Financial Inclusion, More Chit Chat?

The case for Creative Literacy for Financiers

Financial Inclusion is the current growth strategy ‘flavor of the month’ all over the world.  A colleague at United Nations Trade and Development (UNCTAD) headquarters in Switzerland indicated to me last week that “this has been the topic du jour around here”.  Across the world, in keeping with World Economic Forum imperatives, financial institutions are implementing financial inclusion strategies to provide individuals and businesses with access to useful and affordable financial products and services that meet their needs, and are delivered in a responsible and sustainable manner.  To participate in financial inclusion programmes micro and small enterprise practitioners, including those in the creative sector are increasingly encouraged to engage in and embrace ‘financial literacy’ as a prerequisite.  

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When it comes to the emerging creative sector, I believe that financial institutions also need to engage in ‘creative literacy’ to learn more about these emerging businesses and new business models. This way they can benefit from funding and supporting these businesses while assisting in the growth of a dynamic emerging cultural economy.  Financiers meeting creatives where they are is the only way to ensure ‘creative inclusion’. This series of three articles examines the myriad issues associated with financial inclusion and cultural and creative industries. Let me explain.

In June this year, The LAB, one of Jamaica’s leading advertising agencies, announced its intention to float an initial public offering (IPO) on the Jamaican Junior Stock Exchange.  This follows on the creative training institute, iCreate Limited’s successful IPO on the Jamaica Stock Exchange (JSE) Junior Market for just over 74 million shares in February; and the listing of The Main Event Entertainment Group (MEEG) in 2017, which  received a total of 1,033 applications for shares for their initial public offering (IPO), worth approximately $673 million. Three times is a charm. It is as clear an indicator that cultural and creative industries have a place in the formal economy, as the Bank of Jamaica’s use of Jamaicans indigenous music-form, Reggae as a promotional metaphor for its contemporary economic strategy. On the surface, these are positive linkages of creativity and economy.  Below the surface lies a much more complex reality and deep ironies.

The Lab, I Print and Main Event before them present a picture of the possible. For every Solomon Sharpe, Tyrone Wilson and Kimala Bennett, there are thousands of Caribbean creatives and creative entrepreneurs  working towards the big win.

Many of the over one thousand graduates from the Edna Manley College in the last decade across a range of creative disciplines want their idea to yield that measure of success. In the last decade or two, scores of educated, trained creatives, ready become professionals leave HEART, UTECH. NCU. UWI and ICC every year. Every JCDC Festival entrant would like to see themselves in that position.  Every creative start-up entrepreneur wants that level of successful inclusion.

On the other hand, there are Tessellated, Chronix, Koffee and Bolt and a group of remarkable creatives operative across disciplines

whose craft have taken them to the levels of global financial success they now enjoy. It’s complicated.  The cultural and creative industries are themselves contrary. Their models are non-traditional. The main holders of creative ‘value’ come from marginalized circumstances.  The question of financial inclusion brings notions of standardization of goods and services which is anathema with creativity. This is why financial inclusion must also mean creative inclusion.   Financial inclusion is as dependent on the ‘financial literacy of creatives’ as it is on the ‘creative literacy of financiers.

JAMAICA’S FINANCIAL INCLUSION THRUST

At the beginning of July, in a bid to encourage the formalization of small and medium sized enterprises (SME’s) as part of the economic growth strategy, Keith Duncan, Chairman of the Economic Programme Oversight Committee and David Noel, President of the Jamaica Bankers Association joined forces through the PSOJ to launch a Financial Inclusion programme for small and medium sized businesses (SMEs).  They rolled out rolled a ten-point plan in keeping with the 2017 Financial Literacy  Strategy.  The plan  promised the:

  • Review of the regulatory system
  • Publication of the range of products and programmes available for ease of access to lending
  • Review credit adjudication processes, flexibility
  • Building of awareness of products and programmes on offer.
  • Simplification of application processes
  • Improvement of turnaround time to disbursement.
  • Improvement of SME skills readiness and support
  • Re-assessment of SME transparency and delinquency

Music to the ears of entrepreneurs. 

