Jamaica, like many other countries in the region, faces significant infrastructure deficits in key sectors of the economy, such as transport, energy, water, telecommunications and other social services. According to IDB, the infrastructure investment gap in Latin America and the Caribbean is estimated at US$150 billion per year.
Yet, the country has a rich stock of productive assets such as natural harbor capacity and world-class beaches. Global investors can inject competition and expertise into these industries and propel the economy further.
While the Government of Jamaica recognizes the need to expand and modernize its infrastructure, tight fiscal conditions prevent it from developing infrastructure at the level needed. Having determined the need for private sector investment to bridge this gap, the government has supported an active Public Private Partnerships (PPP) and Privatization (P4) Programme, through the Development Bank of Jamaica (DBJ), the government’s central implementing agency for the P4 Programme.
The World Bank also took up this challenge and through the Foundations for Competitiveness and Growth Project, assisted the government in attracting private investments in key infrastructure assets through PPP and divestments. When the project closed on March 30, 2024, US$520 million in private capital had been mobilized, surpassing the initial target of US$200 million.
“My administration believes in working collaboratively with the private sector and in mobilising private capital and expertise through Public-Private Partnerships to address Jamaica's infrastructure challenges,” said the Hon. Andrew Holness, Jamaica’s Prime Minister. “We have successfully used PPPs to develop our airports, our seaports and highways, as we have used it in power generation,” he added.
Successful public-private partnership and privatization transactions completed under the project include:
· Rio Cobre Water Treatment Plant (PPP): A new US$65 million water treatment plant under a Design, Build, Finance, Operate and Maintain PPP arrangement will be constructed, benefiting 150,000 customers through the production of 15 million imperial gallons of water per day. This will contribute to reducing the current shortfall of 45 million gallons per day in the Kingston Metropolitan Area.
· Wigton Windfarm Limited (Stock Exchange Listing): Sale of all government shares in the windfarm, via an Offer for Sale of Shares on the Jamaica Stock Exchange, resulted in reflows of US$90M to the government and a broadened ownership base, through the participation of more than 30,000 shareholders. The transaction also involved restructuring the company’s balance sheet by refinancing the windfarm’s US$ denominated debt through a bond issue.
· Caymanas Track Limited (Lease): This development lease facilitated the modernization of horse racing in Jamaica. Since 2017, the private investor has invested in upgrading the asset, revamping operations and increasing efficiency, while boosting government revenue via lease payments and taxes.
· Greater Bernard Lodge Development Asset Sales: This privatization project aims to identify suitable private partners to purchase and develop a variety of development blocks. The government intends to create the ideal municipality with a high standard of living, sound environmental management and affordable, quality housing. To date, three privatization phases have been largely completed with expected capital investments of more than US$243 M.
The project helped to attract these investments by financing studies and providing critical technical assistance, targeting both foreign and local investors. It also enhanced the government’s capacity - through the Development Bank of Jamaica - to execute privatization and public-private partnerships programs.
Jamaica’s Minister of Finance and the Public Service, the Hon. Nigel Clarke shared that “the PPP and Privatisation Programme continues to be a priority for the government as it facilitates private sector investments in public infrastructure and services, allowing the government to redirect limited resources to other areas of the economy to boost economic growth and development.”
Through technical assistance provided by the project, the Development Bank of Jamaica expanded the public-private partnership and divestment program, effectively engaging with local stakeholders, investors, and transaction advisors. Similarly, the Ministry of Finance and the Public Service's PPP Unit has been fortified with tools for PPP Fiscal Risk Management, Value for Money analysis, and Economic Analysis.
"The government’s clear vision and strong commitment, as well as dedication from our many partners has led to the results we’ve seen in this project. Importantly, strengthened government capacity means that Jamaica can continue its efforts even though the project has now closed,” said Lilia Burunciuc, World Bank Director for the Caribbean.
The Foundations for Competitiveness and Growth Project (FCGP) supported the Government of Jamaica to set up a Project Preparation Facility, which finances feasibility and other related studies needed to bring strategic private investments (including public-private partnerships [PPPs] and divestments) to commercial and financial close. FCGP has concluded, but the PPF remains active, through funding from the Inter-American Development Bank and the Government of Jamaica directly.
Going forward, the government will continue to strengthen its capacity for managing PPP contracts to better monitor and enforce contract requirements. This will ensure that services are delivered in accordance with the contract, and the risks will continue to be managed efficiently.
