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SOCIAL HOUSING IN THE CARIBBEAN – IDB Study

Michael G. Donovan, Senior Urban Development Specialist at the Inter-American Development Bank, greets Therese Turner-Jones, IDB country representative in Jamaica, at the two-day (Oct 6-7, 2014) Regional Housing Conference, organised by the Caribbean Association of Housing Finance Institutions (CASHFI). Looking on are Earl Jarrett, then Chairman of CASHFI and Andreas Zehnder, President of the International Housing Finance Institutions.

Michael G. Donovan, Senior Urban Development Specialist at the Inter-American Development Bank, greets Therese Turner-Jones, IDB country representative in Jamaica, at the two-day (Oct 6-7, 2014) Regional Housing Conference, organised by the Caribbean Association of Housing Finance Institutions (CASHFI). Looking on are Earl Jarrett, then Chairman of CASHFI and Andreas Zehnder, President of the International Housing Finance Institutions.

A report reviewing the implementation of social housing in six Caribbean countries covered by the Inter-American Development Bank (IDB) has projected approximately US$1.8 billion was needed to deliver appropriate housing solutions for some one million households.  The study examined the state of social housing in the Bahamas, Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago over the period 2000-2015.  It noted the importance of housing to achieve the Sustainable Development Goals (SDG) and the larger agenda of poverty alleviation, economic development and climate resilience.  The researchers noted that with the publication, they expected to help the region develop a comprehensive urban agenda, and urged governments to incorporate in their social housing programme measures to protect homes against rising sea levels, as over half of the population live within five kilometers from coastlines.

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TRINIDAD & TOBAGO ECONOMY TO DECLINE 2016

In a statement following the conclusion of an International Monetary Fund’s recent mission to Trinidad and Tobago, the head of this mission, Elie Canetti, based on available information, inclusive of job losses and constraints in the energy sector, has concluded that the country’s economy is expected to contract 1.0% this year.  Declines in energy-based revenues will constrain the government’s ability to “act as an engine of growth”.

The Fund noted, however, that with substantial financial buffers, and low growth in the public debt, Trinidad & Tobago was not in a crisis.  Nonetheless, the IMF added, “considering the size of the energy revenue windfalls, the country has under-saved and under-invested in its future”.

As a consequence, the imbalances that are now starting to build up could lead to uncomfortable levels of debt and external financial cushions.   The new government, led by Keith Rowley, has agreed that policy adjustments are needed and has effected some difficult but necessary measures, such as, widening the tax base, cutting fuel subsidies, and cutting public expenditure.

Despite the measures, the IMF has projected a 2016 Budget deficit at some 11% of GDP.

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GOVERNMENT FIRM ON TAX BREAK

Audley-website-227x289Jamaica’s Minister of Finance and the Public Service, Audley Shaw, has reinforced the new Government’s commitment to fulfill its election platform pledge to provide a tax break to persons earning a gross annual salary of $1.5 million or less.  In a statement, Minister Shaw declared that “the promise is going to be kept”, as he addressed the President’s forum of The Private Sector Organisation of Jamaica (PSOJ) in Kingston, on March 29, 2016.

Admitting that some challenges have been encountered, and may affect its implementation schedule, the Finance Minister assured his audience that the Administration was assessing certain options to ensure that the expectation was met.

According to Mr. Shaw, the Government believed Pay-as-you Earn (PAYE) employees deserved the tax break after enduring a five-year wage freeze, coupled with the effects of a 40% devaluation of the Jamaican dollar and the loss of purchasing power.

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XVIII EUROPEAN CONGRESS

The European Federation of Building Societies (EFBS) will convene its XVIII Congress in Budapest, Hungary, 19-21 October 2016.  Members of the International Union for Housing Finance, including the Caribbean Association of Housing Finance Institutions (CASHFI), have been invited.  The Congress will consider – Brave New World for Finance?  Low Interest Rates – Regulation – Capital Markets Union.  A major question being posed is – Have we learned our lesson from the financial crisis?  It is doubtful.

Proven deposit–based business models are now suffering from the zero interest rate policy of the European Central Bank (EC).   New regulatory projects disproportionately affect small and low-risk credit institutions.  At the same time, shadow banks operate largely outside the regulatory regime. In the meantime, the European Commission is pressing forward the project for a Capital Markets Union.  It aims to direct more private savings into riskier capital markets.  Loan financing through deposit-based institutions, which is important for Europe, would be weakened further, the EFBS contends.  It noted that while the pressure on earnings is increasing, the costs of the European guarantee funds are rising as well.  These issues will be under the microscope, inviting participants to discuss whether the financial world is really becoming “brave and new”, as well as opportunities for long-term financing models and the growth market for improving energy efficiency.  The EFBS Congress offers inspiring lectures, national and international case studies and the opportunity to interact with experts and opinion leaders.