The following week, Private Sector Organization of Jamaica (PSOJ) President, Joseph Matalon,  speaking at the Mona School of Business Conference on Entrepreneurship, challenged local institutions to take their rightful place in the entrepreneurial ecosystem.  His challenge was for them to refocus and redouble their efforts, provide thought leadership, allocate greater resources to entrepreneurship education and training, make it easier for entrepreneurs to gain licensed access to intellectual property derived from their research; and foster closer collaboration with private-sector actors in designing and implementing acceleration and incubation programmes which can provide mentorship and support required for aspiring entrepreneurs to thrive. They had a seminar for small businesses.  I was looking at the footage and was not sure. I trust that the creative sector was represented.Bankers Association FI

Minister of Finance, Nigel Clarke, also speaking at the MSBM Conference, said the Government is exploring the possibility of allowing business owners to access capital that’s secured by outstanding invoices or money owed by clients procuring goods and services on credit.  A demonstration of policy and large enterprise in step with each other to empower the small business sector.  Both perspectives are like drum and bass when brought together, rhythmic and foundational. They provide the beautiful bed upon around which the melody is wrapped.  Now bring in the vocalist!

THE CREATIVE WORKER AS ENTREPRENEUR

The last Survey of Living Conditions results showed that poverty is down and unemployment is up.  Great news like that is the delightful harmony at the end of a musical phrase that gives you goose pimples. Then came news that poverty is actually up.  People are suffering.  Another interesting related tidbit came from a political platform. It was the acknowledgement from People’s National Party leadership aspirant, Peter Bunting, himself a financier, that there are workers within our economy who become entrepreneurs by default and not as a deliberate choice.  

In Jamaica, more than half of the workforce is said to be a part of the informal economy.  A significant number of these, recognized within the unemployment figures, work within the cultural economy.  Many Jamaicans start businesses because ‘dem cyaan do betta’. Opposition leader Peter Phillips has in the past pointed out that several of these workers are working on revolving contracts without benefits or stability. Several, because they cannot find a job in the formal sector. Others start business to thwart the realities of living as working poor who cannot sustain basic lifestyles on everyday salaries. As FLOW recognizes, they start a ‘hustle’.  There are still others who are professionals for whom entrepreneurship is not the focus, but the vehicle. Financial inclusion has become a critical element of the complex process of ‘legitimization’, ‘formalization’ and ‘monetization’ of these sectors.

An entrepreneur is a person who establishes a business and takes financial risks for profit. Doctors’ practices, consultants and many creative practitioners reluctantly take on the rigors of business, enterprise and formalization to meet regulatory obligations.  They may not see themselves as, or aspire to be entrepreneurs, whose focus is leveraging finance and taking risks. In the cultural and creative sector, many just want to create, and engage in creative work. For them, a good story is their currency of choice and their medium of production determines the ‘denominations’

The distinction between creative workers operating through businesses and creative entrepreneurs interested in the business of financial risk is an important one to make.  It is nuanced. But so is the creative sector and there are sensibilities that are worth understanding. Which is part of the necessary cultural and creative literacy. There are a number of issues to consider when approaching financial inclusion for creatives.

CULTURAL AND CREATIVE INDUSTRIES AND FINANCIAL INCLUSION 

The three creative IPOs and the economic impact of Buju Banton’s return concert in Kingston demonstrated the economic value of products and services derived from cultural and creative industries.  This has hastened the legitimization and inclusion processes of CCI’s.Creative Light IV bulb Yet, the Jamaican cultural economy still remains an aspiration. Despite the phenomenal cultural offerings Jamaica has given the world and in spite of the remarkable creative renaissance taking place within a dynamic creative ecosystem by natural selection; formally it remains an emerging sector made up of emerging cultural and creative industries. 

