Public Disclosure Authorized Public Disclosure Authorized DIGITAL ECONOMY FOR LATIN AMERICA AND THE CARIBBEAN Public Disclosure Authorized Country Diagnostic: Jamaica Public Disclosure Authorized April, 2024 Administ r d b Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 1 Report No: Digital Economy for Latin America and the Caribbean Country Diagnostic: Jamaica April 2024 DDT Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 2 © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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TABLE OF CONTENTS ACKNOWLEDGEMENTS�����������������������������������������������������������������������������������������������������������11 ABBREVIATIONS���������������������������������������������������������������������������������������������������������������������� 12 EXECUTIVE SUMMARY����������������������������������������������������������������������������������������������������������� 15 OVERVIEW ������������������������������������������������������������������������������������������������������������������������������� 18 .1. INTRODUCTION ������������������������������������������������������������������������������������������������������������������� 36 2. DIGITAL INFRASTRUCTURE ���������������������������������������������������������������������������������������������� 43 . 2.1. The importance of digital infrastructure: Enabling inclusive digital transformation in Jamaica�������������������� 44 2.2. Current state of digital infrastructure: High prices and low quality and usage of broadband services are barriers to inclusive digital transformation����������������������������������������������������������������������������������������������������� 45 2.3. Recommendations: Improving data and device affordability, expanding a resilient backbone network, and strengthening the institutional and legal framework ������������������������������������������������������������������������������������ 55 3..DIGITAL PUBLIC PLATFORMS ������������������������������������������������������������������������������������������� 60 3.1. The importance of digital public platforms: Improving service delivery and core government systems ������ 61 3.2. Current state of digital public platforms: Opportunities to improve service delivery and core government services through digital transformation��������������������������������������������������������������������������������������������������������������� 62 3.3. Recommendations: Clarifying the political and institutional authority, centralizing management of ICT assets, and adopting a “building-blocks” approach to services online����������������������������������������������������� 74 4. DIGITAL FINANCIAL SERVICES ����������������������������������������������������������������������������������������� 81 4.1. The importance of digital financial services: Key enabler for financial inclusion ����������������������������������������� 82 4.2. Current state of digital financial services: Toward financial inclusion through the interoperability of JAM-DEX accounts, payment instruments, and payment services����������������������������������������������������������������� 83 4.3. Recommendations: Enhancing payment system infrastructure, expanding access for non-bank payment service providers to the ACH, and updating the legal/regulatory framework for fintech and open banking�������� 93 5..DIGITAL BUSINESSES�������������������������������������������������������������������������������������������������������� 100 5.1. Importance of digital businesses: Promoting productivity and economic inclusion������������������������������������ 101 5.2. Current state of digital businesses: Limited digital business maturity and a challenging enabling environment ��������������������������������������������������������������������������������������������������������������������������������������� 102 5.3. Recommendations: Enhancing the business environment, expanding the support ecosystem, and catalyzing digital market development opportunities��������������������������������������������������������������������������������� 113 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 4 6..DIGITAL SKILLS�������������������������������������������������������������������������������������������������������������������117 6.1. The importance of digital skills: Developing digital skills to build the foundation for a technology-enabled society���������������������������������������������������������������������������������������������������������������������� 118 6.2. Current state of digital skills in Jamaica: Uncoordinated efforts to address the high demand for and low supply of digital skills������������������������������������������������������������������������������������������ 119 6.3. Recommendations: Creating a national digital skills strategy to improve coordination around a shared vision ������������������������������������������������������������������������������������������������������������������������������������� 128 7..TRUST ENVIRONMENT ����������������������������������������������������������������������������������������������������� 136 7.1. The importance of a trust environment: Enabling the digital economy by upholding foundational rights��������������������������������������������������������������������������������������������������������������������������������������������� 137 7.2. Current state of the trust environment in Jamaica: Progress through the data protection framework ������ 138 7.3. Recommendations: Align with international standards such as the Budapest Convention and identify critical information infrastructure sectors��������������������������������������������������������������������������������������� 154 REFERENCES ������������������������������������������������������������������������������������������������������������������������ 161 ANNEXES�������������������������������������������������������������������������������������������������������������������������������� 166 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 5 LIST OF FIGURES Figure 1.1. Mechanisms of Digital Technologies and Growth����������������������������������������������������������������������������������� 37 Figure 1.2. Pillars of the Digital Economy����������������������������������������������������������������������������������������������������������������� 41 Figure 2.1. Data Infrastructure Supply Chain ����������������������������������������������������������������������������������������������������������� 44 Figure 2.2. 4G Mobile Coverage and Mobile Broadband Penetration 2022�������������������������������������������������������������� 45 Figure 2.3. Fixed Household Broadband Penetration in Jamaica versus Peers, %�������������������������������������������������� 46 Figure 2.4. Fixed Coverage by Technology �������������������������������������������������������������������������������������������������������������� 46 Figure 2.5. International Bandwidth Used, Mbps per 100 Inhabitants, 2021 ������������������������������������������������������������ 46 Figure 2.6. Data Prices as a Share of Average Monthly Income by Income Quintile, %. ����������������������������������������� 47 Figure 2.7. Price of the Cheapest Smartphone, percent of GNI 2022����������������������������������������������������������������������� 48 Figure 2.8. Price of the Cheapest Smartphone by Income Quintile. 2021 ��������������������������������������������������������������� 48 Figure 2.9. Median Download Speed for Fixed Services, Jamaica and Peers �������������������������������������������������������� 48 Figure 2.10. Median Download Speed for Mobile Services, Jamaica and Peers����������������������������������������������������� 48 Figure 2.11. International Connectivity in Jamaica ��������������������������������������������������������������������������������������������������� 50 Figure 2.12. Used Interregional International Capacity �������������������������������������������������������������������������������������������� 50 Figure 2.13. Mobile Tower and Cell Density per 10,000 Inhabitants (2021)�������������������������������������������������������������� 52 Figure 2.14. Median Download Speed for Fixed Services, Rural vs. Urban ������������������������������������������������������������ 52 Figure 2.15. Median Download Speed for Mobile Services, Rural vs. Urban����������������������������������������������������������� 52 Figure 2.16. ITU’s ICT Regulatory Tracker Index, 2020�������������������������������������������������������������������������������������������� 53 Figure 3.1. The Bank’s Approach to Digital Public Platforms Targets Three Levels of Capacity ������������������������������ 61 Figure 3.2. Scores on the UN E-Government Development Index from 2012 to 2022 for Select Countries ������������ 62 Figure 3.3. JIFMIS Architecture �������������������������������������������������������������������������������������������������������������������������������� 66 Figure 4.1. The Payment Aspects of Financial Inclusion (PAFI framework)�������������������������������������������������������������� 83 Figure 4.2. Account Access (%, age 15+), 2021 ������������������������������������������������������������������������������������������������������ 84 Figure 4.3. Card Ownership, 2021 (%, age 15+)������������������������������������������������������������������������������������������������������ 84 Figure 5.1. Digital Businesses��������������������������������������������������������������������������������������������������������������������������������� 101 Figure 5.2. Digital Businesses by Founding Years ������������������������������������������������������������������������������������������������� 102 Figure 5.3. Digital Business Density Performance and Number of Digital Businesses (2022) ������������������������������ 103 Figure 5.4. Percentage of Digital Businesses that are Headquartered Domestically vs. Abroad ��������������������������� 103 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 6 Figure 5.5. Top Subsectors of Digital Businesses Headquartered and Operating in Jamaica ������������������������������� 104 Figure 5.6. Distribution of Firms according to Presence in Number of Subsectors/Markets ���������������������������������� 104 Figure 5.7. Entrepreneurship Number of Deals by Deal Types and Value of Investment by Funding Type from 2011 to 2020������������������������������������������������������������������������������������������������������������������������ 108 Figure 5.8. Entrepreneurship Support Organizations and Other Capacity Development Providers in Jamaica��������������������������������������������������������������������������������������������������������������������������������������������������������������� 109 Figure 5.9. Percent of Platform-Based Data-Driven Digital Businesses, and Domestic vs. Foreign Ownership of Platform-Based or Data-Driven Digital Businesses����������������������������������111 Figure 6.1. UNESCO’s Digital Literacy Skills Framework - Domain������������������������������������������������������������������������ 118 Figure 6.2. Educational Attainment of Jamaicans between 24 and 64 years old, by age group ���������������������������� 123 Figure 6.3. Number of Jamaican Workers, by economic sector������������������������������������������������������������������������������ 126 Figure 7.1. Multidimensional Layers of Digital Trust������������������������������������������������������������������������������������������������ 138 Figure 7.2. Data Enablers and Data Safeguards of the Trust Environment������������������������������������������������������������ 139 Figure 7.3. DPA: Effectiveness and Operationalization Stages������������������������������������������������������������������������������ 142 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 7 LIST OF TABLES Table O.1. Summary of Key Policy Recommendations by Digital Economy Pillar ��������������������������������������������������� 31 Table 2.1. Data Prices as a Share of Average Monthly Income in 2021, %�������������������������������������������������������������� 47 Table 2.2. International Internet Bandwidth by Destination �������������������������������������������������������������������������������������� 51 Table 2.3. Key Digital Infrastructure: Challenges and Opportunities ������������������������������������������������������������������������ 55 Table 2.4. Digital Infrastructure: Policy Recommendations �������������������������������������������������������������������������������������� 57 Table 3.1. Digital Public Platforms: Key Challenges and Opportunities�������������������������������������������������������������������� 73 Table 3.2. Digital Public Platforms: Policy Recommendations ��������������������������������������������������������������������������������� 76 Table 4.1. Digital Financial Services: Key Challenges and Opportunities����������������������������������������������������������������� 93 Table 4.2. Digital Financial Services: Policy Recommendations ������������������������������������������������������������������������������ 96 Table 5.1. Jamaica’s Top Digital Subsectors ���������������������������������������������������������������������������������������������������������� 105 Table 5.2. Top Five Subsectors by Founding Years – Jamaica ������������������������������������������������������������������������������ 105 Table 5.3. Digital Businesses: Key Challenges and Opportunities ������������������������������������������������������������������������� 112 Table 5.4. Digital Businesses: Policy Recommendations ��������������������������������������������������������������������������������������� 114 Table 6.1. Digital Skills: Key Challenges and Opportunities������������������������������������������������������������������������������������ 127 Table 6.2. ITU’s Sample Roadmap to Develop National Digital Skills Strategies ��������������������������������������������������� 128 Table 6.3. Digital Skills: Policy Recommendations ������������������������������������������������������������������������������������������������� 132 Table 7.1. Rights and Intersection with the ICT Sector������������������������������������������������������������������������������������������� 137 Table 7.2. Summary of Key Safeguards and Enablers for Jamaica and Selected Benchmark Countries in the LAC Region ���������������������������������������������������������������������������������������������������������������������������������� 139 Table 7.3. Alignment of the DPA with the EU GDPR ���������������������������������������������������������������������������������������������� 141 Table 7.4. Trust Frameworks for Digital ID and Services (country examples)��������������������������������������������������������� 146 Table 7.5. Digital Trust Environment: Key Challenges and Opportunities��������������������������������������������������������������� 152 Table 7.6. Trust Environment: Policy Recommendations ��������������������������������������������������������������������������������������� 155 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 8 LIST OF BOXES BOX 2.1. Improving Mobile Handset Affordability����������������������������������������������������������������������������������������������������� 49 BOX 3.1 Development of a Sector-Wide Social Protection Information System ������������������������������������������������������ 69 BOX 4.1. Criteria for the Adoption of Digital Payment Instruments �������������������������������������������������������������������������� 85 Box 4.2. Examples of Financial Literacy Programs around the World ��������������������������������������������������������������������� 91 Box 4.3. Fast Payments in Brazil: the Case of Pix ��������������������������������������������������������������������������������������������������� 95 Box 7.1. Recognition of Data Subjects’ Rights under the DPA ������������������������������������������������������������������������������� 142 Box 7.2. DPA Case Studies: United Kingdom and Sweden������������������������������������������������������������������������������������ 144 Box 7.3. Global Cybersecurity Index ���������������������������������������������������������������������������������������������������������������������� 147 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 9 ANNEXES Annex 1. Vision 2030 and DE4LAC Alignment ������������������������������������������������������������������������������������������������������� 166 Annex 2. DigComp 2.0 Proficiency Levels and Skill Examples ������������������������������������������������������������������������������ 168 Annex 3. Summary of Goals and Strategies in the 2019 Science, Technology, and Innovation Policy������������������ 170 Annex 4. Goals and Strategies in the 2022 ICT in the Education Policy ���������������������������������������������������������������� 171 Annex 5. Digital Skills Attainment Targets for Grades 1 through 9, according to the National Standards Curriculum ��������������������������������������������������������������������������������������������������������������������������������������������� 172 Annex 6. Jamaican National Qualifications Framework������������������������������������������������������������������������������������������ 173 Annex 7. Short Digital Skills Training Programs in Jamaica������������������������������������������������������������������������������������ 174 Annex 8. Main Skills Demands in the Jamaican Economy������������������������������������������������������������������������������������� 176 Annex 9. Occupations with Growing Demand that Require Advanced and Highly Specialized Digital Skills ��������� 177 Annex 10. Primary Laws and Regulations Governing the Data Protection Framework in Jamaica������������������������ 179 Annex 11. Main Provisions under the DPA ������������������������������������������������������������������������������������������������������������� 180 Annex 12. The OIC’s Mandate ������������������������������������������������������������������������������������������������������������������������������� 181 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 10 ACKNOWLEDGEMENTS This report was prepared by a cross-sectoral task team led by Fadwa Bennani and Marolla Haddad (Digital Economy Assessment for Latin America and the Caribbean, Jamaica leads), together with Natalija Gelva- novska-Garcia and Douglas Randall (Digital Economy Assessment for Latin America and the Caribbean, Re- gional leads). The teams consisted of: Marolla Haddad and Niccolo Comini (Digital Infrastructure); Bernard Myers and Emir Sfaxi (Digital Public Platforms); Holti Banka and Gynedi Srinivas (Digital Financial Services); Amadou Dem and Ilias Hamdouch (Digital Businesses); Victoria Levin and Viviana Venegas Roseth (Digital Skills); Aliaksandra Tyhrytskaya and Oscar Noe Avila (Trust Environment); and Catalina Rodriguez Tapia (report coordination). The team would like to thank the World Bank Country Management Unit, including Lilia Burunciuc (Country Director), Gail Richardson (Operations Manager), and Karlene Colette Francis (Senior Operations Officer), for guiding the diagnostic exercise in country. The Latin America and the Caribbean Chief Economist’s office, including Bill Maloney (Chief Economist), Guillermo Beylis (Economist), and Global Practice Managers Doyle Gallegos (Digital Development), Yira Mascaro (Finance, Competitiveness, and Innovation), Adrian Fozzard (Governance), and Emanuela Di Gro- pello (Education), provided invaluable technical guidance and support. The report benefited from the careful reading and comments by Frederic Verdol, Nataliya Mylenko, and Sandra Sargent (peer reviewers). The team thanks Briana Wilson, Clemente Avila Parra (Social Protection), David O’Sullivan, Claudia Vargas Pastor, Silver Namunane, and Rohan Longmore (Tax) for specific inputs into the Digital Public Platforms and Digital Financial Services chapters. This report would not be possible without the sustained interest, commitment, and collaboration of the Government of Jamaica. The team is particularly grateful to the Ministry of Science, Energy, Telecommuni- cations, and Transport (MSETT), the Ministry of Finance and the Public Service, and the Planning Institute of Jamaica for their strategic vision and for coordinating the various ministries, departments, and agencies that contributed to this effort. This report was prepared with the support of the Digital Development Partnership (DDP), administered by the World Bank Group. DDP offers a platform for digital innovation and development financing, bringing public and private sector partners together to advance digital solutions and drive digital transformation in developing countries. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 11 ABBREVIATIONS ACH Automated Clearing House AGD Accountant General’s Department AI Artificial Intelligence AML Anti-Money Laundering API Application Programming Interface ATM Automated teller machine BELLA Building the Europe Link to Latin America and the Caribbean Initiative BEPS Base Erosion and Profit Shifting BIGEE Boosting Innovation, Growth and Entrepreneurship Ecosystems BOJ Bank of Jamaica BOJA Bank of Jamaica Act BPO Business Process Outsourcing CARICOM Caribbean Community and Common Market CBDC Central Bank Digital Currency CDD Consumer Due Diligence CERT Cyber Security Emergency Response Team CFT Combating the Financing of Terrorism CII Critical Information Infrastructure CIRT Cyber Incident Response Team CSEC Caribbean Secondary Education Certificate CTMS Central Treasury Management System DBJ Development Bank of Jamaica DEA Digital Economy Assessment (World Bank) DECU Digital Evidence and Cybercrimes Unit DFS Digital Financial Services DPA Data Protection Act DPO Data Protection Officer DTI Deposit-Taking Institution ePPS Electronic Public Procurement System ESO Entrepreneurship Support Organization EU European Union G2B Government to Business G2C Government to Citizen G2G Government to Government GDPR General Data Protection Regulation GFMS Government Financial Management System GNI Gross National Income GOJ Government of Jamaica HEART/NSTA Human Employment and Resource Training/National Service Training Agency ICT Information and Communications Technology ICTA Information and Communications Technology Authority Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 12 IDB Inter-American Development Bank IGNITE Innovation Grant from Ideas to Entrepreneurship IoT Internet of Things ISO International Standards Organisation ITO Information Technology Outsourcing ITU International Telecommunication Union IXP Internet Exchange Point JaCIRT Jamaica Cyber Incident Response Team JAM-DEX Jamaica Digital Exchange (Jamaica’s Central Bank Digital Currency) JAMPRO Jamaica Promotions Corporation JBDC Jamaica Business Development Corporation JDXP Jamaica Data Exchange Platform JTA Jamaica Teacher’s Association JTEC Jamaica Tertiary Education Commission KPO Knowledge Process Outsourcing KYC Know Your Customer LAC Latin America and Caribbean MDAs Ministries, Departments, and Agencies MIIC Ministry of Industry, Investment and Commerce MLSS Ministry of Labour and Social Security MOCA Major Organized Crime and Anti-Corruption Agency MOEY Ministry of Education and Youth MOFPS Ministry of Finance and the Public Service MSETT Ministry of Science, Energy, Telecommunications, and Transport MSME Micro, Small, and Medium Enterprises NCA National Cybersecurity Authority NCB National Commercial Bank Jamaica Limited NCS National Cybersecurity Strategy NIDS National Identification System NIN National Identification Number NIRA National Identification and Registration Authority NIRI National Identification and Registration Inspectorate NQF-J National Qualifications Framework NSC National Standards Curriculum OAS Organization of American States ODPP Office of the Director of Public Prosecution OIC Office of the Information Commissioner OUR Office of Utilities Regulation PAFI Payment Aspects of Financial Inclusion PATH Programme of Advancement through Health and Education PCSA Payment Clearing and Settlement Act PIMIS Public Investment Management Information System PIOJ Planning Institute of Jamaica PPP Public-Private Partnership PSP Payment Service Provider QR Quick Response Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 13 RAiS Revenue Administration Information System RPJ Retail Payments Jamaica Limited RTGS Real-Time Gross Settlement SMA Spectrum Management Authority SME Small and Medium-Sized Enterprise SSO Single Sign-On ST&I Science, Technology, and Innovation TAJ Tax Administration Jamaica TIU Technology and Information Unit TRN Tax Registration Number TVET Technical and Vocational Education and Training UMIC Upper-Middle-Income Country UN United Nations UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children’s Fund USF Universal Service Fund UWI University of West Indies VAT Value Added Tax Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 14 EXECUTIVE SUMMARY Jamaica’s progress in digital transformation is pav- policy environment in which authority for digital ing the way for a foundational change in how the initiatives has generally been dispersed across economy and society operate and create value. The MDAs with only limited steering from the center. Al- broadband initiative, implemented by the Ministry of though there may be no single institution alone that can Science, Energy, Telecommunications, and Transport be responsible for all aspects of the digital transforma- (MSETT), aims to provide internet connectivity to all tion, a strong political and institutional mandate would households and communities and has helped establish be beneficial to driving the implementation of the digital high-speed broadband connectivity in 90 schools across agenda. Initiatives need to be guided by a single stra- the country. The same initiative brought together public tegic framework that provides clear policy direction for and private sector investments for an emergency broad- all MDAs. Developing a digital transformation strategy band backbone amounting to more than US$2 million. would also help to reconcile the sequencing of multiple The Government of Jamaica (GOJ) is also modernizing policy objectives and guide the trade-offs among com- its processes and functions and developing citizen-cen- peting public investment priorities. An “interim” digital tric digital platforms; for example, at least 80 percent of strategy and a data governance framework would be a core tax declarations are currently being submitted on- prudent first step in laying the groundwork for future in- line, and the Programme of Advancement through Health teroperability across government. and Education (PATH) pays 40 percent of beneficiary families through electronic payments. The central bank To further advance its digital transformation, the of Jamaica has also taken a leading role in the region GOJ would need to address the barriers that cur- by granting legal tender status to the Jamaica Digital rently impede the inclusive and productive adoption Exchange, or JAM-DEX, a central bank digital currency of digital technologies. High prices for reliable internet to promote financial inclusion. The Human Employment services are among these obstacles; it is estimated that and Resource Training (National Service Training Agen- Jamaicans pay on average 7.9 percent of their average cy) Trust is educating 6,000 people per year to meet the monthly gross national income for fixed broadband ser- needs of the burgeoning business process outsourcing vice compared to an average of 5.0 percent on the con- industry. Moreover, foundational elements for trust in tinent. Structural issues, such as limited competition and data and digital transactions are being strengthened, restricted access to upstream broadband infrastructure, such as in cybersecurity, data governance, and digital contribute to higher costs and lower access to digital identification. technologies compared to neighboring countries. Adop- tion of digital financial services (DFS) is limited, with only Jamaica’s ambition to transform itself into a dig- 40 percent of adults having made at least one digital pay- ital economy has been rooted for many years in ment in the past year. An ecosystem to incentivize the the country’s long-term development plan “Vision use of DFS is necessary to promote financial inclusion 2030,” but progress in realizing those objectives has and maximize the reach of social protection programs. been slow. Multiple factors are contributing to the delay, Moreover, Jamaica’s score on the World Economic Fo- including weakness in the institutional and coordination rum’s 2019 Global Competitiveness Index (93rd out of mechanisms of government, the lack of a digital trans- 141 countries) indicates that many Jamaicans lack the formation strategy and roadmap, and limited human and required skills to participate in and benefit from the digital financial resources devoted to the task. Senior technical economy. The government therefore needs to strength- staff throughout Jamaica have a clear understanding of en institutional capacity and reform certain laws and reg- global developments and opportunities within the digital ulations to increase trust in digital technologies and to space and the specific challenges Jamaica encounters in boost the digital economy ecosystem. exploiting them. The appointment in May 2023 of a new Minister without Portfolio for Skills and Digital Transfor- This report serves as input to guide Jamaica’s digital mation provides a fresh opportunity for the GOJ to draw transformation strategy, in line with the country’s as- lessons from its past approaches to digital development pirations and its Vision 2030 National Development and to build on the foundation that has been laid. Plan. The report is based on the World Bank’s Digital Economy Assessment methodology, which analyzes Going forward, the GOJ needs to embrace a the digital economy across six pillars: digital infrastruc- whole-of-government approach to digital transfor- ture, digital public platforms, digital financial services, mation and move away from the more fragmented digital businesses, digital skills, and trust environment. Executive Summary 15 It examines the current state of Jamaica’s digital ecosys- The report organizes the findings of the six pillars into tem, including its strengths and weaknesses, and out- three main digital economy work streams that have an lines a set of priority actions for the GOJ to accelerate its impact on the overall economy or that can be implement- digital transformation. The report also provides a com- ed across different sectors: the digital economy en- prehensive set of recommendations that the GOJ may abling environment, digital public infrastructure and consider incorporating into its short- and medium-term platforms, and digital skills and technology adop- policy and budget planning cycles to leverage digital tion. Specific recommendations for the GOJ in these technologies across the six pillars outlined above. Al- work streams are highlighted below: though the implementation of some of the recommenda- tions entails new legislation or regulation, many actions can be pursued without legal changes. PRIORITY REFORMS AND INITIATIVES ACROSS KEY PILLARS OF THE DIGITAL ECONOMY 1. The digital economy enabling environment translates into putting into place the legislation, de- crees, and regulations required to encourage competition, investment, and innovation while promoting trust in and the security of online transactions. It also entails a reform of the institutional setup with the appropriate roles and mandates for implementing large-scale projects across diverse government entities and fostering a well-defined and streamlined government institutional architecture. The priority actions for Jamaica include: » Establish a well-defined institutional arrangement to drive digital government transforma- tion, including operationalizing the Ministry with portfolio responsibility for digital transformation and skills, and establishing an Information and Communications Technology Authority (ICTA). » Develop a digital transformation strategy and roadmap with a sequencing based on the readi- ness and capacity of institutions, the level of investment needed, and/or the impact on people’s lives. » Improve the affordability of internet services by assessing the impact of direct and indirect tax- ation and levies on the services and strengthening competition in the telecommunications market. » Establish a comprehensive legal and regulatory framework for electronic retail payment services, along with amendments to fintech sandbox guidelines. » Strengthen institutional capacity and accelerate the implementation of the data privacy and cybersecurity frameworks. 2. Digital public infrastructure and platforms refers to developing the core infrastructure, information systems, and platforms needed to manage government operations efficiently and effectively and build- ing on them to make public services widely accessible online. This will also ensure the interconnectivity and interoperability of data and information systems and the continuity of government operations and services, including DFS, among others. The priority actions for Jamaica in this workstream include: » Develop a basic enterprise architecture vision document that sets the main directions and stan- dards for future initiatives in information and communications technologies. » Promote advanced digital infrastructure to transform key sectors, including investment in next generation infrastructure (fiber to the premises, 5G, and cloud computing) that can enable the mod- ernization of the logistics sector and accelerate the adoption of smart agriculture in priority regions. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 16 » Continue the modernization of the DFS ecosystem to promote DFS adoption and advance fi- nancial inclusion. This entails continued enhancements of the payment system infrastructure to im- prove interoperability and enable fast payment functionalities. Efforts should also be directed toward advancing the digitization of cross-border remittances and government-to-person social transfers. 3. Digital skills and technology adoption entails providing individuals and businesses with the tools needed for an advanced digital economy while fostering innovation and productivity. The supply of basic to intermediate skills requires a continued effort to strengthen school curricula and lifelong training for the private and public sectors. Yet, emerging high value-added sectors need advanced or specialized digital skills to grow. This calls for more coordinated and targeted public and private sector programs to create a pool of advanced digital talent that in turn can attract more investment by digital firms. Greater technology adoption also relies the growth of digitally enabled business models to drive demand for newly skilled employees. The priority actions for Jamaica in this workstream include: » Develop a shared vision for digital skills development. » Improve the coordination, monitoring, and evaluation of key initiatives. » Develop an upskilling and reskilling program for public sector employees to accompany the development and implementation of digital public platforms. » Accelerate the demand for digital businesses and promote the growth of the innovation ecosystem by expanding targeted digital transformation initiatives that address specific vertical competitiveness and cross-cutting strategic objectives, including business formalization, operational competitiveness, and export market readiness. Executive Summary 17 OVERVIEW Digital technologies are transforming how individu- on the UN’s E-Government Development Index reflects als, businesses, and governments interact, creating this progress, increasing from 0.4552 in 2012 to 0.5906 new opportunities to address long-standing devel- in 2022. The modernization of government functions is opment challenges. Defined as electronic tools, sys- being leveraged to facilitate procedures for Jamaican cit- tems, devices, and resources that generate, store, or izens through eGov Jamaica and the implementation of process data, digital technologies have already changed ICT projects across government by the Transformation how people learn, work, shop, socialize, and access in- Implementation Unit (TIU). According to the Tax Admin- formation.1 The impacts of this transformation are diverse istration Jamaica (TAJ), at least 80 percent of declara- and dynamic, from productivity gains across economic tions are filed online for each core tax, and 99 percent of sectors to improvements in the efficiency and quality of large taxpayers file core tax declarations online. Similar- service delivery and the creation of new sources of val- ly, the Programme of Advancement through Health and ue. For policy makers in emerging markets, digital tech- Education (PATH), a conditional cash transfer program nologies also offer new pathways to address long-stand- and Jamaica’s main social assistance scheme, delivers ing development challenges and to make strides in the 40 percent of payments to families digitally and plans to growth of core economic activities. increase this to 57 percent by 2028. Financial services have also benefited from digital transformation, with the In Jamaica, the Vision 2030 document and the Mid- Bank of Jamaica (BOJ) granting legal tender status to term Socio Economic Policy Framework 2021–2024 the Jamaica Digital Exchange, or JAM-DEX, a central recognize the potential of digital technologies to help bank digital currency (CBDC) that aims to promote finan- boost the country’s social and economic develop- cial inclusion. ment. Jamaica has prioritized its digital transformation agenda, and Prime Minister Andrew Holness has sought The country still faces several barriers to widespread support from the World Bank and international partners digital transformation, however, hindering the digital to ensure that Jamaica becomes a digital society. Vision economy’s potential impact on its social and eco- 2030, Jamaica’s National Development Plan, recognizes nomic development. High prices for data and devices the fundamental role of science, technology, and inno- are among these obstacles. Jamaicans are paying 7.9 vation (ST&I) in advancing sustainable prosperity. The percent of their average monthly gross national income Midterm Socio Economic Policy Framework 2021–2024 for a fixed broadband basket compared to an average places a priority on creating a technology-enabled so- of 5.0 percent on the continent. With underlying limited ciety and addresses the challenges the country faces, competition, low access and usage of the internet can such as low investment in research and development, a lead to the exclusion of disadvantaged groups, higher in- weak research and innovation culture, gaps in intellectu- formation and search costs, constrained access to mar- al property protections, and the absence of a national in- kets and new technologies, reduced labor productivity, novation system. The Ministry of Science, Energy, Tele- and limited access to financial services. For example, communications and Transport (MSETT) has played an in terms of financial inclusion through the expansion of essential role in developing the country’s digital strategy digital financial services (DFS), only 40 percent of adults framework. For example, the ministry’s 2011 information report having made at least one digital payment over and communications technology (ICT) policy established the past year. Another barrier to the widespread digital a framework for ICT to support economic and social de- transformation of the government is the weak mandate velopment. With the appointment of a new minister un- for implementing digital public platform initiatives, and der the Office of the Prime Minister with direct oversight the country’s low digital skill levels present a similar ob- of skills and digital transformation, as well as the new stacle to the wider transformation of the country’s econ- National Identification System (NIDS), the government omy: Jamaica ranks 93rd out of 141 countries in World has demonstrated its commitment to Jamaica’s digital Economic Forum’s 2019 Global Competitiveness Index. transformation agenda.2 Accelerating the adoption of digital technologies Following these commitments, Jamaica has made holds great promise for transforming Jamaica’s significant progress in its digital transformation in public and private sectors. With more households recent years. One hundred percent of the population is and businesses using high-quality internet, the range of already covered by a 3G mobile network, and roughly economic opportunities widens, including remote work 47 percent of households have access to fixed broad- and study, e-commerce, online offshoring and outsourc- band (with various degrees of speed). Jamaica’s score ing, application-based activities, and the use financial Overview 18 technologies. Digital transformation of government sys- This assessment serves as input to help inform the tems and public services in Jamaica, such as procure- GOJ’s digital transformation strategy. Although it also ment, budgeting, and customs, has the potential to im- provides policy recommendations, its main objective is to prove service delivery to individuals and businesses and assist the country in identifying the key areas for expan- enhance the attractiveness of the business environment. sion and in this way guiding important policy decisions Adopting digital technology in the private sector and on investments, action plans, and other steps to advance aligning market demand with a digitally skilled workforce the digital transformation agenda. The report is based on can increase productivity growth and export sophistica- the World Bank’s Digital Economy Assessment (DEA) tion. Furthermore, an ecosystem to incentivize the use of methodology, which, by examining the international ex- DFS with broad reach can accelerate the financial inclu- periences of digital businesses and public sector institu- sion of individuals and micro, small, and medium-sized tions, has identified a set of foundational elements that enterprises (MSMEs), while enabling the shift away from play a critical role in the digital transformation of econo- in-person, cash-based transactions. Developing state-of- mies. In line with this methodology, the report provides a the-art technologies, such as 5G and Internet of Things wide-ranging overview of Jamaica’s digital economy de- (IoT) connectivity, is an opportunity for Jamaica to unlock velopment across these six foundational elements or pil- the potential of sectors that are central to its economy lars: (a) digital infrastructure; (b) digital public platforms; and social development, such as logistics, tourism, and (c) digital financial services; (d) digital businesses; (e) agriculture. digital skills; (f) trust environment. The adoption of digital technologies can also create Based on the assessment, the report outlines a set disparities, though Jamaica can take several mea- of priority actions for the GOJ to accelerate its dig- sures to mitigate any negative impact from technolo- ital transformation. It also provides a comprehensive gy adoption in specific sectors. The impact of technol- set of recommendations that the GOJ may consider in- ogy on productivity, employment, and wages is complex corporating into its short- and medium-term policy and to measure, and the literature so far includes varying ev- budget planning cycle. Although the implementation of idence and perspectives. For this reason, a digital trans- some of the recommendations entails new legislation or formation strategy should include an analysis and moni- regulation, many actions can be pursued without legal toring of the impact of technologies on various sectors to changes. The report organizes the findings of the six pil- lay the groundwork for more targeted interventions. The lars outlined above into three main digital economy work GOJ can also include other mitigating measures, such streams that have an impact on the overall economy or as investing in retraining and upskilling in the public and that can be implemented across different sectors: the private sectors to help workers acquire new skills and digital economy enabling environment, digital pub- transition into emerging industries and ensuring that all lic infrastructure and platforms, and digital skills citizens have access to digital technologies and the nec- and technology adoption. Specific recommendations essary skills to leverage them. for the GOJ in these work streams are highlighted below: Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 19 PRIORITY REFORMS AND INITIATIVES ACROSS THE VARIOUS PILLARS OF THE DIGITAL ECONOMY 1. The digital economy enabling environment translates into putting in place the legislation, decrees, and regulations required to encourage competition, investment, and innovation while promoting trust in and the security of online transactions. It also entails a reform of the institutional setup with the appro- priate roles and mandates for implementing large-scale projects across diverse government entities and fostering a well-defined and streamlined government institutional architecture. The priority actions for Jamaica include: » Establish a well-defined institutional arrangement to drive digital government transforma- tion, including operationalizing the Ministry with portfolio responsibility for digital transformation and skills, and establishing an Information and Communications Technology Authority (ICTA). » Develop a digital transformation strategy and roadmap with a sequencing based on the readi- ness and capacity of institutions, the level of investment needed, and/or the impact on people’s lives. » Improve the affordability of internet services by assessing the impact of direct and indirect tax- ation and levies on the services and strengthening competition in the telecommunications market. » Establish a comprehensive legal and regulatory framework for electronic retail payment services, along with amendments to fintech sandbox guidelines. » Strengthen institutional capacity and accelerate the implementation of the data privacy and cybersecurity frameworks. 