for themselves.

To provide a catalyst to improving this

important sector, the following policy and operational recommendations are being made.

They require the careful consideration and action of the Jamaican government and other stakeholders: • The Government of Jamaica and rights holders must take every step necessary to enforce the existing Intellectual Property Rights regimes to protect the interests of creative entrepreneurs who produce original creative content; • The Government of Jamaica must seek to reduce or minimize the cost of doing business and reform the regulatory and bureaucratic system imposed on micro, small and medium sized entrepreneurs in the creative industries; • Existing government entities such as the Jamaica Business Development Corporation ( JBDC) and JAMPRO must begin to collaborate more closely to train and build capacity among creative entrepreneurs to help them to break into local, regional and international markets; • The formal financial sector must be enabled by both government and industry lobby groups to better grasp the business models and products within the creative industries. This is with a view to help unlock financing for the creative industries from the formal financial sector.

• Both government and the creative enterprises must explore public private partnerships for cultural content funding; • Creative entrepreneurs must begin to examine more carefully the existing arrangements within the EU-ACP trade agreement to determine whether co-production agreements could help to secure low cost financing and other opportunities for the production of cultural products and services in Jamaica and the Caribbean region.

This policy brief was prepared in October 2013 by the Mona ICT Policy Centre, Mona School of Business and Management, The University of the West Indies with the support of International Development Research Centre, Canada

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