The MSME and Entrepreneurship Policy tells us that traditional MSME owners seldom meet over one third of the requirements of formality.  This discrepancy will be more prevalent in the creative sector where there are practitioners who are often philosophically averse to ‘formalization’. Even as Damian Marley encourages the youth to ‘Set Up Shop’ and get involved in entrepreneurial activity; Kabaka Pyramid vows he is “Never gonna be a slave to the system”.  Often, even within registered creative businesses, we confuse the the inability to contribute to the consolidated fund tax avoidance. Most creative professionals are at subsistence level; although tax avoidance is also a reality by those with greater disposable incomes.

Jamaica’s Financial Inclusion Strategy for SMEs emphasizes the formalization of businesses.  It is prompted by increasingly stringent government regulations and stipulation. While the PSOJ has committed to reviewing the regulations, I doubt that this one will change.   The economic strategy and ideology is dependent on growing the number and scale of formal businesses. 

An inherent irony exists for Jamaican cultural and creative industries.  Even as the government continues to encourage the formalization of creative professionals and businesses; they have been slow to play their part in the formalization process. Cultural and Creative Industries policy, an Entertainment Industry Encouragement Act and other sector facing legislation; and satellite accounts for the disaggregation of national accounting across defined sectors, remain in the pipeline almost five years after the completion of an integrated all of government framework and national business plan recommending their implementation.  

While a revised cultural policy and legislative framework remains in the pipeline, there is no clear, joined-up government indication of priorities for creative sectors to drive financing strategies.  There is no sign of when or whether government will be allocating the significant resources needed to implement a holistic sector development plan. We do not even know whether there is such a plan. Still, 12 ministries of government hold important sections of CCI policy and administration responsibilities and there is no clear focal point for the joined-up government efforts for cultural economy development.   

The cultural and creative ecosystem and economy are not listed as a sector or sectors in the 2013 MSME Strategy. The closest sector listing is ‘Community, Social and Personal’ or perhaps ‘Transport Sales and Communication’.  Additionally, creative startups are increasingly dependent on digital platforms. There is little integration of policy to reflect how the relationships between digital, cultural, creative, broadcast, telecommunications and innovation are being forged across all of government.  The glaring research gaps for each sector and the complete economy is yet another challenge impacting the financial inclusion effort.  

FINANCIAL LITERACY MEETS CREATIVE LITERACY

Information, policy and stability are required by financial institutions to support their financial inclusion strategies.  A senior financial executive whom I interviewed recently, who requested anonymity, indicated that “there is not enough awareness or knowledge of how the industry is developing, blocking the flow of capital to the industry”. Financiers want to know, “how are businesses within the industry creating value, and how different firms are organizing themselves to grow and expand as they are largely viewed as informal.  By extension, the awareness around the projected impact on the GDP is not widely known and reinforcement around the value to the economy is not in the mainstream. As such, related organizations are not readying themselves for the opportunity”.

There are several other nuances to consider when thinking of cultural and creative industries and financial inclusion.  According to my financial sector source, even in light of the proposed reforms, “most financial institutions are conservative given that they have to safeguard depositors’ funds. As such the modus operandi will not be taking the risk of taking a risk. The opportunity has to be understood and the size of the prize assessed”.

Understanding is the operative word.  Bridging the gaps through financial and creative literacy for growth and development.  In summary, while many creative certainly need lessons in financial literacy, financial institutions also need to engage in ‘creative literacy’ to learn more about these emerging businesses and new business models. This requires engaging with creatives on the margin, the repositories of creative value.  The current financial inclusion strategy is a great start, however it does not recognize the cultural and creative industries and their specific nuances. This is an invitation to sit down with the creative sector to understand the interfaces that will help financial and other business organizations understand the cultural economy.

Dr. Deborah Hickling Gordon is a UNESCO Cultural Economy Expert Facility member; Lead Facilitator at the creative Facilitation firm, Ink and Vision Ltd, and coordinator of the BA in Cultural and Creative Industries a

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