2. Digital public infrastructure and platforms refers to developing the core infrastructure, information systems, and platforms needed to manage government operations efficiently and effectively and build- ing on them to make public services widely accessible online. This will also ensure the interconnectivity and interoperability of data and information systems and the continuity of government operations and services, including DFS, among others. The priority actions for Jamaica in this workstream include: » Develop a basic enterprise architecture vision document that sets the main directions and stan- dards for future ICT initiatives. » Promote advanced digital infrastructure to transform key sectors, including investment in next generation infrastructure (fiber to the premises, 5G, and cloud computing) that can enable the mod- ernization of the logistics sector and accelerate the adoption of smart agriculture in priority regions. » Continue the modernization of the DFS ecosystem to promote DFS adoption and advance fi- nancial inclusion. This entails continued enhancements of the payment system infrastructure to im- prove interoperability and enable fast payment functionalities. Efforts should also be directed toward advancing the digitization of cross-border remittances and government-to-person social transfers. Overview 20 3. Digital skills and technology adoption entails providing individuals and businesses with the tools needed for an advanced digital economy while fostering innovation and productivity. The supply of ba- sic to intermediate skills requires a continued effort to strengthen school curricula and lifelong training for the private and public sectors. The newer high value-added sectors need more targeted public and private sector programs to create a pool of advanced digital talent for the emerging advanced technol- ogies. This in turn can attract more investment by digital firms. Greater technology adoption also relies on the growth of digitally-enabled business models to drive demand for newly skilled employees. The priority actions for Jamaica in this workstream include: » Develop a shared vision for digital skills development. » Improve the coordination, monitoring, and evaluation of key initiatives. » Develop an upskilling and reskilling program for public sector employees to accompany the development and implementation of digital public platforms. » Accelerate the demand for digital businesses and promote the growth of the innovation ecosystem by expanding targeted digital transformation initiatives that address specific vertical competitiveness and cross-cutting strategic objectives, including business formalization, operational competitiveness, and export market readiness. The detailed findings of the report presented below Digital infrastructure also supports climate change adap- are organized into six chapters, each dealing with a tation and disaster response, facilitates communication pillar of the digital economy. Each pillar presents pol- and coordination between stakeholders, and acts as a icy recommendations that can inform relevant efforts by key enabler for emerging technologies, such as IoT and national authorities, the private sector, and development artificial intelligence (AI). partners. The section below summarizes the main find- ings on each digital economy pillar. Demand and usage of broadband services DIGITAL INFRASTRUCTURE: Inclusive growth through adequate digital infrastructure Jamaica faces challenges related to broadband us- age and affordability, as well as quality of service. Sixty percent of people in Jamaica have a unique mobile broadband subscription, lower than such countries as The importance of digital infrastructure Costa Rica and Georgia (both 76 percent). International bandwidth used in Megabits per second (Mbps) in Ja- maica are also below relevant peers in the Caribbean Digital infrastructure plays a crucial role in driving region and worldwide. Internet usage varies between ru- Jamaica’s digital transformation and unlocking the ral and urban areas (67 and 82 percent, respectively). potential of key sectors, such as public services, lo- Gaps in usage could be linked to a variety of underlying gistics, e-commerce, tourism, and agriculture. It en- factors, such as the quality and affordability of mobile ables the streamlining of government functions and the broadband services on the supply side or digital literacy delivery of citizen-centric services, promoting efficiency and the availability of services on the demand side. The and transparency. Expanding digital infrastructure is vital high prices for fixed broadband service noted above im- for reducing spatial inequalities by connecting rural areas pact the lower-income population disproportionately, as to markets, services, remittances, and social protection. the lowest quintile of income pays between 10 and 25 Cloud computing and data storage, for example, support percent of their income, depending on the service. small and medium-sized enterprises to scale IT resourc- es easily and affordably, fostering private sector growth. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 21 the development of sector or geographic areas will re- Bottlenecks at the value chain quire densifying the mobile network and increasing the footprint of fiber connectivity. Reliable and universal con- nectivity can promote health care, entertainment, agri- culture, and forestry in rural areas. Mobile networks will Jamaica is connected to the global data network require new investments in 5G to enable more precise through six subsea cables, though options for inter- applications for IoT in agriculture, port logistics, and oth- national connectivity for current and future needs er high-capacity applications. are limited. The main subsea cables are owned and op- erated by a single operator, C&W Networks. Currently there is no clear mandate for C&W to provide wholesale Sector governance, policy, and regulatory international data transit on equal and transparent terms environment to all providers, a mandate that could lower the end-user prices for broadband services and increase the adoption of digital services. According to TeleGeography, interna- Modernizing legislation and strengthening regula- tional bandwidth used in Jamaica is expected to grow at tory tools are important to fostering the develop- a compounded annual rate of 33 percent between 2022 ment of a reliable and resilient digital infrastructure. and 2029. To meet this volume, additional subsea cables The Telecommunications Act was adopted in 2000 and may also be needed in the medium to long term, given needs to be modernized to address technology changes, that the expansion of capacity on the existing cables is including the switch from voice to data-based communi- limited. With the growing need for capacity and lower la- cations, the convergence of services and infrastructure, tency worldwide, Jamaica could grow into a regional hub and the changing ecosystem of digital infrastructure. to provide international transit providers with alternative Streamlining the licensing regime, strengthening the ex international routes and reduced data latency. ante anti-competitive regulations, and developing clear guidelines for dispute resolution are important priorities The increasing demand for data processing, stor- for the market. age, and cloud services highlights the need for Ja- maica to upgrade the backbone, internet exchange Jamaica’s current regulations on infrastructure point (IXP), and data storage infrastructure to over- sharing are not yet comprehensive and do not fa- come limitations on capacity and network reach. The cilitate access to essential infrastructure for new or backbone footprint in Jamaica is fragmented and needs less-dominant operators, thus delaying investments further expansion and resilience to support the growth in and the deployment of fiber networks across the of mobile and fixed access networks across the island. island. To strengthen these rules, the OUR would need There is currently one IXP in Jamaica, operated by the to conduct a market assessment, determining significant Office of Utilities Regulation (OUR) and located at the market power and mandating a reference offer on these eGov data center. IXPs, complemented with cache serv- operators to provide open access and cost-based whole- ers, reduce latency and data costs, increase broadband sale services to smaller and new entrant operators. speed, and improve connectivity quality. There are cur- rently no colocation data centers, cloud regions, or con- Jamaica has a full set of institutions that regulate, tent providers hosting in Jamaica. Due to its small size, promote, and oversee the telecommunications sec- attracting investment in this area might not be highly tor, but some institutional mandates overlap, which profitable yet. In the meantime, how well data or cloud may decrease regulatory efficiency. Good institutional computing services are transferred to and from the main coordination and the streamlining of functions and ser- regional nodes (reliable international and backbone in- vices to the private sector are important to decreasing frastructure) would impact the user experience and the uncertainty and improving the environment for private choice between one application versus its competitors. operators and service providers. Mobile networks cover most of the Jamaican pop- ulation, but fixed fiber connectivity needs to be im- proved. Although coverage for mobile networks is high, Overview 22 The GOJ could use the momentum of establishing DIGITAL PUBLIC PLATFORMS: a digital ID to set up single sign-on (SSO) for gov- A whole-of-government approach to facilitate ernment-to-citizen (G2C), government-to-business service delivery and process improvement (G2B), and government-to-government (G2G) use. SSO is a system that allows a user to use one set of log- in credentials to access multiple applications or services. The development of digital platforms is an essen- The Jamaican government could already implement an tial lever for the digital transformation of the whole SSO module without waiting for the official launch of the economy. Digital public platforms can transform how digital ID. governments interact with citizens and businesses and optimize public value by reducing costs and improving productivity. Interoperability and shared services Institutional and strategic framework The GOJ aims to implement interoperability and shared services layers within its platforms, but so Although the value of digital government has been far progress has been limited. Jamaica should adopt widely embraced in Jamaica, the government lacks a a “building-blocks” approach to bringing services online, comprehensive digital government strategy that can focusing on common functions and ensuring interopera- be translated into an action plan. ICT blueprints and bility across platforms. The TIU is working on a shared policy documents developed over the past decade are services platform that combines many of the govern- not updated or detailed enough to serve as a practical ment’s core functions, such as human resources, payroll, guide to addressing the constantly evolving digital chal- procurement, and financial management. Concurrently, lenges. eGov seeks to develop the Jamaica Data Exchange Plat- form (JDXP), which would allow for data sharing across The responsibility for digital development is dis- government agencies, resembling Estonia’s X-Road. persed across government, and no one institution The JDXP is currently at the concept stage, with sus- has overarching authority in this area. The resulting tainable funding yet to be identified. Despite these ini- policy void hinders data sharing, interoperability, cyber- tiatives, interoperability between GOJ databases is still security, and the overall reform process. Despite the lack rare. Even though several ICT systems are hosted and of agreed standards and guidelines, ministries, depart- managed by eGov Jamaica, information is shared only ments, and agencies (MDAs) continue to invest in digi- in limited instances. To enable interoperability, efforts to tal platforms while also awaiting the launch of ICTA and synchronize the technology stack, standards, and proto- the appointment of the Chief Information Officer. Given cols are needed. the lengthy delays in operationalizing the ICTA, Jamai- ca should consider interim solutions to guide its digital agenda and an updated roadmap tailored to its specific needs and constraints. Such a roadmap could enable Service delivery (G2C/G2B) a gradual, fiscally credible digital transformation path- way that can be integrated into a more comprehensive strategy later. The Office of the Cabinet oversees the government’s service delivery platform and is working on an up- dated version of the government portal with more end-to-end digitalized services. The existing platform Digital ID and trust services intends to provide a single source of information for res- idents and businesses regarding MDA responsibilities and service requirements. However, despite the well-es- Jamaica does not presently have a foundational ID tablished vision for an updated service delivery platform, that serves as general-purpose identification usable services are still being developed in a stand-alone mode. across all activities. Instead, the country has functional Each MDA currently develops its services independently, IDs, such as passports, electoral IDs, driver’s licenses, without using standardized guidelines for data exchange and the Tax Registration Number (TRN). Jamaica is cur- and reuse or relying on an interoperability layer. This can rently in the process of introducing a new, unique, and lead to difficulties in reusing or integrating services into unified ID system that is both digital and physical. other interfaces, a lack of consistency, and increased Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 23 costs. By centrally developing standard functionalities connected to customized workflows, however, the coun- Platform management and cybersecurity try can successfully digitize services and ensure a seam- less exchange of information, avoiding delays in service delivery. The Office of the Cabinet has taken steps to Centralizing the management of ICT assets is cru- evaluate GOJ services and identify priority measures for cial for cost-effective and sustainable digital public re-engineering and digital transformation, taking into ac- platforms. To drive effective digital transformation in Ja- count the needs of selected MDAs, and intends to inte- maica, it is essential to establish one clear political and grate a proposal for funding consideration by the Public institutional authority that unites stakeholders under a Investment Management Committee. shared vision. A starting point would be to assess the current information systems used by different govern- ment entities and identify the services they provide. The Back-office systems (G2G) fragmented approach to managing digital assets and in- formation leads to higher costs and resource demands, which are unsustainable. Moreover, a comprehensive Jamaica’s fragmented development of core govern- enterprise architecture, robust cybersecurity measures, ment (G2G) back-office systems hinders effective and alignment with international standards are essential G2C and G2B service delivery, leading to inconsis- to establishing trust in new service channels and safe- tencies, inefficiencies, and increased security risks. guarding core systems from cyberattacks. The guiding As the current governance model is heavily decentral- government body should develop a security and data ized, there is no comprehensive inventory of its back-of- protection framework that includes security policies, reg- fice systems, leading to a fragmented IT landscape. Ja- ular assessments and audits, employee training, and maica should adopt a centralized management approach incident response procedures to ensure data security, and whole-of-government strategy to address these is- data privacy, and effective utilization of technology in sues, focusing on streamlining ICT service procurement government operations. By centralizing asset manage- and management while enhancing interoperability and ment, Jamaica can streamline processes and optimize information exchange across agencies. In the interim, resource allocation, while at the same time prioritizing the TIU has taken steps to consolidate and interconnect cybersecurity and data protection. some core systems, building a technological layer where the applications could interconnect using application programming interfaces (APIs). By developing standard DIGITAL FINANCIAL SERVICES: functionalities as “modules” connected to customized Accelerating the adoption of DFS for financial workflows, Jamaica can maximize resource utilization, inclusion strengthen the effectiveness of digital public platforms, and facilitate seamless service delivery. DFS are a critical enabler of the digital economy and can help to overcome the cost, accessibility, and product design barriers that have historically driv- Data management and hosting en financial exclusion. The G20 High-Level Principles for Digital Financial Inclusion define DFS as financial products and services, including payments, transfers, The TIU and eGov are working to consolidate gov- savings, credit, insurance, securities, financial planning, ernment infrastructure and upgrade the GOJ’s data and account statements. These are delivered via digital/ center to near Tier-3-equivalent specifications, im- electronic technology, such as e-money (initiated either proving management and security. Despite such chal- online or on a mobile phone), payment cards, and reg- lenges as limited hosting capacity, unclear cloud policy, ular bank accounts. Digital payments often serve as the and offshore vendor hosting of critical systems (budget entry point and “rails” for a DFS ecosystem and enable planning), Jamaica can benefit from more extensive cen- consumers to easily make and receive payments from tralization of ICT functions within government. By lever- friends, family, retailers, service providers, and govern- aging economies of scale, the government can achieve ment authorities. Greater uptake and usage of DFS help efficiency gains, cost savings, and more effective use of foster the growth of digital businesses by ensuring con- (financial and human) resources while addressing con- venient, fast, safe, and transparent payments. Universal cerns about data security and sovereignty. Overview 24 access to DFS can also facilitate greater use of digital CBDC (JAM-DEX), and plans to upgrade the Real Time public platforms, including the rapid and efficient delivery Gross Settlement (RTGS) system and the Automated of social transfer payments through digital channels. Clearing House (ACH). Moreover, in 2017 the country implemented a National Financial Inclusion Strategy, Access to a transaction account is relatively high in which was updated in 2021, with five key objectives: Jamaica, but DFS adoption is not yet widespread. (a) increasing the use of digital payments and banking The access level for transaction accounts with financial services, (b) improving financial literacy; (c) enhancing institutions in Jamaica is relatively high at 73 percent, consumer protection; (d) promoting MSME finance; and which is on par with regional peers and the average for (e) improving the financial inclusion data infrastructure. Latin America and the Caribbean (LAC) (also 73 per- cent), but it lags behind the upper-middle-income coun- try (UMIC) average of 84 percent. When breaking down Legal and regulatory framework access levels by different criteria, such as gender, age, income, and labor status, a similar pattern is observed: although Jamaica does well compared to regional peers (with a few exceptions), it lags behind other peers as well The BOJ withdrew its guidelines for electronic retail as UMIC averages. Within the country itself, the access payment services in 2019 and is now working on a levels of those population segments that are typically new legal regulatory framework for overseeing and considered vulnerable (e.g., the poor, those out of the la- supervising PSPs. It is expedient and necessary that bor force, rural dwellers, women) are not far off from the the BOJ bring in an interim guidance and regulatory general population average. On ownership of payment framework (with a sunset clause) to transition entities instruments such as debit and credit cards, Jamaica lags that are graduating or that are likely to graduate from the behind most peers as well as the LAC and UMIC aver- sandbox into authorized and licensed institutions, given ages. However, the fact that non-bank deposit-taking in- that the amendments to the Payment Clearing and Set- stitutions and other non-bank payment service providers tlement Act (PCSA) could take more time. (PSPs) have started issuing debit cards, alone or in part- nership with banks, holds promise that debit and credit The BOJ established a fintech regulatory sandbox in card ownership will rise in the country. 2020 to achieve a number of public policy objectives by encouraging innovations in financial services The number of those who have initiated and received and promoting financial inclusion and competition. digital payments is much lower than the number who The regulatory sandbox provides the framework for ap- have access to a transaction account. According to proval of PSPs and ensures the appropriateness of their World Bank Findex 2021 data, 40 percent of adults re- processes, procedures, and contractual arrangements. ported that they had made at least one digital payment The BOJ should consider amending its sandbox guide- over the course of a year in the country, and 32 percent lines in order to promote competition and innovation in had received at least one digital payment. The low usage the payment ecosystem in Jamaica. The current require- of digital payment instruments relates to several factors ment that a fintech firm with an innovative payment solu- that still require attention in the Jamaican market. Cash is tion must partner with a deposit-taking institution (DTI) still prevalent in the country, fueled by the long-standing carries the risk that the fintech will have to share infor- cash culture, the low levels of financial literacy among mation on that innovative solution, potentially resulting in some population segments, the lack of digital payment the firm’s losing its competitive advantage. acceptance among micro and small merchants, a lack of interoperability at the payment instrument and account The BOJ is exploring the option of open banking to level, the continued use of cheques by some government encourage efficient access to financial information agencies, and the high costs on the digital payment side. that would allow existing financial institutions to re- duce the cost of onboarding new clients. This would Although more work remains to be done, there has also enable third-party providers to offer services at bet- been a deliberate effort by the BOJ, the government, ter terms and conditions than existing banks and finan- and market players to work together and accelerate cial institutions. It will be important during the process the adoption and usage of digital payments, facili- to conduct a gap analysis for a better understanding of tated by new financial technologies (fintech) that the different data-sharing initiatives, API adoption, and promote financial inclusion. Some of those efforts legal and regulatory framework, as well as the role that include the implementation of a regulatory sandbox for existing infrastructures and services, such as credit bu- PSPs, the revision of the Payment Systems Law, the dig- reaus and retail payments, could play in the provision of itization of government payments, the introduction of a account information and payment initiation services. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 25 Infrastructure Financial literacy Jamaica has a well-developed payment and set- Financial literacy is an important lever to further ad- tlement systems infrastructure (RTGS, ACH, card vance financial inclusion and usage of digital pay- switches, CBDC). On the RTGS side, the BOJ has ini- ments in Jamaica. In 2020, the BOJ launched a finan- tiated efforts to migrate to International Organization for cial literacy program to promote greater understanding of Standardization (ISO) 20022 message standards from financial concepts and the relevant laws, including sim- the existing SWIFT MT standards with respect to Jam- plified customer due diligence requirements, through tra- Clear-RTGS. On the retail side, access to the ACH was ditional and digital media. However, there is still a need previously limited only to the commercial banks that had to employ additional such programs to target the main an ownership stake. Other entities, such as the remit- factors that inhibit individuals and merchants from ac- tance service providers and credit unions, do not have cessing and using transaction accounts and digital pay- direct access to the ACH services. There is no tiered ments. These programs could specifically address how membership in the ACH, which, to a significant extent, accounts can effectively help meet payment and store- has hampered the ability of remittance service providers of-value needs and also target specific “fear” factors, and credit unions to provide various electronic retail pay- such as: i) the lack of sound proof of payment if paper ment products to their customers. Moreover, the Bank is not used; (b) vulnerability to fraud; (c) unresponsive, of Jamaica Act (BOJA) was amended in June 2022 to complicated systems prone to operational error; and (d) provide legal tender status to JAM-DEX. One of the key loss of privacy. This could also be done by targeting par- objectives of the BOJ in introducing the CBDC was fi- ticular population segments such as remittance recipi- nancial inclusion, as JAM-DEX is seen as an easy, safe, ents that might benefit even more from such programs efficient, secure, and convenient way to pay for goods and campaigns. and services for all Jamaicans. JAM-DEX is available to members of the public through a digital wallet provided by a wallet provider that could be a bank, building soci- DIGITAL BUSINESSES: ety, merchant bank, or authorized PSP. Promoting digital business growth through an enhanced business environment and capacity building Market dynamics Digital business can play a strategic role in unleash- ing opportunities for economic growth, digital trans- There are several actors that operate in the retail formation across key sectors, higher value job cre- payments market of Jamaica: banks, credit/savings ation, and increased social inclusion. Jamaica has unions, money transfer operators, payment aggre- made notable progress in expanding the digital econ- gators, and digital wallet providers. Although there is omy over the past decade, from attracting key foreign interoperability pertaining to automated teller machine direct investments in its business process outsourcing (ATM) and point-of-sale infrastructure on internation- (BPO) sector to developing the foundations of a digital al brand card use in Jamaica, there are also several entrepreneurship ecosystem and assisting MSMEs to closed-loop solutions that banks have developed for become more competitive in the regional market. Over- merchant payment acceptance. The lack of interopera- all, Jamaica has become a relatively high performer in bility across different payment instruments and PSPs for terms of digital business density (i.e., the number of dig- merchant acceptance leads to inconvenience and higher ital businesses relative to GDP and population for 2021) up-front and transaction costs, particularly for micro and in the LAC region. Despite these early successes, how- small merchants. Having national QR code standards ever, most digital economy development efforts related that could support multiple payment instruments, beyond to MSMEs have not yet reaped the benefits to sustain just cards, could help overcome cost and convenience improved productivity, profitability, and market reach. issues. This is especially the case when considering the digital transformation efforts in key sectors, such as agrobusi- ness, manufacturing, and retail and tourism, that require harmonious approaches, methods, and tools tailored to specific value chains. Overview 26 Policy, legal, and regulatory reforms have contribut- Council, to ensure scalable capacity from infrastruc- ed to the development of Jamaica’s digital business ture to skills. These efforts are crucial to building on the ecosystem. Under the leadership of the Office of the progress made in BPO sector development by preparing Prime Minister and the MSETT, the Vision 2030 Jamaica the country for a notable increase in the provision of in- ICT Sector Plan provided a framework in 2012 that em- formation and knowledge process outsourcing services phasized the importance of ICT adoption across all sec- as early as 2025 while ensuring an improved position tors, including the public sector, ensured the consistency in key global benchmarks of foreign direct investment, and continuity of long-term economic planning, and cat- including those related to global service delivery. alyzed numerous initiatives, including the establishment of the E- Learning Project, the Universal Access Compa- It is crucial that private and public stakeholders de- ny Limited, and the Jamaica Intellectual Property Office. velop dynamic data collection methods and tools to The framework also led to the definition of the National inform policy, increase transparency, identify bottle- Cybersecurity Strategy (NCS) in 2015, the Cybercrime necks, define adequate support mechanisms, and Act of 2015, and the Data Protection Act (DPA) of 2020, ensure tailored approaches to digital transformation as well as several foundational policies to adapt to the and sustained growth efforts. Currently there is limited requisites of the digital economy. However, many of the data on start-up companies and overall firm-level tech- provisions to stimulate investments in the digital econo- nology adoption that are segmented by firm size, sec- my, such as to prevent cybercrime, regulate e-transac- tor, and digital maturity. For example, the World Bank’s tions and e-commerce, encourage open data initiatives, Enterprise Surveys on this topic date back to 2010. and protect supplier and consumer data, are not yet in Many MSMEs misconstrue what it means to go digital effect. and often do not have the means to do so beyond the initial digitalization of their operations. During the recent Growth outside of Jamaica could be an important av- COVID-19 pandemic, the Development Bank of Jamaica enue for accessing regional private investment and (DBJ) offered grant programs to businesses looking to regional value chains to help Jamaican firms to scale go digital. However, according to several public stake- their productive capacity, develop human capital, holders, this was underutilized, as most businesses opt- and increase revenues by trading across borders. In ed mainly to boost their social media presence. Looking the context of a small domestic market, Jamaican dig- ahead, tailored approaches that are supported by mar- ital businesses need to specialize with vertical-specific ket and business intelligence data can improve the de- offerings to competitively meet rapidly evolving market sign and implementation of sectoral digital development demand that would translate into more resilient embed- or cross-cutting digital business programs. dedness in regional markets and, in some cases, inter- national markets. As highlighted in the 2022 Country Further reforms can build on recent progress in en- Private Sector Diagnostic, this repositioning can begin trepreneurship and foster a more mature stage of in outsourcing services and agricultural value chains. development specific to Jamaica’s digital innovation As part of this effort, competitive niches could include ecosystem. With a score of 4.2 on the Global Entre- adjacent market opportunities, such as manufacturing preneurship Monitor 2020/21, Jamaica fairs well relative and logistics in the case of agricultural value chains and to peers and some aspirational countries in both Latin tourism and entertainment in the case of outsourcing America and Europe. Though the existing entrepreneur- services. ship policy framework initiated in 2013 at the Ministry of Industry, Investment and Commerce (MIIC) was updated Repositioning Jamaica as a higher-value destination in 2018 to broadly support MSMEs, it is not specific to for global services delivery will be essential to sus- digital businesses in a way that would create and cap- taining further investments and large-size outsourc- ture value in emerging market development opportuni- ing deals. In addition to the 2022 National Strategy for ties, ranging from the digitization of agriculture to the Global Digital Services Sector Development, another deployment of AI across industries and the adoption of important update was the 2022 Investment Climate Pol- the Metaverse among youth in creative industries. More- icy, which revisited Jamaica’s enabling environment to over, public and private stakeholders should coordinate continuously and consistently improve competitiveness to prevent institutional bottlenecks that could stifle the and entice both foreign and national investment. The distributed nature of collaborative innovation networks. MSETT and the Jamaica Promotions Corporation (JAM- PRO) have been working with government ministries Nurturing more investment-ready digital firms would and other public and private entities, including the Global help Jamaica to move toward later-stage financing. Services Association of Jamaica, the Jamaica Technol- Jamaica’s young digital business landscape, coupled ogy and Digital Alliance, and the Global Services Skills with limited early-stage financing capacity, has resulted Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 27 in a small pipeline of potential digital firms ready for in- quality assurance and formal certification are unclear. In vestment. In the LAC region in comparison, later-stage addition, access to formal advanced education in digital financing, such as private equity, debt, and mezzanine skills in universities seems out of reach for an import- financing, has been roughly 15 percent of digital busi- ant share of Jamaicans due to poor learning outcomes ness investments in the past decade. This indicates that among high-school graduates and unaffordable high- Jamaica has some catching up to do in terms of nurtur- stakes examinations and university programs. ing and maturing young digital businesses to be ready for later-stage investments. The development of digital skills for the future workforce is also hampered by important structural challenges. First, despite widespread access to basic education, many individuals do not gain fundamental nu- DIGITAL SKILLS: meracy and literacy skills in school, both of which are Building a technology-enabled society essential to developing digital skills. Second, the lack of through a shared vision for digital skills connectivity and access to devices is a persistent chal- development lenge. Despite investments to enhance connectivity and access to technology for educational purposes, govern- ment officials estimate that 50 percent of students do not Digital skills are essential to realizing Jamaica’s Vi- have devices and 50–60 percent did not attend online sion 2030, but interventions need to be coordinated, classes during COVID-19 due to a lack of connectivity, monitored, and evaluated. The country’s long-term de- particularly in rural areas. Third, support for teachers to velopment plan aspires to create a technology-enabled develop and use digital skills in the classroom appears society to support the transition to a knowledge econo- to be insufficient. Despite investments in teacher training my, and a digitally savvy workforce is essential to achiev- in ICT, most stakeholders believe that the lack of teacher ing this goal. Two major policies to advance Vision 2030 capacity still poses a significant challenge to advancing created a regulatory framework for investment in digital digital skills in the country. skills development: the National Science, Technology, and Innovation (ST&I) Policy and the ICT in Education Jamaica’s labor market currently calls for basic and Policy. Although these policies can enable the develop- intermediate digital skills, but emerging high val- ment of digital skills, Jamaica has yet to define concrete ue-added sectors need more advanced or special- initiatives and the necessary target indicators. Multiple ized digital skills to grow. Currently, the largest sectors government agencies are actively involved in fostering in terms of employment are not technology intensive. In digital skills, but initiatives are uncoordinated, as there is 2022, half of the Jamaican workforce was employed in no strategy or framework that is commonly recognized, either wholesale and retail (18 percent), agriculture and accepted, and used. Moreover, though the government fishing (14.5 percent), real estate (10.8 percent), or con- has made important efforts to develop the capacity of struction (10 percent), which suggests that the largest teachers to integrate ICT into the classroom and to share of the demand for digital skills is likely to focus provide access to broadband and digital equipment to on basic and intermediate skills for firms that have in- schools and students, these initiatives have not been tegrated ICT. However, emerging and growing subsec- evaluated in terms of their implementation or impact. tors, such as knowledge processing outsourcing, cy- bersecurity, manufacturing, and creative industries, are The level of digital skills for most of the existing expected to increase the demand for more advanced or workforce is likely to be basic or below, though there specialized digital skills. Overall, the demand for digital are multiple digital skills training and education of- skills at all levels is only going to grow as businesses and ferings. Only 31 percent of workers (aged 24–64) have government agencies continue to integrate ICT into their obtained the Caribbean Secondary Education Certifi- operations and service delivery. cate (CSEC). Since formal integration of technology into basic education dates only to 2016, when the National Improving coordination around a shared vision for Standards Curriculum (NSC) was introduced, current digital skills development in Jamaica is a key policy workers are likely to have learned digital skills informal- priority. The vibrant engagement in digital skills devel- ly if at all. Although the Human Employment and Re- opment among public and private stakeholders suggests source Training/National Service Training Agency Trust a shared understanding of its importance. However, (HEART/NSTA) initiative, many universities, and multiple uncoordinated action leads to inefficiencies and slows other stakeholders offer programs to develop intermedi- down progress. The creation of a national digital skills ate and advanced digital skills, the limited availability of strategy that clarifies agencies’ roles, establishes co- this talent in Jamaica continues to be a common con- ordination mechanisms, adopts a common digital skills cern among employers and government officials. Some framework, develops a digital skills assessment sys- providers offer formal training that is quality assured and tem, and includes accountability measures could help certified; others offer quick skilling programs for which address the existing fragmentation. Overview 28 Monitoring and evaluation of key policy actions will The operationalization of the DPA is still in progress, also be essential input in the development of a digital and secondary regulations, directives, and guide- skills strategy. To date, there have been no formal eval- lines to support its compliance and enforcement uations of the impact of such major initiatives as integrat- are yet to be developed. The Office of the Information ing ICT into the NSC and providing access to broadband Commissioner (OIC) is the primary supervisory authority and digital equipment to schools and students. Despite responsible for enforcing data protection standards and significant investment in recent years, limited access to ensuring compliance with the DPA. The OIC has the au- connectivity and digital devices as well as lack of mon- thority to monitor and enforce data protection standards, itoring of digital skills development through a student’s issue warnings and orders, conduct investigations, and educational trajectory are key obstacles to digital skills provide guidance and recommendations. However, to development in Jamaica. Robust evaluations of these facilitate compliance with the DPA, the adoption of sec- and other initiatives are essential in order to revise, re- ondary regulation and OIC directives and guidelines will calibrate, and adjust them to achieve the intended ef- be key. fect. Such information would also be instrumental in the development of an overall digital skills strategy. Digital identification TRUST ENVIRONMENT: Toward a national cybersecurity strategy Jamaica is working toward modernizing its digital identification systems, with a focus on the NIDS. The regulation of data exchanges is indispensable to The NIDS utilizes biometric data, such as fingerprints, enabling the kind of interactions and data flows nec- facial features, and signatures, to assign a unique na- essary to sustain a growing digital economy while tional identification number to each individual, aiming to at the same time ensuring that personal data are improve government transactions, reduce identity fraud, collected, processed, and stored fairly and lawfully. and enhance service delivery. However, there have been The World Bank’s 2021 World Development Report cat- concerns about the potential infringement of privacy egorizes data policies and regulations as enablers and rights due to the collection of biometric data. In 2019, safeguards. Enablers are policies and regulations that the Jamaican Constitutional Court ruled that the manda- facilitate the use of data as a necessary condition for the tory biometric requirement violated the right to privacy, digital economy, such as through data-sharing models leading to the dissolution of the NIDS. This ruling em- that underpin e-commerce transactions and public and phasized the importance of respecting the privacy and private intent data. On the other hand, safeguards en- liberty rights of all Jamaicans. compass policies and regulations that protect personal and non-personal data and prevent data abuse, cyber- To ensure the effectiveness and efficiency of Jamai- crime, and other misuse. ca’s digital identification system, the country can learn from international best practices. Examples, such as New Zealand’s RealMe and the United King- dom’s Verify systems, highlight the importance of user Privacy and data protection control, transparency, accountability, and robust security measures to protect data privacy. By incorporating simi- lar approaches, Jamaica can create a user-friendly and Jamaica took a significant step in developing a data secure system. protection framework by enacting the DPA in 2020. Although the DPA is largely aligned with the European Jamaica’s legal framework for electronic signatures Union General Data Protection Regulation, its substan- is governed by the Electronic Transactions Act of tive provisions, including the rights of data subjects and 2006. The Act outlines guidelines for electronic signa- the obligations of data controllers, will come into effect tures in specific situations, such as contracts, wills, and on November 30, 2023, after a two-year transition peri- legal proceedings. To be valid and legally binding, elec- od. The DPA applies to both public and private sector or- tronic signatures in Jamaica must meet certain criteria, ganizations in Jamaica, regardless of their physical loca- such as uniqueness, control by the signatory, detectabil- tion, if they collect and process personal data that target ity of subsequent data changes, and use of reliable elec- individuals in the country. The Act also grants data sub- tronic signature creation methods. jects various rights, such as the right to access, rectify, and erase their data, the right to object to the processing of their data, and the right not to be subject to automated decision making. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 29 Jamaica is neither a signatory party nor an observer National cybersecurity capacities to the Council of Europe’s Budapest Convention. Ja- maica’s primary substantive and procedural cybercrime law, the Cybercrimes Act of 2015, has been under scruti- ny and public review for further amendments since 2021. Jamaica’s national cybersecurity capacities are still Given that the Act is being updated, the country should in the formative stage. Although Jamaica has made consider aligning it with the Council of Europe’s Buda- progress on its legal and regulatory frameworks and in- pest Convention to enhance its cybersecurity framework. cident response capabilities, there is a need for further The establishment of the Command, Control, Communi- capacity development and for additional organizational cation, Computer, and Cyber (C5) Center and the provi- and technical measures. The country faces significant sion of technological equipment aim to further enhance cyber threats, as it currently experiences millions of Jamaica’s cybercrime response and investigatory capa- cyberattack attempts and cyber incidents regularly tar- bilities. These efforts can serve as a national guarantee geting both public and private sector entities. However, of reliability and security for prospective investors and the lack of mandatory incident reporting requirements businesses. hinders accurate measurement of the extent of cyber incidents and losses. Collaboration between public and Jamaica has recognized the importance of protect- private sector organizations and the Jamaica Computer ing critical information infrastructure (CII) assets, Incident Response Team (JaCIRT) is also limited, and although the specific sectors have not been official- there is a need particularly to incentivize private sector ly identified. The NCS outlined activities to ensure the stakeholders to work collaboratively with the public sec- protection and resiliency of critical infrastructure sys- tor to enhance cyber resilience. tems. In 2016, Jamaica adopted the “Plan Secure Ja- maica” (2016–2023), which included a focus on critical The establishment of a new National Cybersecurity infrastructure protection and cyber defense. However, it Authority (NCA) and a national cybersecurity acad- is unclear if these activities have been carried out, leav- emy are underway, but greater efforts are needed ing critical services highly exposed to cyberattacks. The to monitor cybersecurity threats. Jamaica has taken government should adopt a comprehensive national CII steps to integrate cybersecurity into its policy and le- protection plan and enhance cooperation between public gal frameworks and has established key cybersecurity and private sector operators of essential services. The bodies. However, there is a need for a new NCS and cybersecurity strategy recently adopted in the United roadmap to address the evolving digital and cybersecuri- States provides an example of a comprehensive ap- ty environment, especially in light of the COVID-19 pan- proach to defending CII that involves both government demic. By seeking greater international cooperation and and private sector actors. aligning with international standards and best practices, Jamaica can strengthen its strategic and organizational cybersecurity measures. Overview 30 Table O.1. Summary of Key Policy Recommendations by Digital Economy Pillar (1 of 4) Pillar Timing Recommendation Responsible Entities Digital Short term Strengthen the regulatory rules for digital infrastruc- OUR, MSET Infrastructure ture with a market analysis and a requirement for cost-based open access to international connectivity and landing points. Consider developing a public-private partnership MSET, Ministry of Finance framework to create a resilient and open access and the Public Service backbone network. (MOFPS) Develop a strategic vision for attracting investment MSET, MOFPS, Planning in international connectivity and data centers. Institute of Jamaica (PIOJ) Modernize sector monitoring, and design a set of OUR, Universal Service statistics for sector diagnostics and public policy Fund (USF), MSET, design. Spectrum Management Authority (SMA), PIOJ Medium term Strengthen IXP governance and capacity and OUR, eGov, internet service discuss with content providers the installation of providers/operators, MSET cache servers in Jamaica. Design regulatory instruments to mandate cost-ba- OUR, MSET, SMA sed open access to the backbone by any internet service provider or operator. Diversify international subsea connectivity by OUR, Investments Agency attracting new investors. Digital Public Short term Operationalize the ICTA and the OIC. The Office of the Prime Minister, Platforms government could focus on addressing implementa- MSET, MOFPS tion challenges for the ICTA, clarifying its mandate, and offering a clear roadmap with political and financial support. The government should ensure that there is a single entity with the authority to convene stakeholders across the public and private sectors, resolve policy conflicts, guide resource allocations, stimulate collaboration, and monitor compliance with program targets over time. Additionally, leveraging the experience of eGov and the TIU might be beneficial while thoughtfully assessing the risks and benefits of potential mergers. Develop an interim digital strategy that includes OPM Office of the Prime a digital enterprise architecture. The government Minister, MSET, eGov, can work on an interim digital strategy, including a MOFPS, TIU simplified enterprise architecture, to lay the groundwork for interconnection and interoperability. Leveraging eGov and the TIU’s experience and institutional knowledge may jumpstart this process while developing a comprehensive strategy. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 31 Table O.1. Summary of Key Policy Recommendations by Digital Economy Pillar (2 of 4) Pillar Timing Recommendation Responsible Entities Digital Public Short term Complete the catalog of government services Cabinet Office, eGov, TIU Platforms for priority MDAs. To optimize the digitalization of services that are important to internal (G2G) and external (G2B, G2C) users, the GoJ would benefit from establishing a catalog of government services that includes, among other items: the degree of digitalization, the type of data required to carry out the service, the current ownership of the data, and data privacy considerations. Efforts initiated by the Cabinet Office to survey priority MDAs may need to be scaled up so that compliance with the inventory can be expedited and the results used to support the digital strategy. Develop an inventory for ICT systems. The GoJ eGov, TIU, MSET, MOFPS does not have an updated list or inventory of the current information systems used by different MDAs. Developing an inventory for ICT systems, led by eGov and supported by the TIU, can help provide an overview and optimize technology usage and resources while identifying potential security risks. Ensure that no one is left behind in the digital ID NIDS rollout. The government must guarantee that every citizen has access to vital government services, regardless of whether they possess a digital ID. This can be achieved by offering alternative service options for individuals without a digital ID or assistance in acquiring one. Medium term Develop a data governance framework. Develo- MSET, MOFPS, eGov, TIU ping a data governance framework with experts from various line ministries can establish a data-dri- ven public sector that improves policy and public service delivery. While waiting for the ICTA, the GoJ could decide on procedures and best practices like data formats, communication protocols, and APIs. Increase interoperability between core govern- MSET, MOFPS, eGov, TIU ment systems. Increasing interoperability between core government systems could involve supporting the JDXP with a data integration policy and adopting a data governance framework. Utilizing APIs, web services, and frequent routine backups may ensure seamless information sharing, minimize duplication, and reduce data loss risks. Centralize government ICT functions to improve MSET, MOFPS, eGov, TIU effectiveness and reinforce security. Centralizing government ICT functions, such as application hosting and cybersecurity monitoring, can lead to cost savings, increased security, and more efficient use of resources. A range of approaches can be implemented, such as reorganizing existing resources and adopting a shared services approach similar to that of the TIU. Overview 32 Table O.1. Summary of Key Policy Recommendations by Digital Economy Pillar (3 of 4) Pillar Timing Recommendation Responsible Entities Digital Medium term Expand and better target digital transformation MIIC, with JAMPRO and Businesses programs. Ensure that programs such as Boosting the Jamaica Business Innovation, Growth and Entrepreneurship Ecosys- Development Corporation tems (BIGEE) continuously assess lessons and (in partnership with private best practices to enhance MSMEs’ digitalization sector professional associa- and managerial capacity as part of their economic tions, such as the Jamaica recovery efforts. Structure programs preferably by Manufacturers and Exporters industry to promote vertical-specific methods and Association) tools that can support the development of competiti- ve clusters of MSMEs. This will require, among other measures, better data collection on sectoral distribution, age, ownership, etc., of digital businesses. Improve financing tailored to digital MSMEs. MOFPS, DBJ Adapt existing funding programs (e.g., ASMEF, Vertex, Stratus) and technical assistance programs (e.g., BIGEE, Innovation Grant from Ideas to Entrepreneurship [IGNITE]) to ensure that they become specialized by sector and address vertical-specific challenges and opportunities for Jamaica (e.g., global services delivery, creative industries, and agroindustry). Engage with the diaspora to achieve a virtuous cycle of upstream mergers and acquisitions investments in destination markets. Digital Short term Establish a regulatory framework for electronic BoJ Financial retail payment services using the existing Services provisions of the BOJA and PCSA. Consider revising the ACH’s existing access and ACH Operator participation criteria to enable both direct access and indirect tiering participation arrangements to all entities licensed by the BoJ, such as remittance service providers. Quickly operationalize the interoperability BoJ feature of JAM-DEX by wallet providers under the overall direction of the BoJ. Ensure that customers are provided with instant TAJ receipts by TAJ on any of the various systems for the tax amount paid. Automate reconciliation procedures through TAJ coordination by the relevant authorities. Take measures to automate the current manual BoJ, Accountant General’s procedures used for uploading government Department payment files, whether into the RTGS or the ACH. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 33 Table O.1. Summary of Key Policy Recommendations by Digital Economy Pillar (4 of 4) Pillar Timing Recommendation Responsible Entities Digital Medium term Take measures to further streamline and ACH Operator Financial enhance the capabilities of the ACH to provide Services safer and more efficient services. Develop national QR code standards to foster BoJ, private sector interoperability across different payment instruments and PSPs, particularly for merchant acceptance. Explore synergies between the eGov and TAJ TAJ portals to optimize the use of resources and to provide a seamless and efficient experience to the taxpayers. Digital Short term Establish baselines and benchmarks for digital Ministry of Education and Skills skills development in the country. Youth (MOEY), Department of Schools’ Services, Student Assessment Unit Increase monitoring standards and transparen- MOEY, USF, e-Learning cy for the implementation of teacher digital Jamaica skills training, initiatives to improve access to broadband and devices, and the implementation of the NSC. Invest in evaluations to identify the effect or impact of these initiatives on, among other outcomes, digital skills development. Medium term Improve coordination around a national digital TBD skills strategy that clarifies agencies’ roles, establishes coordination mechanisms, adopts a common digital skills framework, develops a digital skills assessment system, and assigns monitoring, evaluation, and accountability measures. Trust Short term Develop a new NCS to ensure a holistic TBD Environment approach to cybersecurity between government agencies and incentivize cyber hygiene in the private sector. Develop a step-by step strategy and a roadmap OIC of priorities for the full operationalization of the DPA. In accordance with the DPA, the OIC must develop a wide range of data-compliance norms that outline the data-protection mechanisms. Medium term Conduct sectoral consultations to determine the OIC need for a sector-specific data protection regulation. Overview 34 Notes 1. Fan and Ouppara (2022). 2. Jamaican Observer (2023). Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 35 1. INTRODUCTION households had access to the internet, albeit with vary- Adopting digital technologies to increase ing degrees of quality. This reflects progress in the de- service delivery efficiency, productivity, and velopment of digital infrastructure. Public platforms have inclusion also seen progress in digital transformation through the efforts of several government entities, such as eGov Jamaica and the Transformation Implementation Unit The widespread adoption of digital technologies (TIU), that have contributed to the implementation of in- is transforming how individuals, businesses, and formation and communications technology (ICT) projects governments interact and at the same time creat- across government. Jamaica’s score on the UN’s E-Gov- ing new opportunities to address long-standing de- ernment Development Index reflects this progress, in- velopment challenges. Digital technologies include a creasing from 0.4552 in 2012 to 0.5906 a decade later. wide array of disruptive and transformative technologies, The Government of Jamaica (GOJ) has also adopted a such as electronic systems, devices, and resources that number of digital technologies that directly benefit Ja- generate, store, or process data, as well as other more maican citizens. For example, according to the Tax Ad- advanced technologies, such as artificial intelligence ministration Jamaica (TAJ), at least 80 percent of decla- (AI) and the Internet of Things (IoT),1 that have begun to rations are filed online for each core tax, and 99 percent transform the way most people around the world learn, of large taxpayers file core tax declarations online. Sim- work, shop, socialize, and access information. Such ilarly, digital financial services (DFS) have been used to technologies are also disrupting business models and support the country’s main social assistance programs, economic structures and in many cases driving signifi- promoting financial inclusion and social development. cant productivity gains.2 For policy makers in emerging The Programme of Advancement through Health and markets, digital technologies offer new pathways to ad- Education (PATH), a conditional cash transfer scheme, dress long-standing development challenges and can delivers 40 percent of payments to families digitally and support better access to public services for citizens. Yet, plans to increase this number to 57 percent by 2028. To as the World Bank’s Mobilizing Technology for Devel- do so, taking advantage of advances in DFS, such as the opment (2021) highlights, digital technologies require adoption of the Jamaica Digital Exchange (JAM-DEX), a efforts in a number of analog complements, including central bank digital currency (CBDC) that received legal policies, institutions, and skills, that enable their uptake.3 tender status in June 2022, will be key. By 2025, the contribution of the digital economy to The GOJ has made deliberate efforts to lead initia- global GDP is expected to reach roughly 25 percent, tives that promote greater digital transformation up from 15.5 percent in 2016.4 The concept of the digi- and innovation through Vision 2030. Vision 2030, tal economy as discussed in this report refers to all eco- Jamaica’s National Development Plan, recognizes the nomic activity resulting from the use of information tech- fundamental role of science, technology, and innova- nology to create, adapt, market, or consume goods and tion (ST&I) in advancing sustainable prosperity through services.5 Data and digital technologies are the corner- economic development and the creation of wealth and stone of the digital economy, as they enable the growing employment, the design and commercialization of new interconnectedness of people, organizations, and ma- products and services, and improvements in the quality chines through billions of daily online transactions.6 of life for all citizens. Within Vision 2030, the ICT Sector Plan (2009–2030)7 considers ICT in two ways: i) as a Jamaica has made significant progress in its efforts sector in its own right; and ii) as an enabler of all oth- toward digital transformation. In 2021, 100 percent er economic, social, environmental, and governance of the Jamaican population was covered by at least a sectors. 3G mobile network, and approximately 75 percent of Introduction 36 Figure 1.1. Mechanisms of Digital Technologies and Growth Digital Technologies Overcome Augment Generate information existing economies barriers factors of scale Inclusion Efficiency Innovation International Capital Competition trade utilization Source: Adapted from World Bank (2016). In addition, the GOJ has established various initia- people having an active broadband subscription. These tives to promote innovation and entrepreneurship. challenges can lead to the exclusion of disadvantaged The Midterm Socio Economic Policy Framework 2021– groups, such as the elderly and the poor, from the poten- 2024 places a priority on creating a technology-enabled tial benefits of a widespread digital transformation. Low society and addresses the challenges Jamaica faces in access and usage of the internet can also result in higher ST&I, such as low investment in research and develop- information and search costs, limited access to markets ment, a weak research and innovation culture, gaps in and new technologies, reduced labor productivity, re- intellectual property protections, and the absence of a stricted access to financial services, and fewer oppor- national innovation system. These efforts aim to max- tunities for women’s empowerment.8 There is also room imize the contribution of ST&I to the foundation of a for improvement in terms of financial inclusion, as only knowledge-based society and innovation-based econ- 40 percent of adults in Jamaica reported having made at omy. The Ministry of Science, Energy, Telecommunica- least one digital payment over the course of a year, and tions and Transport (MSETT), responsible for the digital approximately a third having received at least one digital infrastructure sector, has also played an essential role in payment, according to World Bank Findex 2021 data.9 developing the country’s digital strategy framework. For Furthermore, Jamaica ranks 93rd out of 141 countries in example, the MSETT’s 2011 ICT policy established a the World Economic Forum’s 2019 Global Competitive- framework for ICT to support economic and social devel- ness Index, indicating a large digital skills gap between opment. The MSETT also established an ICT Authority the demand for digital skills and the capacity to respond (ICTA) and implemented a 100 Day ICT Action Plan to to the talent deficit. A strategic vision of digital transfor- address the immediate and short-term needs of coordi- mation can help unlock the social and economic devel- nating a COVID-19 ICT-related response in the public opment benefits of adopting digital technologies, as will sector. be described in the pages below. Despite progress, Jamaica faces challenges in ac- cess to the internet, as well as internet use and Inefficient service delivery, low productivity, quality. Although 3G coverage is comprehensive, there economic and educational inequality, and are significant disparities between rural and urban ar- vulnerability to climate change risks pose eas in internet access (67 and 82 percent, respective- significant development challenges for Jamaica. ly). Moreover, there is a gap between access to mobile broadband services and usage, with only 61 percent of Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 37 Digital infrastructure serves as a crucial foundation exposed the risks of overreliance on this sector, with in- for Jamaica’s digital transformation, enabling the ternational visitor arrivals plummeting by 69 percent in enhancement of public services, e-commerce, and 2020.11 To address this, there has been a shift toward key sectors, such as tourism and agriculture, that faster-growing yet low-productivity sectors, such as ho- are vital to the country’s productivity and growth. Its tels, restaurants, and construction, which have created applications include streamlining government functions, employment opportunities for the poor and those in the delivering citizen-centric services, and improving oper- bottom 40 percent of the income distribution. Promoting ational efficiency. Cloud infrastructure empowers small more digital-intensive sectors can potentially bring sig- and medium-sized enterprises (SMEs) to scale IT re- nificant additional benefits to the economy by encourag- sources economically, while expanding digital infrastruc- ing the growth of more productive sectors. For instance, ture aids in bridging spatial inequalities, supporting rural a study by the International Telecommunication Union and peri-urban development, and increasing access to (ITU) finds that an increase of 1 percent in mobile in- markets, public services, remittances, and social protec- vestment can increase GDP by 0.097 percent, while a 1 tion. Furthermore, a well-developed digital infrastructure percent increase in fixed telecom investment can lead to contributes to climate change adaptation, environmental an increase in GDP of 0.023 percent, if all other variables monitoring, disaster response, and coordination among are kept fixed. Additionally, an increase of 1 percent in to- stakeholders. Lastly, it acts as a critical enabler for such tal telecom investment is associated with a 0.09 percent emerging technologies as IoT, AI, blockchain, and cloud increase in GDP.12 computing. Prioritizing technology adoption in firms, along with Digitalizing core government systems and public investments in digital skills and organizational ca- services presents an opportunity to enhance ser- pacity, is crucial to improving productivity in the pri- vice delivery and efficiency, thereby improving the vate sector. A study on manufacturing firms in 82 de- country’s capacity to reach rural and marginalized veloping economies from 2002 to 2019 found that digital populations. Jamaica scored 0.541 on the World Bank adoption, including email and website adoption, learning GovTech Maturity Index,10 slightly below an average of through exporting, and managerial experience, positive- 0.547 in Latin America and the Caribbean (LAC), and ly impacted revenue-based total factor productivity and was placed in group B (considered countries with high factor demand.13 However, the Caribbean region exhibits significant focus on GovTech), alongside Bolivia, Costa low levels of digital adoption and innovation: one study Rica, Dominican Republic, Ecuador, El Salvador, Hon- found that only 26 percent of surveyed firms in the region duras, Panama, and Paraguay. However, Jamaica’s per- engaged in any innovative activity.14 Although there is a formance was weaker in the core government service lack of data on Jamaica specifically, indicators suggest index, where it received a score of 0.458 compared to low technology uptake. According to a 2018 survey by LAC’s 0.58, suggesting room for improvement in stream- the Planning Institute of Jamaica (PIOJ), around two- lining operations, such as procurement, budgeting, thirds of firms in the country did not use the internet. and customs. Such improvements could, for example, Among those that did, the vast majority (94.5 percent) strengthen the government’s ability to effectively target used it solely for sending or receiving emails, with only the beneficiaries of social protection programs. Similar- a few engaging in more sophisticated activities, such ly, a robust digital ID system and public digital platforms as receiving orders (45.1 percent), training staff (28.5 could enable the public sector to identify and support percent), or delivering products online (14.3 percent).15 vulnerable communities better, ultimately expanding In addition, most firms do not leverage technology to coverage of government services, especially for those streamline payment processes or take advantage of living in rural and marginalized areas. Additionally, digital digital payments: of the firms with internet access, very payments could eliminate many of the costs and frictions few used it for online payments (48.7 percent), internet associated with providing payments or benefits. banking (49.1 percent), or accessing financial services (41.5 percent).16 In Jamaica, adopting digital technolo- The widespread adoption of digital technology in gies can help firms access new markets, improve export the private sector has the potential to boost produc- capabilities, streamline production, and drive innovation. tivity growth and increase export sophistication in Additionally, DFS can lower financing costs for micro, Jamaica. The country has struggled with low productiv- small, and medium-sized enterprises (MSMEs) and pro- ity growth due to limited innovation and an unfavorable mote more efficient and convenient payments, which are business environment. The service industry, particu- essential for e-commerce and platform-based business larly tourism, remains a dominant economic driver, ac- models. counting for 32 percent of GDP. However, the pandemic Introduction 38 Access to technology and improved digital skills can increase the economic and educational inclusion of Strengthening key enablers for the development marginalized communities and individuals, particu- of a well-functioning digital economy can larly in rural areas. There is a 15-percentage point gap help Jamaica address its key development in fixed broadband internet access between rural and challenges. urban households in Jamaica, which is problematic, giv- en that half of the country’s poor population resides in Strengthening key enablers for the development of rural areas. Improving rural connectivity is necessary to a well-functioning digital economy can help Jamaica developing a hybrid education system that is resilient to address its key development challenges. Universal external shocks, as was demonstrated by the COVID-19 access to the internet and other technologies can sup- pandemic. During the pandemic, 50–60 percent of stu- port efforts to close Jamaica’s digital divide and conse- dents, many of them in rural areas, did not attend online quently, address the country’s development challenges. classes due to a lack of connectivity.17 Digital competen- Digital transformation can also: (a) create more efficient cies are also inadequate, indicating that technical and service delivery and public sector operations; (b) spur technological capacity should be developed to strength- productivity and innovation; (c) increase economic and en the digital skills of students at all levels. Efforts should educational inclusion; and (d) strengthen resilience to also be made to facilitate the lifelong learning of digital the economic, climate, and security risks that climate skills in order to upskill and reskill the labor force. Cur- change poses. rently, most digital skills interventions in Jamaica target individuals aged 34 and younger, excluding a significant This report provides a cross-cutting diagnostic of portion of the workforce, potential customers for digital Jamaica’s digital economy and offers policy recom- businesses, and citizens who could benefit from the dig- mendations to help the country address its digital ital transformation of public services. divide and accelerate the pace of digital transforma- tion. The analyses that follow are based on quantitative Adoption of technological tools can strengthen Ja- and qualitative assessments carried out with govern- maica’s resilience to the economic, climate, and ment entities, as well as extensive consultations with security risks associated with climate change. In key public and private sector stakeholders in the country. 