For further details of the programme and registration, please visit www.efbs2016.org.

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THINGS TO KNOW!!

  • 41236516_l“60 percent of wealth transition failures are caused by a breakdown of communications and trusts”; 25 percent are due to a failure to prepare the heirs, and the last 15 percent are attributed to “all other causes” such as tax considerations, legal issues and lack of a mission”.

OFFSHORE INVESTMENT

May 2014

  • “The European Union is strengthening its savings-tax directive, which requires member states to exchange information. Last year more than 80 countries agreed on a “common reporting standard” set by the Organization for Economic Cooperation and Development (OECD)”

THE ECONOMIST

February 2015

  • “With new investment opportunities, fast-tracking of permits for large projects, a relaxation of rules to stimulate foreign direct investment, a growing maritime sector, improved residency and citizenship options…there is every reason to believe that Cyprus will emerge stronger than ever.”

OFFSHORE INVESTMENT

Sept. 2014

“It is becoming increasingly important for wealth managers and private bankers to build trust and brand loyalty with high-net-worth clients, and also to understand their complex needs”.  A lesson for CASHFI members.

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CARIFORUM ANXIETIES

Caribbean Forum (CARIFORUM) countries have expressed concern about not reaping potential benefits of the Economic Partnership Agreement (EPA), signed with Europe in 2008, eighteen years ago.  This was summarized in a statement following the 23rd meeting of the Council of CARIFORUM Ministers held in Guyana the week ending Friday, February 18.   Reviewing the EPA, the meeting of the organization concluded that the region “had as yet to meaningfully reap the potential benefits of the Agreement”.

The statement noted that the commonly held view was that CARIFORUM committed itself and signed a comprehensive EPA, yet it has not “harvested the windfalls” which seemed to have been held out as rewards for early signature of the Agreement.

According to the statement, ministers in attendance at the meeting recorded “deep concern” that a recent declaration on taxation in the European Union had the potential to negatively impact the economies of a number of member states.

The meeting took note that CARIFORUM and EU senior officials held a political dialogue session in Guyana on March 15, 2016, at which the Union provided an update on the European Union’s recent communication on an External Strategy for Effective Taxation as part of its Anti-tax Avoidance Package.

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Mr Paul Maxwell

As President & CEO of Capita Financial – a Barbadian-owned company with OECS presence – as well as a Director of the Barbados Stock Exchange and Audit Committee Chair of the Caribbean Confederation of Credit Unions, Paul is well positioned in relation to regional finance matters – both from a corporate and grass-roots perspective.

This former University of the West Indies graduate has vast experience in the finance and telecommunications sector and has served on various committees and boards locally and regionally. His industry experience includes:

  • President of the Barbados Public Workers’ Co-operative Credit Union Limited on numerous occasions
  • Past President of the local credit union governing body; the Barbados Co-operative Credit Union League Ltd
  • Performed in various Finance capacities spanning management and corporate accounting as well as compliance at Cable & Wireless over a 12-year period

Paul was awarded a Diploma in Credit Union Management from the University of Wisconsin, USA and is a Certified Credit Union Director (CCUE) by the Credit Union Executive Society through the London School of Economics, England. He is currently enrolled in the Darden School of Business, University of Virginia, pursuing a Global MBA for Executives.

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Sandra King-Storr

Sandra StorrManaging Director, Bahamas Mortgage Corporation

Mrs. Storr has been a team member at The Bahamas Mortgage Corporation since March, 1987.  She initially joined the Corporation as an Arrears Control Officer and was later promoted to Human Resource Manager, Deputy Managing Director, and is currently the Managing Director.

A graduate of Prince Williams Baptist High School, Sandra completed an Associate of Arts degree in Business Administration at Miami-Dade College, A Bachelor’s degree in Management and a Master’s Degree in Business Administration from Nova Southeastern University.  She also obtained certification in Human Resource Management from Florida International University.  Additional programs completed include courses at The Bahamas Institute of Financial Services, the Diploma program in Housing Finance with The Wharton School, University of Pennsylvania, and Executive Education program at the Goizueta Business School, Emory University, Atlanta Georgia.