2020, the government committed to ambitious targets The report is based on the World Bank’s Digital Econo- under the Paris Agreement to transform Jamaica into a my Assessment (DEA) methodology, which, by examin- low-emissions and climate-resilient economy while fos- ing international experiences of digital businesses and tering low-carbon and sustainable development. Yet, Ja- public sector institutions, has identified a set of foun- maica continues to be highly susceptible to frequent and dational elements that play a critical role in the digital intense climate shocks, with approximately 90 percent of transformation of economies, including: the availability its US$14 billion GDP being produced in coastal zones, of internet or broadband that brings people online, the which exposes infrastructure, tourism, and agricultural capacity to identify and authenticate people digitally, and assets.18 Digital solutions, such as geographic informa- the ability to pay or transact digitally. Digital economies tion systems (GIS) to map and assess vulnerable areas, further energize when there is a sizable tech-savvy work- visualization tools with remote sensing, satellite imagery, force and an ecosystem that supports digitally intensive Lidar data, and early warning systems, can all strengthen firms in entering the market or scaling up. Once those the country’s resilience to climate disasters and improve foundations are in place, a wide array of use cases can planning and management capabilities.19 Other tools, emerge that denote all the ways by which a digital econ- such as the digital mapping of maritime and coastal omy may take shape, serving people, businesses, and space and natural assets, can help facilitate cross-sec- government in a process typically referred to as digital tor analysis and planning to promote the sustainable and transformation. The private sector is the main driver of inclusive growth of the blue economy.20 Additionally, by use cases, offering major platforms and applications, establishing a proper measurement, reporting, and veri- including e-commerce, gamification, and others. The fication (MRV) system, which indicates when an activity government may also develop new government plat- has successfully avoided or removed greenhouse gas forms, applications, and services to automate its func- emissions and can be converted into credits with mon- tions, improving its efficiency and effectiveness. In line etary value, the country can increase the traceability of with the DEA methodology, this diagnostic provides a its greenhouse gas emissions.21 Low-carbon growth can comprehensive overview of Jamaica’s digital economy also be supported by improving energy efficiency (e.g., development across six specific pillars or foundational electric demand management) and reducing emissions elements: digital infrastructure, digital public platforms, from other sectors (e.g., electrification of the transport digital financial services, digital businesses, digital skills, sector). and trust environment. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 39 » Digital Infrastructure: This refers to the facilities that early-stage ventures that create new digital solutions are involved in the effort to collect, exchange, store, or business models as part of their core products process, and distribute data across first-mile (inter- or services, and (b) established digital businesses, national links), middle-mile (backbone), and last-mile which are the digitally intensive businesses that have (access) networks. Digital infrastructure provides the managed to scale up and consolidate their position way for people, businesses, and governments to get in local or international markets and include medium online and link with local and global digital services, and large platform-based and data-driven firms. Dig- thus connecting them to the global digital economy. ital businesses, and adoption of digital technologies It also encompasses IoT (such as mobile devices, among less technology-intensive firms, represent a computers, sensors, voice-activated devices, geo- unique opportunity for Jamaica to nurture and scale spatial instruments, and machine-to-machine and MSMEs, boost entrepreneurship, increase efficien- vehicle-to-vehicle communications) and data re- cy, generate more and better jobs, foster economic positories (such as data centers, internet exchange integration, and promote the integration of lagging points and clouds). It also includes all the active and populations and regions. Digital businesses thrive passive infrastructure necessary to develop the digi- when other key enablers, such as digital infrastruc- tal economy downstream. ture, skills, payments, and a trust environment, are set in place. » Digital Public Platforms: Digital Public platforms developed for the public sector or as a public good— » Digital Skills: Economies require a digitally savvy either by government agencies, in partnership with workforce in order to build robust digital-intensive private companies, or through a hybrid model—can sectors and competitive markets. Digital skills en- help deliver more and better services to individ- compass foundational, technology, and business uals. The development of digital public platforms skills for building or running a digital start-up or run- underpins the expansion of e-government services ning a digitally intensive business. Greater digital lit- and can support the efficiency of core government eracy further enhances the adoption and use of dig- systems. Digital public platforms can also boost ac- ital products and services among governments and countability, including through providing new chan- the larger population. nels for public engagement and feedback and re- ducing opportunities for corruption. Likewise, they » Trust Environment: The rapid growth of the digital can provide a foundational layer to catalyze private economy goes hand in hand with a rapid rise in cy- sector innovation and new markets. ber threats and increasing concerns about personal data protection. Therefore, the capacity of both the » Digital Financial Services: DFS provide individu- public and private sectors for cybersecurity and data als and households with convenient and affordable protection needs to evolve quickly to meet current channels by which to pay as well as to save and bor- and future threats. This pillar assesses the presence row. Firms can leverage DFS to more easily transact of a governance framework that balances data en- with their customers and suppliers and to build digi- ablers and safeguards and supports digital transfor- tal credit histories and seek financing. Governments mation while protecting individuals, businesses, and can use DFS to increase efficiency and account- institutions from cybersecurity risks. ability in various payment streams, including for the disbursement of social transfers and receipt of tax Multiple cross-cutting themes impact these founda- payments. Digital payments are often the entry point tional elements, affecting the country’s capacity to for DFS and provide the infrastructure, or “rails,” create an enabling institutional and policy environ- through which additional products and use cases ment. The DEA framework addresses three cross-cut- can be developed, as has been demonstrated by the ting themes: developing regulatory frameworks to foster evolution of M-PESA in Kenya and Alipay in China. competition and contribute to the World Bank’s Maximiz- Digital payments and financial services are critical to ing Finance for Development (MFD) agenda; managing financial inclusion and key enablers of e-commerce the risks of the widespread adoption of digital technolo- and digitally enabled business models. gies; and generating opportunities to empower vulner- able populations. The diagnostic emphasizes inclusive, » Digital Businesses: Digital businesses can be di- equitable, and sustainable access to digital opportunities vided into two categories, each with their distinct as a means to improve household welfare, particularly characteristics: (a) digital start-ups, which refer to for poor populations. Introduction 40 Figure 1.2. Pillars of the Digital Economy Digital Economy Foundations / Pillars Applications likely to develop once the foundational elements are in place » GOVTECH applications » ECOMMERCE adoption » OPEN BANKING: non-banks offer tailored services Digital Infrastructure Digital Businesses Public Digital Platforms Digital Skills Digital Financial Services Trust Environment » Strong legal and regulatory frameworks to foster competition and manage risks » Social and economic exclusion (digital poverty) CROSSCUTTING » Gender gaps and opportunities to empower women ISSUES » Rural - Urban gaps » Climate change Source: Authors, based on World Bank (2020). The diagnostic includes practical and actionable availability and affordability of connectivity, which is es- recommendations in the form of a sequenced action sential to bringing more people online. Chapter 3 looks plan that can inform relevant government efforts to at the presence and use of digital public platforms that promote the widespread adoption of digital technol- can support better digital exchanges and transactions, ogies within government, businesses, and society enhance the access to and transparency of public ser- at large. The report takes stock of existing digital trans- vices, and improve public service efficiency. Chapter 4 formation initiatives in Jamaica and identifies key con- examines the current state of DFS in the country, while straints and priority areas, proposing a mix of possible Chapter 5 assesses digital entrepreneurship and estab- policy reforms, investments, and capacity-building inter- lished digital businesses. Chapter 6 examines demand ventions to harness the economic and social benefits of for, as well as the attainment and coverage of, digital widespread digital technology adoption and to effectively skills in Jamaica, a key enabler of the uptake of digital mitigate the associated risks, particularly in the critical services and the application of digitally enabled solutions. areas of a digital economy. Chapter 7 looks at the legal and regulatory framework for cybersecurity and data protection, describing the chal- The remainder of the report is organized as follows. lenges and opportunities in creating a trust environment Chapter 2 discusses the accessibility, quality, and resil- conducive to the further adoption of digital technologies. ience of digital infrastructure in Jamaica, as well as the Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 41 Notes 1. https://ieg.worldbankgroup.org/evaluations/mobilizing-technology-development 2. See, for instance, OECD (2019). 3. https://ieg.worldbankgroup.org/evaluations/mobilizing-technology-development 4. See Knickrehm, B. Berthon, and P. Daugherty (2016). 5. Adapted from Santander (2022). 6. See WEF and Deloitte (2022). 7. GOJ (2009). 8. World Bank (2016b). 9. Demirgüç-Kunt et al. (2021). 10. Dener et al. (2021). 11. IDB Invest (2021). 12. ITU (2017). 13. Cusolito, Lederman, and Peña (2020). 14. Crespi et al. (2017). 15. PIOJ (2018). 16. Ibid. 17. ECLAC (2022). 18. World Bank (2022a). 19. Saldivar-Sali, Artessa (2021). 20. World Bank (2016a). 21. World Bank (2022c). Introduction 42 2. DIGITAL INFRASTRUCTURE Inclusive growth through adequate digital infrastructure KEY MESSAGES » Jamaica faces challenges related to broadband affordability that disproportionately impact the lower-income population. Strengthening competition in the broadband value chain can sig- nificantly lower prices. The recent infrastructure-sharing regulation is not clear enough to facilitate investment and competition in digital infrastructure and should be complemented by the definition of significant market power and decrees to mandate specific infrastructure to be shared on the des- ignated operators. » Investment in international subsea cables is important for the growth of the digital economy and can be strategic to improving the country’s position as a regional hub for data transit. Jamaica relies heavily on one provider for its international connectivity, which can be constraining to the growth of the market in the medium to long terms. The country could leverage its geographical location to explore opportunities for alternative international connectivity and provide international transit operators with alternative routes and redundancy to improve data latency. » Cloud and data infrastructure, internet exchange points (IXPs), and backbone are core en- ablers of Jamaica’s digital transformation and the growth of the data exchange market. The GOJ can leverage a public-private partnership to develop an island-wide, resilient, and high-ca- pacity backbone network as an essential infrastructure for the development of its digital economy. Complementing this, carrier neutral data centers and the strengthening of IXPs can improve data exchange and lower prices. Incentivizing the use of cloud computing is an opportunity for the gov- ernment to accelerate the development of home grown digital and small to medium businesses. » Reliable and universal connectivity can promote health care, entertainment, agriculture, and forestry in rural areas. Densifying the mobile network, increasing the footprint of fiber connectivity, and increasing infrastructure sharing can strengthen the network in rural areas and in certain sec- tors. » Mobile networks will require new investments to develop next generation infrastructure, for example, in 5G to modernize logistics or manufacturing. » Development of the digital infrastructure will require modernizing the legal framework, including by streamlining the regulatory functions. Digital Infrastructure 43 2.1. The importance of digital » It makes it possible to streamline government func- infrastructure: Enabling inclusive digital tions and deliver citizen-centric services (health care, education, social protection), while improving transformation in Jamaica the efficiency and cost effectiveness of government operations. Digital infrastructure consists of the hardware, soft- ware, networks, protocols, and standards that en- » Cloud infrastructure allows SMEs to easily and able the collection, exchange, storage, processing, cost-effectively scale IT resources and access a and distribution of data. The network infrastructure is wide range of computing resources on demand, in- composed of cross-border, middle-mile, and last-mile cluding virtual machines, storage, and databases. networks.1 These segments are interconnected, creat- ing a data supply chain where public and private actors » Expanding digital infrastructure is essential to bridg- operate (Figure 2.1). Additional layers of the digital infra- ing spatial inequalities and fostering the develop- structure include data centers, cloud computing, digital ment of rural and peri-urban areas, increasing ac- ID, and data-sharing systems. For data to be fully and cess to markets, public services, remittances, and safely leveraged in a trusted environment, the systems social protection. and sensitive information should be adequately protect- ed through an appropriate legal and regulatory frame- work for cybersecurity and data governance. » A well-developed digital infrastructure can support climate change adaptation, monitoring, and resil- Digital infrastructure is a foundational enabler for ience and help to improve environmental reviews, the digital transformation of Jamaica. It can help bolster disaster response efforts, and facilitate com- to improve public services and unlock the potential of munication and coordination among stakeholders. e-commerce, tourism, agriculture, and other sectors im- portant to Jamaica’s productivity and growth. The use » It is a key enabler of emerging technologies, such as cases for digital infrastructure include: IoT, AI, blockchain, and cloud computing. Figure 2.1. Data Infrastructure Supply Chain Cross-border network Middle-mile network Last mile (international links) (distribution) (access) Distributing internet from Connecting the service Conecting bigger cities the middle mile in the Purpose centers to the worlwide together and routing data community to individual internet to the service centers homes and businesses Fiber-optic Fiber IXP Fiber backbone DSL Coaxial Terrestrial fiber Fiber or microwave Fiber backbone Wireless Technologies Cellular Wi-Fi, LTE, towers TV white space Subsea cable Satellite link Satellite link (DTH) Fiber Earth station Wireless Colocation Balloons data center and drones Typical >1,000 km 10 - 1,000 km <1 - 5 km distances Source: World Bank (2021d). Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 44 The Jamaican government recognizes the poten- 2.2. Current state of digital infrastructure: tial of digital infrastructure and should aim toward High prices and low quality and usage a more harmonized and ambitious vision to provide of broadband services are barriers to the country with a resilient and state-of-the-art infra- structure. Digital infrastructure is prominently featured inclusive digital transformation in Vision 2030 and the Midterm Socio Economic Policy Framework (2021–2024), with emphasis placed on le- veraging ICTs to enhance economic growth prospects. The implementation of these aims falls under different Demand and usage of broadband services ministries, though primarily the MSETT, through such initiatives as the 2011 ICT Policy and the 100 Day ICT Action Plan for the national broadband network. Going Jamaica has low broadband usage and a digital di- forward, and to accelerate the country’s digital transfor- vide between rural and urban areas, both holding up mation, the government should consider the immediate the transformation of the economy.2 The population need to improve the national infrastructure, target inter- covered by at least a 3G mobile network reached 100 ventions in the more critical sectors and geographic re- percent of the Jamaican population in 2021, but there gions, and in the medium to long term, support the next is a gap between access to mobile broadband services generation infrastructure (fiber to the premises, 5G, and and usage: only 60 percent of Jamaicans have a unique cloud computing) that will enable the country to be an mobile broadband subscription compared to 76 percent advanced digital economy. in Costa Rica and Georgia (Figure 2.2). In 2022, 47 per- cent of households in Jamaica had broadband access This chapter evaluates the current state of Jamaica’s at home (Figure 2.3), below the LAC average, and the digital infrastructure and outlines a number of gen- country relies mostly on cable technology rather than eral recommendations for the consideration of the the more advanced fiber to the premises (Figure 2.4). In- GOJ. It examines digital infrastructure from the perspec- ternet usage also varies between rural and urban areas tives of both supply and demand. Additionally, areas of (67 and 82 percent, respectively).3 Gaps in usage can strength and weakness in the digital infrastructure are be linked to a variety of underlying factors, such as the identified with policy suggestions for an accelerated tran- quality and affordability of mobile broadband services on sition to a digital economy. the supply side or digital literacy and the availability of services on the demand side. Figure 2.2. 4G Mobile Coverage and Mobile Broadband Penetration 2022 4 120% 100% 80% 76.20% 76% 60% 66% 59.10% 55% 40% 42% 36% 20% 0% LAC UMIC Domican Jamaica Barbados Costa Georgia Republic Rica 4G network coverage; by population Unique mobile broadband subscriptions Source: GSMA Intelligence, Mobile by Market. Digital Infrastructure 45 Figure 2.3. Fixed Household Broadband According to the GSM Association (GSMA),5 Jamai- Penetration in Jamaica versus Peers, % ca falls into the cluster of “transitioning countries,” performing weaker than others on affordability and 89 content and services. Transitioning countries perform 86 well in at least two categories of enablers (infrastruc- ture, affordability, consumer readiness, and content and 71 services). The score for Jamaica in the maturity of its 66 digital infrastructure is lower than Dominican Republic 59 (63), Costa Rica (72), Barbados (67), and Georgia (69), with the latter three countries considered advanced. The 47 main weaknesses of Jamaica’s infrastructure according to this index are affordability and content and services. 36 The international bandwidth used in Jamaica is be- low that of relevant peers in the Caribbean region, in- dicating lower levels of demand for internet connec- tivity and digital services in the country. The amount of international bandwidth a country consumes is related Jamaica Barbados Dominican Georgia Costa UMIC Caribbean to the level of demand for digital services, such as online Republic Rica content, e-commerce, social media, and video stream- ing. Jamaica consumed 394,000 Mbps of international Source: TeleGeography, 2022. bandwidth in 2021,6 with an average consumption per user of 0.146 Mbps, a performance below the regional Figure 2.4. Fixed Coverage by Technology average of 0.206 Mbps.7 For example, the gap between Jamaica and upper-middle-income countries (UMICs)8 in 500k the use of international bandwidth was 23 Mbps in 2021. The gap with such peers as Barbados and Costa Rica was 37 Mbps and 10 Mbps, respectively. Comparison 400k with worldwide peers such as Georgia shows a gap of 52 Mbps (Figure 2.5). 300k Figure 2.5. International Bandwidth Used, Mbps per 100 Inhabitants, 2021 200k 66 100k 51 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 ‘21 ‘22 37 DSL Cable Fiber/LAN Source: TeleGeography, 2022. 24 17 14 13 Jamaica Barbados Dominican Georgia Costa UMIC Caribbean Republic Rica Source: World Bank, 2021; and TeleGeography, 2021. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 46 Data prices in Jamaica are often among the highest Figure 2.6. Data Prices as a Share of Average when compared to benchmarks. Jamaicans pay 7.9 Monthly Income by Income Quintile, %. percent of their average monthly gross national income Monthly per capita GNI ($, left axis), and share (GNI) per capita for a fixed broadband basket, while the of monthly per capita GNI (right axis) average for the continent is 5.0 percent. Prices for mobile broadband are also the most expensive when compared 1200 to peers, such as Barbados, Dominican Republic, Costa Rica, and Georgia (see Table 2.1). High prices have a 1000 25% Share of monthly per capita GNI stronger impact on low-income segments of the popula- Monthly per capita GNI tion, making the digital divide more severe and widening 800 20% inequality. For instance, the lowest quintile of the popula- tion per income pays between 10 and 25 percent of their 600 15% income for mobile broadband depending on the service, while international affordability standards9 are advocat- 400 10% ing for data prices to be no more than 2 percent of GNI (Figure 2.6). 200 5% Current prices of smartphones and data in Jamaica 0 0% are limiting accessibility and connectivity, especially for the lower-income population. On average, acquir- Affordability 1.5G Affordability Fixed BB ing the cheapest smartphone in Jamaica requires a sub- Affordability high data usage GNI per month stantial percentage of per capita GNI (16.0 percent) in comparison to other Caribbean countries (11.0 percent), relevant regional peers, and worldwide (Figure 2.7). Source: ITU, A4AI, WBG. Moreover, the price of the cheapest smartphone in Ja- maica is 50 percent of the monthly per capita GNI of the poorest segment of the population, and between 25 and 30 percent of the second poorest segment (Figure 2.8). Table 2.1. Data Prices as a Share of Average Monthly Income in 2021, % Mobile Data and Voice Fixed Mobile Data and Voice Low-Consumption Data Bundle Broadband High-Consumption Basket Basket (70 mins Basket (140 mins + 70 SMS + 2 GB) + 20 SMS + 500 MB) Jamaica 7.9 percent 5.2 percent 5.2 percent Americas 5.0 percent 3.0 percent 3.0 percent Barbados 4.1 percent 3.9 percent 3.9 percent Dominican Republic 4.4 percent 4.0 percent 3.2 percent Costa Rica 1.8 percent 1.7 percent 1.2 percent Georgia 2.8 percent 1.9 percent 1.9 percent Source: ITU, Digital Development Dashboard. Digital Infrastructure 47 Figure 2.7. Price of the Cheapest Smartphone, Figure 2.9. Median Download Speed for Fixed percent of GNI 2022 Services, Jamaica and Peers 26 90 23 80 Barbados 70 Costa Rica 60 16 Jamaica 50 40 10 11 30 Georgia 8 20 Dominican 7 Republic 10 0 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Jamaica Barbados Dominican Georgia Costa UMIC Caribbean Republic Rica Source: Speedtest Global Index by Ookla, Source: ITU, A4AI, WBG. https://www.speedtest.net/global-index. Figure 2.8. Price of the Cheapest Smartphone Figure 2.10. Median Download Speed for by Income Quintile. 2021 Mobile Services, Jamaica and Peers 1200 60% 40 55% 1000 50% 35 Jamaica 45% 30 Georgia Monthly per capita GNI Cheapest smartphone 800 40% 25 Costa Rica 35% Dominican 600 30% 20 Republic 25% 20% 15 400 15% 10 200 10% 5% 5 0 0% 0 Q1 Q2 Q3 Q4 Q5 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Cheapest smartphone GNI per month Source: ITU, A4AI, WBG. Source: Speedtest Global Index by Ookla, https://www.speedtest.net/global-index. According to the Speed Test Global Index, Jamaica is According to this index, the average download speed of a mid-performer in terms of speed quality, perform- the mobile networks is better than that of Dominican Re- ing better in mobile than fixed services.10 Download public, Costa Rica and Georgia, but fixed networks are speed tests for fixed and mobile services experienced lagging behind higher performers, such as Costa Rica an upward trend, with fixed services averaging download and Barbados (see Figures 2.9 and 2.10). speeds of 43 Mbps compared to 51 Mbps for mobile. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 48 Jamaicans’ low-quality connectivity is influenced by a number of factors, including upload speeds, la- Bottlenecks at the value chain tency, outages, and energy cuts. In 2021, 66 percent of Jamaicans reported that they faced low-quality con- nectivity, and 51 percent experienced energy blackouts, First mile (international terrestrial or submarine compared to an average of 51 and 37 percent in the LAC cables and landing points) countries, respectively.11 Data on latency in the mobile network show a good performance of the mobile network Jamaica is connected through six subsea cables in Jamaica, but there is no information on outages and to the global data network. Demand for capacity will service consistency. Financial enterprises, content pro- grow, but expansion may require new investors in the viders, gaming companies, and cloud computing provid- country, as five subsea cables are owned by one opera- ers all require low latency in long-haul data transmission; tor, C&W Networks. The six subsea cables are: ALBA-1, thus, reducing delay by even a few milliseconds can Cayman-Jamaica Fiber System (CJFS), Colombia-Flor- impact the performance of big data analytics, machine ida Subsea Fiber, East-West, and Fibralink, which learning, cloud computing, and gaming. does not have data transit capabilities). The biggest BOX 2.1. Improving Mobile Handset Affordability Drivers of affordability include both demand- and promoting innovative financing solutions to lower supply-side factors. The supply of credit to sup- the risk and increase the supply of credit available port the financing of devices for low-income and for financing schemes that target low-income and unbanked individuals is another key barrier. To ad- unbanked consumers. dress these challenges, governments can promote the ownership and adoption of internet-enabled Example of these measures are provided in the ta- mobile handsets by addressing the supply- and ble below: demand-side factors affecting affordability and by Direct Enabling Environment Virtuous Interventions Needed Cycles Supply VAT exemptions for Regulatory ease of Adequate policies Barriers low-end smart devices doing business (as a and infrastructure Customs duty relief for retailer, importer, or for e-commerce and device importation manufacturer) distribution networks Demand Device subsidization Framework for digital Local and relevant Barriers (through Universal inclusion and disadvan- content generation Service and Access taged populations (e.g., Digital skills Funds or otherwise) women, rural areas) Financing Credit and risk Financial and mobile Barriers guarantees money regulation Debt and equity funding Financial consumer Financial scheme protection subsidization Source: Authors. Digital Infrastructure 49 capacity is currently the Colombia-Florida cable, which Figure 2.11. International Connectivity has roughly 80 percent of the lit capacity available to in Jamaica Jamaica, making the country dependent mostly on this cable for future increase in demand.12 ALBA-1 has 5 per- cent of the lit capacity, CJFS 9 percent, and East-West and FibraLink 3 percent each. According to TeleGeog- Gulf of Mexico The Bahamas raphy forecasts, the international bandwidth used is ex- pected to grow at a compounded annual rate of 33 per- Cuba Turks and cent between 2022 and 2029, which implies a doubling Caicos Islands roughly every 2.5 years. Cayman Islands Haiti Dominican Republic British Virgin Islands Puerto Rico Jamaica Despite the relatively high number of subsea cables, Monstserrat options to buy international connectivity for internet Caribbean Sea Dominica service providers are limited. As noted, five cables are Belize St Lucia owned and operated by C&W Networks, and the remain- Guatemala Aruba Curaçao Barbados Grenada ing cable is owned by Telecom Venezuela and Transit.13 Honduras Trinidad Any internet service provider will therefore have to buy El Salvador Nicaragua Costa Rica Venezuela and Tobago Panama wholesale international capacity from C&W Networks or Telecom Venezuela. Currently, Jamaica is heavily reliant Source: TeleGeography, 2023. on one provider for its international connectivity, which creates risks associated with market concentration. The Figure 2.12. Used Interregional International price of international capacity is an important element of Capacity data usage prices, and maintaining efficient competition on this market has the potential to lower end-user prices for broadband services. Europe U.S. & Jamaica can leverage its strategic location to be- Canada Middle Asia come an important transit hub for applications that East require low latency. As most countries in LAC, Jamaica Africa heavily relies on the United States for its international Latin America capacity traffic (Figure 2.12). LAC countries have limited Oceania direct routes to Europe or other continents, and there are only a few initiatives currently underway to change that. New submarine cable projects have been launched 2022 Content Providers 100 Tbps over the past few years with the hope of diversifying in- 2022 Total Used 100 Tbps terregional connectivity and connecting Brazil to Europe Source: TeleGeography, 2023. and Africa, betting on an increase in traffic between the two continents. Another example is the BELLA initiative14 (Building the Europe Link to Latin America and the Carib- Furthermore, Jamaica needs to develop its cloud bean), a European Union (EU)-driven project that aims and data infrastructure market, which is currently to enable high-speed connectivity, exchange of knowl- nascent but is essential for digital economy devel- edge, implementation of advanced technologies, and opment. There are currently no colocation data centers, capacity building between the EU and the LAC region. cloud regions, or content providers in Jamaica. Due to its At the same time, the composition of international traf- small size, attracting investment in this area might not be fic itself is changing, as it is increasingly composed of highly profitable yet. In the meantime, how well data or content providers’ traffic, which requires low-latency data cloud computing services are transferred to and from the transmission. Jamaica could tap into both trends to po- main regional nodes would impact the user experience sition itself as a hub for international connectivity, first, to and the choice between one application versus its com- offer its shores for diversification of regional connectivity petitors. Mexico, Costa Rica, and Panama are currently and second, to offer shorter routes to many destinations the main hubs for colocation data centers.15 Improving in LAC for low-latency traffic. international connectivity will help strengthen the busi- ness case for Jamaica. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 50 Table 2.2. International Internet Bandwidth by Destination International Internet Bandwidth Country Gbps Percent United States 290 66% Barbados 80 18% Trinidad and Tobago 20 5% Cayman 15 3% Curacao 15 3% Bermuda 10 2% Cuba 3 1% Haiti 3 1% Antigua and Barbuda 2 0% Source: TeleGeography, 2023. Middle mile (backbone, data centers, and internet connectivity quality. A recent study has estimated a 14 exchange points) percent growth in fixed broadband download speed by doubling the number of IXPs for every 10 million inhabi- Backbone infrastructure in Jamaica is fragmented tants.16 With the increase in local traffic, Jamaica (through and needs to be expanded to support the devel- the OUR) has the potential to attract content providers opment of local networks. At present, there are over to install cache servers, further reducing prices and im- 1,840 kilometers of optical fiber networks, mainly along proving quality of service. To date, not all operators and the shore of the country, connecting Spanish Town with service providers are linked to the IXP. Low utilization of St. Ann’s Bay and Port Maria, owned by telecom oper- the IXP may mean that it is necessary to revise the IXP ators Flow and Digicel and the National Works Agency. governance model to incentivize operators to connect for The Agency is currently developing the first phase of the local traffic exchange. backbone network’s expansion through aerial fiber and infrastructure sharing with other operators and utilities. Last mile (mobile or fixed technologies for end-user The backbone footprint is therefore fragmented and access) needs further expansion to support the growth of mobile and fixed access networks and to ensure resiliency. Ad- Mobile networks cover most of the Jamaican pop- ditional investments are required to bring the infrastruc- ulation, but fixed fiber connectivity needs to be im- ture closer to the remaining 60 percent of the population, proved. A locally owned network operator, Rock Mo- resulting in service quality improvements. In many coun- bile, is currently finalizing the deployment of its mobile tries, the development of backbone infrastructure has network to compete with Flow (vertical integration with taken the shape of a public-private partnership (PPP), C&W) and Digicel as the third entrant. Fixed network because it allows the efficient utilization of government connectivity is mostly based on legacy technologies, resources and leverages the know-how and funding of such as coaxial and copper cables or fiber, and is pro- the private sector. Jamaica may want to consider utiliz- vided mainly by Flow and other smaller internet service ing this model. providers and carriers. The market for satellite-based connectivity is growing but remains a niche market for Internet exchange points (IXPs) and caches need to businesses and remote connectivity. Although 3G and be strengthened to support Jamaica’s digital trans- 4G networks reach full population coverage,17 low cell formation. There is currently one IXP in Jamaica, op- density (Figure 2.13), quality of service, and affordability erated by the Office of Utilities Regulation (OUR), the remain a challenge. Access to fixed infrastructure is less Jamaican regulator for electricity, water, and telecom- widespread and is particularly weak in rural and peri-ur- munications, and located at the eGov data center. IXPs, ban areas, which is evident from the lower connectiv- complemented with cache servers, reduce latency and ity speed from both mobile and fixed internet services data costs, increase broadband speed, and improve (Figures 2.14 and 2.15). Digital Infrastructure 51 Figure 2.13. Mobile Tower and Cell Density per Figure 2.14. Median Download Speed for Fixed 10,000 Inhabitants (2021) Services, Rural vs. Urban 110 60 102 100 50 90 80 40 70 60 30 57 50 47 20 40 32 32 30 10 28 28 24 20 18 14 15 0 10 10 10 13 7 8 Feb 22, 22 May 22, 22 Aug 14, 22 Nov 6, 22 3 3 1 3 0 Barbados Costa Dominican Georgia Jamaica Rural Urban Rica Republic Source: Speedtest Global Index by Ookla, GSM per 10k LTE per 10k https://www.speedtest.net/global-index. Towers per 10k UMTS per 10k Source: TowerXchange, https://www.towerxchange.com/; World Bank, https://data.worldbank.org/; Figure 2.15. Median Download Speed for OpenCelliD, https://opencellid.org/#zoom=16&lat=37.77889&lon=-122.41942. Mobile Services, Rural vs. Urban Reliable and universal connectivity can promote 60 health care, agriculture, and forestry in rural areas and reduce societal inequities.18 Although coverage 50 for mobile networks is high, the development of sector or geographic areas will require densifying the mobile 40 network and increasing the footprint of fiber connectivi- ty. For example, connectivity in rural settlements may be 30 needed beyond the boundaries of the populated areas (in forestry and agricultural locations). In this regard, in- 20 frastructure sharing may be a useful tool to strengthen the network in rural areas where it is often not profitable for the private sector to develop or upgrade the infra- 10 structure. Although initiatives to digitalize rural activities in Jamaica were promoted by the Food and Agriculture 0 Organization before the pandemic,19 an adequate digital Feb 27, 22 May 22, 22 Aug 14, 22 Nov 6, 22 environment in the country’s rural areas is still pending.20 Rural Urban Mobile networks will require new investments in 5G Source: Speedtest Global Index by Ookla, to enable more precise applications for IoT in agri- https://www.speedtest.net/global-index. culture, port logistics, and other high-capacity ap- plications. 5G networks can play an important role in the modernization of industry, manufacturing, logistics, port operations, and the integration of autonomous vehi- and agriculture. These applications require a high num- cles and drones for cargo handling. The GOJ may want ber of connected devices within a small radius and low to consider rolling out pilots for 5G for the modernization latency to provide the maximum precision for operations, and digitization of port logistics, starting with the Port of enabling real-time data exchange, remote monitoring of Kingston. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 52 Sector governance, policy, and regulatory Closing the digital divide and lowering data prices environment can be promoted through competition in the first- and middle-mile infrastructure value chain. Prices The current Telecommunications Act was adopted in and service quality could be impacted by the degree of 2000 and has supported several important telecom competition across segments of the telecom sector. High reforms such as market liberalization, but it needs data prices in Jamaica for final users may be influenced to be updated to remain relevant for further market by structural conditions, such as the limited supply of in- needs. The legal and regulatory frameworks need to be ternational bandwidth. The analysis so far reveals some modernized to address technology changes, including level of dominance in the international and backbone in- the switch from voice to data-based communications, frastructure. Although competition may not be possible in the convergence of services and infrastructure, and the all areas and segments of the digital infrastructure value changing ecosystem of digital infrastructure. Although chain, mandating cost-based open access wholesale in- the Telecommunications Act allowed the transition to a frastructure sharing on operators with significant market competitive market,21 implementation has been chal- power can open the downstream market for more com- lenging. For instance, it was not until recently that a third petition, affecting prices and quality. mobile operator entered the market, not least because the current regulatory framework has a fragmented li- Jamaica’s current regulations on infrastructure censing regime that makes it difficult for smaller and new sharing are not yet comprehensive and do not fa- firms to enter the market. Another shortcoming of the Act cilitate access to essential infrastructure for new was its limited capacity to enforce sanctions, and little or less-dominant operators, delaying investments progress has been made to address this problem.22 The in and the deployment of fiber networks across the ITU’s ICT Regulatory Tracker (ICT-RT) has identified the island. The Telecommunications Act allows the OUR competition framework as a strength for Jamaica, while to enforce resource sharing between competitors, both other areas require more attention (Figure 2.16). For ex- tangible and intangible. Although recent rules have been ample, Jamaica improved its regulatory regime between published on infrastructure sharing, they remain contin- 2007 and 2022. However, for the regulatory mandate gent upon identifying the dominant operator—a status as and regulatory authority categories, Jamaica had the yet undetermined within Jamaican markets—and they same score in 2022 as it did in 2007. For the regulatory defer to the operator to determine the assets it wants to authority branch, opportunity areas may include the ca- share and the conditions for sharing. As stated earlier, to pacity of the regulator to impose sanctions and the lack strengthen these rules, the OUR would need to conduct of mechanisms to solve disputes. For the regulatory re- a market assessment, determining significant market gime branch, areas for improvement focus on the lack of power and mandating a reference offer on these oper- a specific mandate for an infrastructure-sharing model. ators to provide open access and cost-based wholesale services to smaller and new entrant operators. Figure 2.16. ITU’s ICT Regulatory Tracker Index, 2020 Jamaica belongs to the G3 (enabling investment and access), according to the 2022 ICT Regulatory Tracker Overall Score Regulatory Authority Regulatory Mandate Regulatory Regime Competition Framework Dominican Rep. 97 Costa Rica 91 Georgia 90.5 Jamaica 76.5 Barbados 84 Source: ITU, 2020, https://app.gen5.digital/tracker/about. Digital Infrastructure 53 Jamaica has a full set of institutions that regulate, of spectrum prices and was late in beginning the alloca- promote, and oversee the telecommunications sec- tion process: 4G spectrum allocation started in 2013 in tor, but some institutional mandates overlap, which other Caribbean countries but not until 2016 in Jamaica. may decrease regulatory efficiency.23 The OUR has In addition, according to the GSMA, spectrum pricing primary regulatory duties for services and facilities, and and its impacts on consumers were not aligned with the it also has an obligation to promote competition between Jamaican Development Plan or the ICT Sector Plan. carriers and service providers.24 Although the Telecom- munications Act grants regulatory safeguards to be im- Establishment of an outage/disaster protocol for the plemented by the OUR in relation to dominant carriers, telecommunications sector is an important tool that the Fair Trading Commission is responsible for ensuring the OUR will be using to reach target indicators on a competitive environment and protecting consumers.25 service quality and to reinforce resilience of the in- The MSETT is also the host ministry for the Spectrum frastructure. On June 2022, the OUR established an Management Authority (SMA), which provides licens- outage and disaster protocol for the telecommunications es for the use of scarce frequency spectrum. Finally, sector in Jamaica, which involves categorizing outages, the Universal Service Fund (USF) is responsible, along establishing notification processes, and improving net- with the National Works Agency, for the planning and work resiliency during disasters to mitigate risks of recur- implementation of extending connectivity to rural areas. rence in the future. These protocols will mandate mobile A business environment with several independent reg- operators to provide national roaming during emergency ulators requires good institutional coordination, as it in- or disaster situations and to develop business continuity creases the risk of regulatory overlaps, regulatory voids, plans, which will greatly enhance network resilience and and fragmentation. ensure service availability during emergencies. Spectrum pricing policy in Jamaica can be upgraded The OUR in Jamaica developed Quality of Service to set the stage for 5G uptake and improvements in Rules for telecom providers, which became effec- 4G network quality. The SMA launched a consultation tive on February 2024. The rules will enable the OUR study in 2020 to review the spectrum pricing policy and to monitor the quality of service delivered by internet to propose new fees for mobile services. With the ex- service providers and mobile operators through periodic emption of two mobile spectrum bands, 700 MHz and reporting and continuous monitoring, ensuring that deliv- AWS (1700/2100), proposals involve fee reductions be- ered speeds are in line with advertised claims and thus tween 18.7 and 37.4 percent.26 Jamaica’s experience providing consumers with objective data on the quality with the allocation of spectrum bands to be used in 4G of the voice and internet services they receive. Howev- networks suggests that delays in distribution, as well as er, the regulations will need to be complemented by an the high prices observed, were related to lower market equipment upgrade for the OUR to ensure better mea- penetration in comparison to the Caribbean average.27 In suring and monitoring capacity. particular, Jamaica was identified as an outlier in terms Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 54 Table 2.3. Key Digital Infrastructure: Challenges and Opportunities Strengths Areas for Improvement » Good 3G/4G network coverage » Affordability of broadband services » Well-established regulatory framework that includes a » Footprint and resilience of the backbone network public consultative process for rule making » Governance and participation of the IXP » New rules and regulations on infrastructure sharing, quality of service, spectrum pricing, and outage » Implementation of infrastructure-sharing rules reporting » Fragmented regulatory functions » Multiple initiatives by the MSET to encourage the supply and demand side of the digital infrastructure » Legacy legal framework for telecommunications » Geographical location between North and South » Statistics for better monitoring of market and planning America and Europe Opportunities Challenges » Developing IXPs, data centers, and cloud computing » Infrastructure is prone to floods and hurricane to foster private sector development damage. » Improving international subsea connectivity » The country’s small market size makes it difficult to attract big investors in cloud, data centers, and » Using access to broadband to promote health care, content provider networks. access to social protection, agriculture, and tourism in rural areas » Deploying 5G to modernize manufacturing, industry, and logistics » Attracting private sector investment for the deploy- ment of the backbone optical fiber network Source: Authors' elaboration based on digital economy assessment. 