Mrs. Storrs’ civic involvement, past and present, includes The Pilot Club (Downtown – Charter Member),   council member of the Bahamas Institute of Financial Services (formerly The Bahamas Institute of Bankers), and mentoring with various civic and social organizations.

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More Discussion Needed On Housing for Low Income Earners

Earl Samuels, Assistant General Manager, Jamaica National Building Society (JNBS), makes a point during the recent two-day (Oct 6-7) Regional Housing Conference, organised by the Caribbean Association of Housing Finance Institutions (CASHFI). Mr. Samuels, who is also a former Managing Director, of the NHT, says the discourse on affordable housing continues to exclude low income earners.

Earl Samuels, Assistant General Manager, Jamaica National Building Society (JNBS), makes a point during the recent two-day (Oct 6-7) Regional Housing Conference, organised by the Caribbean Association of Housing Finance Institutions (CASHFI). Mr. Samuels, who is also a former Managing Director, of the NHT, says the discourse on affordable housing continues to exclude low income earners.

Earl Samuels, Assistant General Manager, at the Jamaica National Building Society (JNBS) says there needs to be more discussion on the issue of providing proper housing for low income earners, noting that the debate about affordable housing continues to be one-sided, excluding low income earners from the discourse.

“The majority of the beneficiaries under the National Housing Trust (NHT) are those in the middle-income category and there is a reason for that: Those at the lower income level, they can’t afford it,” Mr. Samuels argued. “Even at $4.5 million at zero percent interest, a significant portion of the contributors would still not be able to afford it,” Mr. Samuels, a former Managing Director of the NHT, emphasised.

The issue recently re-emerged during the recent two-day Regional Housing Conference earlier this month, organised by the Caribbean Association of Housing Finance Institutions (CASHFI), at the Jamaica Pegasus Hotel in Kingston, under the theme, “Transforming Regional Communities through Housing and Economic Development.”

Low-income earners represent about 20 percent to 25 percent of beneficiaries from the NHT, Easton Douglas, Chairman of the NHT says, while middle-income earners make up some 40 percent of beneficiaries, although near equal numbers of middle-income and low-income earners make up the more than 350,000 contributors to the NHT.

His revelation was supported by findings by the Caribbean Policy and Research Institute (CaPRI), which indicated that the NHT has only been able to provide housing for some 12 percent of the population.

“More than 600,000 Jamaicans are not eligible for the loan (mortgages) because the income falls below the minimum wage or they are not contributors,” stated Altricia Dawson, Research Officer at CaPRI, who presented a draft paper at the conference on behalf of Dr. Damien King, Co-Executive Director of CaPRI.

She noted that with more than half a million Jamaicans living below the poverty line, the gap between effective housing demand and need is increasing.

“Some people will never be able to afford housing in this country even if it is a dollar and that is why we are now having an indigent housing programme through the NHT to try and help these persons,” Mr. Douglas stated.

He added that the NHT recently launched the First Step Housing Programme, under which it has developed units at a value of $2.7 million, targeted to low income earners. This model is to be improved in partnership with private developers, he pointed out.

However, Doreen Prendergast, Chief Technical Director in the Ministry of Transport Housing and Works, noted that partnerships with private developers to construct low income housing have not been the best solution, as private companies are about generating profit.  She said the NHT has, in the past, offered special financing to private developers which had low take up.

“Given the situation in the low income market we will need some committed Jamaicans who are willing to see a change in the sector and come forth and decide that yes, it is essential to make a profit, but it is essential to do something for the public good,” she maintained.

She added that partnerships also leave the government vulnerable as the bulk of the risk is borne by central government; noting that moves to strengthen the policy governing private-public partnerships with developers and reduce central government’s risk have only been met by even lower participation by developers.

Mr. Douglas revealed that some private developers were lobbying the NHT to instead increase its benefits, rather than to engage in partnerships with developers to build low income housing projects.

“They are lobbying for us to increase the benefits to $6 million, [for single applicants]; and up to $10 million or $12 million, [for joint applicants]. However, the board is not willing to yield to the lobbying, because the intention of the NHT board, at this time, is to provide for low income contributors,” he emphasised.

However, Mr. Samuels said there are other options. He said Government could look at developing rental housing, giving people the opportunity to own the house over time.

“This is something done in other countries, including Britain and Brazil, where a portion of the rent is treated as an equity investment so that over time the person could eventually become the owner,” he suggested.

He also said Government could also look at implementing a tax incentive for persons who earn below a certain amount to broaden access to home ownership.

“So for persons earning below a certain level, you could look at a programme where you offer them the opportunity to reclaim the taxes on the mortgage offered for the purchase of a low income unit. This could be a good way of also addressing even the squatter issue in Jamaica because what you’re offering is an opportunity for even those who don’t earn a formal income to get access to proper shelter through the formal system,” he suggested. He said the model is not new and has been working even in other Caribbean countries such as Barbados.

But, beyond the issue of low income earners’ inability to draw down benefits from the NHT, Mr. Samuels said bureaucracy continues to be a major factor impacting the price of housing.  He was supported by other participants who pointed to the red tape involved in the approval process for developments and called for the process to be de-centralised and parish councils empowered.

“We need to look at the efficiency of the government bureaucracy in dealing with the approval for development. It is extremely inefficient and those are some of the factors not being considered,” Mr. Samuels stated.

Responding to the issues raised by Mr. Samuels and parish council representatives at the forum, Mr. Douglas said  arrangements are being made that should give Parish Councils more power to better manage the approval process for housing developments. The arrangements are to be announced soon.

The CASHFI housing conference was organised in association with the Inter-American Development Bank and the National Housing Trust (NHT) with CASHFI members, JNBS and The Victoria Mutual Building Society, as main sponsors.

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CASHFI Conference Focus: Housing as a Means of Economic Development

Secretary General of the Caribbean Association of Housing Finance Institutions (CASHFI) Joseph Bailey is projecting that the staging of a Regional Housing Conference,  will assist regional governments to shape policy that will result in using the provision of housing as a means for economic development.

The two-day conference will be held at the Jamaica Pegasus Hotel in Kingston, from October 6-7, 2014, under the theme Transforming Regional Communities through Housing and Economic Development.”  It is anticipated that representatives from Association’s 12-member countries in the region and other territories will attend the event.

Key partners in the hosting of the historic assembly will include the Jamaica National Building Society (JNBS), the National Housing Trust (NHT), the Victoria Mutual Building Society (VMBS) and the Inter-American Development Bank (IDB).

Minister of Transport Works and Housing, Dr. the Hon. Omar Davies will deliver the keynote address. And, the conference will include presentations on: Latin American & Caribbean Housing Assessment; Housing affordability and contributory factors;  Private/Public Partnership in Housing, Climate Change – Implications for Sustainable Development; The Course of the Jamaican Economy; Revitalisation of Cities – the Canadian Experience; and Law & Order, Security and Stability in Communities.

Putting the conference in perspective, Mr. Bailey said, “In many jurisdictions governments are taking a new look at the role housing can play in growing their Gross Domestic Product (GDP); and, at this regional housing forum, we want to send a message to the leadership of our member countries that: Housing should be given a full place in economic development with renewed investment in the sector.

He maintained that housing has the potential to transform cities; and expansion of the sector should be taken seriously, as the records show that housing was the main contributor to the revitalisation generation of many cities, worldwide. A new thought in some major cities is the development of Housing Covenant which seeks to reward effort through improved housing offer.  Greater priority is placed on developing intermediate housing; that is housing for those who cannot afford to access the private market, to rent and buy but who do not qualify for social housing.

“When the housing sector thrives, cities improve because construction generates employment. When this happens, residents will seek to refurbish their homes; buildings in communities will be renovated; and this improves the overall ambience of the city,” Mr. Bailey affirmed.

He added that one of the objectives of the conference is to contribute to shaping Caribbean policy that will result in housing playing a vital role in economic development; and assist the region to meet the housing needs of its population which is growing faster than current new housing stock.

“It is our hope that the concept for a housing policy will emerge from this conference, to set the framework for a paradigm shift. This policy should make housing affordable and allow housing development to impact economic development. Consequently, we will advocate for the appropriate use of resources to reduce the housing deficit in the region,” he said.

General Manager of the Jamaica National Building Society (JNBS) and CASHFI Chairman Earl Jarrett concurred with Mr. Bailey.

“As a building society, we at Jamaica National recognise that housing is at a critical juncture in the Caribbean; and, it is our hope that the conference will provide right solutions to demonstrate to policymakers that housing can benefit regional economies. We will also use the opportunity to identify right solutions to address the housing deficit,” he said.

The findings of the CASHFI conference will be published in the IDB Findings: New Study on Latin America & Caribbean; Housing Opportunities for the Majority publication, early next year.

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