2.3. Recommendations: Improving data and device affordability, expanding a resil- In the short to medium term ient backbone network, and strengthening the institutional and legal framework Improving the affordability of broadband services and devices: The GOJ can prioritize infrastructure improvements to accelerate the modernization of key sectors while » Strengthen the infrastructure regulatory rules positioning the country as a leader in digital trans- with more defined obligations. Launch a compe- formation by investing in next generation infrastruc- tition assessment for different markets across the ture and applications. The recommendations are orga- data value chain to identify potential bottlenecks and nized according to their priority status: short to medium opportunity areas that should be addressed by the term and medium to long term. government. Although the competitive environment in Jamaica has been referred to as adequate by the Fair Trading Commission,28 the telecommunications markets still present high concentration levels, and prices for final users remain high. Potential findings from this study could be the source of a regulatory Digital Infrastructure 55 agenda aiming to promote a more competitive en- needed to be connected. The BELLA initiative II can vironment (for structural issues). Moreover, such a be a good starting point to assess the potential of study would encourage specific market assessments high-speed connectivity for research and innovation to mandate open access obligations and identify an- in the country. ticompetitive behaviors. » Improve last-mile connectivity for the health, » Improve the IXP governance model and capa- education, agriculture, and tourism sectors and bilities. Currently not all internet service providers for digital nomads. Improve the coverage of mo- are linked to the IXP, which is being managed by the bile networks and/or provide high-speed connectiv- OUR. These are not optimal conditions for leverag- ity to regions of strategic importance to the country ing a local data exchange. Incentivizing the private to boost agriculture and tourism and promote high- sector to participate and moving management to the speed connectivity in touristic areas for digital no- private sector can contribute to lower data prices mads. and a higher quality of service. » Deploy 5G for manufacturing, industry, and lo- » Carry out an assessment of the tax structure. In gistics modernization. Jamaica still has idle re- the short term, the government can assess the tax sources regarding spectrum, and ideally, potential structure and the levies that could have an impact new entrants in the mobile markets would be de- if there is a change to the end-use prices. This as- sirable to promote competition. Moreover, 5G tech- sessment can also investigate the informal market nologies should be launched in the country, and the for devices and the way in which different approach- government should allocate spectrum for this goal, es to formalization can contribute to lower costs for starting with a pilot for port modernization. smart instruments. Incentivizing new investments and technologies in Expanding the backbone network: the market: » Consider developing a PPP framework for the » Provide a level playing field for domestic net- backbone infrastructure. To strengthen this im- work operators. The OUR can consider updating portant transmission infrastructure, the government the competition framework with clearer rules on ex may wish to consider defining government needs, ante and ex post regulations to provide a level play- estimating current and future private sector needs, ing field for all market participants. Other areas that and developing a PPP to ensure efficient utilization could facilitate new investments include simplifying of government resources and to leverage the know- the licensing regime, streamlining the SMA, as- how and resources of the private sector. sessing the right-of-way fees and procedures, and assessing the use of the USF to encourage new en- » Provide open access to backbone infrastructure. trants. This should be accompanied by cost-based open access obligations to allow nonparticipating internet » Develop a strategic vision for attracting invest- service providers to access the infrastructure on a ment in international connectivity and data cen- level playing field. ters. The GOJ can start with an assessment of the business case for colocation data centers within the regional and global data center and international connectivity market. In the medium to long term Improving sector governance and planning: Accelerating the transformation of key sectors in » Modernize sector monitoring. The current data the economy through targeted interventions: and statistics that the OUR and other entities collect are limited and are voice centric. The lack of sec- » Leverage cloud computing and internation- tor-quality statistics limits the institutional capacity to al connectivity to develop key sectors. Provide deploy public policies aimed at improving the sec- cloud computing resources to digital businesses and tors’ competitiveness and reducing the digital divide. to key sectors, such as health, education, entertain- A set of statistics and indicators should be designed ment, and research and innovation. The plan can that authorities should collect and publish to be more include measures to attract data centers with cloud data rather than voice centric in order to launch sec- hosting capabilities and/or the international capacity tor diagnostics and design public policies. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 56 » Streamline regulatory functions, either by re- » Modernize the legal framework for telecommuni- structuring the functions or by using more col- cations and digital infrastructure. A new law that laborative soft tools. Two main concerns arise from is data rather than voice centric is important for the the current governance structure of the regulatory longer-term development of the digital infrastructure. institutions: i) the SMA reports to the MSETT and The law could also improve the sanctioning powers thus does not have the autonomy to strengthen the of the regulator or reinforce the sanctions regime of independence of spectrum allocation to the public other institutions. and private sectors, and ii) the USF, OUR, and SMA have overlapping and complementary functions that should not remain in silos and should be streamlined or consolidated. Table 2.4. Digital Infrastructure: Policy Recommendations (1 of 2) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Improve the affordability Review the tax policies related to Ministry of Short Maybe of data and devices the digital infrastructure value Finance and term chain and to smart devices. the Public Service (MOFPS) OUR MSET Jamaica Customs Agency Strengthen the infrastructure OUR Short No regulatory rules with market MSET term analysis and requirements for cost-based open access to international connectivity and landing points. PRIORITY Strengthen IXP governance and OUR Medium No capabilities and discuss with eGov term content providers the installation of internet service cache servers in Jamaica. providers/ PRIORITY operators MSET Expand and strengthen Consider developing a PPP MSET Short No the resilience of the framework to create a resilient and MOFPS term backbone network open access backbone network. PRIORITY Design regulatory instruments to OUR Medium No mandate cost-based open access MSET term to the backbone by any internet SMA service provider or operator. PRIORITY Accelerate the digital Leverage cloud computing and MSET relevant Medium No transformation of key international connectivity to ministries, term sectors develop key sectors, such as departments, health, research and development, and agencies and agriculture. (MDAs) Digital Infrastructure 57 Table 2.4. Digital Infrastructure: Policy Recommendations (2 of 2) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Accelerate the digital Improve last-mile connectivity for MSET Medium No transformation of key the health, education, agriculture, OUR term sectors and tourism sectors and for digital SMA nomads. relevant MDAs Deploy 5G for manufacturing, MSET Medium No industry, and logistics OUR term modernization. SMA relevant MDAs Incentivize new Simplify the licensing framework, OUR Medium Maybe investments and review the right-of-way regime, MSET term technologies in the and strengthen the competition SMA framework. market Develop a strategic vision for MSET Short No attracting investment in internatio- MOFPS term nal connectivity and data centers. PIOJ PRIORITY Diversify international subsea OUR Medium No connectivity by attracting new Investments term investors. Agency PRIORITY Auction spectrum for 5G SMA Medium No technology. MSET term Improve sector planning Modernize sector monitoring. OUR Short No and the institutional and Design a set of statistics for sector USF term legal frameworks for diagnostics and public policy MSET design. PRIORITY SMA digital infrastructure PIOJ Modernize the legal framework for MSET Long Yes telecommunications and digital relevant MDAs term infrastructure. Streamline regulatory functions, MSET Long Yes either by restructuring the relevant MDAs term functions or by using more collaborative soft tools. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 58 Notes 1. World Bank (2021a). 2. Jamaica ranks as a high developed country in the Human Development Index of the United Nations, but in recent years, it has lost its relative position. Since 2013, Jamaica is below the world average ranking. 3. ITU. Digital Development Dashboard. https://www.itu.int/en/ITU-D/Statistics/Dashboards/Pages/Digital-Development.aspx 4. Peer countries were chosen based on geographic location, income level, and overall development aspiration of Jamaica. 5. GSMA Mobile Connectivity Index, see https://www.mobileconnectivityindex.com/connectivityIndex.html#year=2021&zoneIsocode=JAM 6. TeleGeography (2022), Global Bandwidth Forecast Service Q4. 2022. 7. ITU. Digital Development Dashboard. https://www.itu.int/en/ITU-D/Statistics/Dashboards/Pages/Digital-Development.aspx 8. For more information on UMICs as defined by the World Bank, see https://datahelpdesk.worldbank.org/knowledgebase/articles/906519- world-bank-country-and-lending-groups 9. like the Alliance for Affordable Internet (A4AI) 10. See https://www.speedtest.net/global-index 11. World Bank and UNDP (2022). 12. TeleGeography. 13. TeleGeography. 14. For more information on BELLA, see https://international-partnerships.ec.europa.eu/policies/programming/projects/bella-building-eu- rope-link-latin-america_en 15. See Thompson and Schweizer (2022), and https://www.datacentermap.com/. 16. ESCAP (2019). 17. GSMA Intelligence, Mobile by Market, https://www.gsmaintelligence.com/data/ 18. Gov.uk (2022), Benefits of Mobile Coverage, https://www.gov.uk/government/publications/benefits-of-rural-mobile-coverage/benefits-of-ru- ral-mobile-coverage#findings. 19. FAO. N.d. 20. Clarendon, Manchester, St Elizabeth and St Ann were the parroquias with the highest rural population in Jamaica according to the Census of 2010 (in 2022, a new Census was launched). For more information, see https://statinja.gov.jm/Census/PopCensus/ruralpopulationbyfive- yeargroups.aspx 21. Lodge and Stirton (2002). 22. Idem. 23. Idem. 24. Telecommunications Act 2000, see https://our.org.jm/about-us/our-legislation/telecommunications-acts-legislations/ 25. Fair Competition Act (FCA) 26. SMA 2020. 27. GSMA (2018). 28. FTC (2020). Digital Infrastructure 59 3. DIGITAL PUBLIC PLATFORMS A whole-of-government approach to facilitate service delivery and process improvement KEY MESSAGES » Jamaica’s decision makers understand the dividends of accelerating digital government adoption. In the past decade, Jamaica has made substantial advances in developing its public platform digital landscape thanks to eGov and the TIU, which engage in the execution and funding of digital initiatives. » Jamaican policy makers have been anticipating the establishment of the Information and Communications Technology Authority (ICTA) to address policy and leadership gaps. A shared vision is crucial to allocating strategic resources, resolving policy conflicts, and eliminating legal or administrative barriers. However, given the prolonged delays in launching the ICTA, Jamai- ca might consider implementing interim solutions to coordinate the digital agenda, possibly through an updated interim roadmap that could be incorporated into a more comprehensive strategy. » The GOJ should develop an extensive enterprise architecture and a whole-of-government approach to managing digital public platforms. Steps could include evaluating existing ICT sys- tems, developing a service catalog, setting up a data governance framework, developing govern- ment software architecture, and expanding the existing shared services layer. Major systems, such as public finance or social assistance, would benefit from a ministry-level enterprise architecture design, which can leverage the data generated for better decision making, promote cost savings, mitigate cybersecurity risks, and help prevent redundant systems. » Centralized management of core government systems is vital to achieving cost-effective, sustainable digital public platforms and seamless service delivery. A whole-of-government and “building-block” strategy could streamline ICT service procurement and management, such as data hosting, and also address unique needs within the ICT governance framework. Focusing on com- mon functions across agencies and centralizing their development would enhance interoperability. » As Jamaica implements its National Identification System, the GOJ has an opportunity to re- think interconnectivity and system interoperability using single sign-on systems to strength- en the Jamaica Data Exchange Platform. However, interconnected systems may increase con- tagion risks, emphasizing the need for comprehensive enterprise architecture, robust cybersecurity measures, and alignment with international standards to safeguard core systems from cyberattacks. A guiding body must develop a security and data protection framework with clear security policies, regular assessments and audits, employee training, and incident response procedures. Public Digital Platforms 60 3.1. The importance of digital public service delivery of government institutions. They proved platforms: Improving service delivery and critical during the COVID-19 pandemic, for example, and citizen expectations have increased as a result. core government systems Governments can boost digital public platforms by Digital platforms are electronic tools designed to digitalizing their operations and procedures. Digital exchange goods, services, or information between public platforms entail operating a set of foundational producers and users. In a nutshell, they facilitate the elements, including shared ICT infrastructure, such as flow of information and transactions to enable producers a government cloud, interoperability framework, appli- and users to create value by interacting with each other. cation programming interface (API), digital ID, and reg- Digital platforms can be public or private, such as, for ulatory framework for data protection. A second layer example, social networks and online marketplaces. This comprises core cross-cutting back-office government chapter focuses on digital public platforms and examines management systems, such as public financial manage- their capacity across three complementary levels (see ment information systems, human resource manage- Figure 3.1). ment e-procurement systems, and so on. These systems produce information that can generate public value and Digital public platforms can increase operational and improve strategic decision making within the government economic efficiency, improve service delivery, and through open data. An additional third layer is focused on facilitate innovation and economic development. the delivery of services leveraging the automation and The development of digital platforms is an essential lever information processes generated by cross-cutting sys- for the digital transformation of the whole economy. They tems and foundational elements. This layer consists of can transform how governments interact with citizens such critical features as the development of single citi- and businesses and optimize public value by reducing zen records, a single digital services portal, and the de- costs and improving productivity. They also enable new velopment of ID authentication services for public and service delivery models and improve the management private sector institutions. of public resources while providing timely information for the design and implementation of public policies. Digital Using a customized approach, the World Bank team platforms connect people and public institutions virtually assessed the maturity of Jamaica’s digital public and have the power to improve people’s lives in mul- platforms. The analysis was focused on key enablers tiple ways by enhancing the operational efficiency and and constraints to the development of digital public Figure 3.1. The Bank’s Approach to Digital Public Platforms Targets Three Levels of Capacity Single Authentication Government to sign-on (SSO) services Citizens services Service Delivery Government Citizen Government to portal Records Business services Integrated financial Tax & Customs HR management Core management systems Administration and payroll Government Systems Performance Data E-Procurement Management Management Digital ID and Interoperability registry Shared services framework Foundational Elements Electronic Document Data protection Centralized ICT Management Platform & Privacy Infrastructure (cloud) Source: Authors’ elaboration. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 61 platforms on the following dimensions: (a) institutional, Jamaica’s relatively good progress in developing strategic, and legal frameworks, (b) interoperability and digital government is reflected in the UN’s interna- shared services, (c) service delivery, (d) back-office sys- tional surveys on e-government, though other coun- tems, (e) platform enablers, and (f) platform constraints. tries in the region are ranked higher. Jamaica’s score An additional section was subsequently added to spot- on the UN’s E-Government Development Index rose light the implications of public platforms in the areas of from 0.4552 in 2012 to 0.5906 a decade later.1 Among tax policy and tax administration. the six countries from the region displayed in Figure 3.2 below, Jamaica was at the bottom in 2012 but quickly 3.2. Current state of digital public plat- improved its ranking the next time the survey was under- forms: Opportunities to improve service taken. Nevertheless, as of 2022, Jamaica still had work to do to catch up with comparator countries in the Ca- delivery and core government services ribbean (Trinidad and Tobago, Barbados, and Grenada). through digital transformation Other global benchmarks also place Jamaica behind Digital transformation is a complex and multidimen- LAC peers, especially in core government service sional process that often requires legal, institutional, delivery. Jamaica scored 0.541 on the World Bank Gov- technological, and cultural changes across govern- Tech Maturity Index,2 slightly behind the LAC average ment and the broader digital ecosystems. Carrying (0.547). Jamaica belongs to group B of the GovTech out the necessary reforms and implementing concrete Maturity assessment (which considers countries with a actions to drive digital transformation in a timely and ef- highly significant focus on GovTech), along with Bolivia, fective manner entails high-level political commitment, Costa Rica, Dominican Republic, Ecuador, El Salvador, a clear transversal mandate, and the development of Honduras, Panama, and Paraguay. Jamaica is particu- technical capabilities and human resources to support larly behind in the Core Government Service Index,3 with diverse, multidisciplinary digital teams. The successful a score of 0.458 compared to 0.58 for LAC. implementation of digital transformation policy begins with clear leadership, a vision of the desired outcomes, and the potential policy pathways to achieve them. Figure 3.2. Scores on the UN E-Government Development Index from 2012 to 2022 for Select Countries 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2012 2014 2016 2018 2020 2022 Barbados Grenada Jamaica Guyana Trinidad and Tobago Uruguay Source: UN E-Government Development Index. Public Digital Platforms 62 updating the legal framework, and serving as convenor Institutional, strategic, and legal frameworks for other institutions to implement the agenda across government. In the interim, pending the ICTA’s launch and the appointment of a Chief Information Officer, a pol- Jamaica’s decision makers understand the div- icy void remains, with no institution specifically responsi- idends of digital government. The GOJ has several ble for setting the policy direction for digital development. line ministries investing in digital platforms to increase the efficiency and efficacy of government functioning Currently, Jamaica needs a comprehensive digital and service delivery. Every institution seems to see government strategy that could be translated into an the digital agenda as a top priority, and Parliament has action plan. In the past decade, successive governments approved legislation to facilitate the use of technology in Jamaica have developed roadmaps and policies relat- across government. Despite the existing political will ed to a government digital transformation strategy and and the longstanding awareness of the benefits, how- cybersecurity, establishing a foundation for these goals. ever, Jamaica does not seem to have a clear roadmap Although these documents were helpful, they have not to reach its vision as a leading digital platform country in been sufficiently updated to serve as a practical guide the Caribbean. for addressing the constantly evolving digital challenges. The digital agenda is rooted in Jamaica’s Vision 2030 In the past decade, Jamaica has made substantial document, the long-term development plan published in advances in developing its digital public platform 2009. Other reference documents include a 2016 Road landscape thanks to the execution and funding of Map and Action Plan for ICT Transformation (the Blue- several institutions. The MSETT oversees the coun- print Report), a 2011 ICT Policy (i.e., the sector plan to try’s digital infrastructure and platforms. eGov is the support Vision 2030),8 and a 2018 Manual with ICT poli- MSETT’s powerhouse in managing digital platforms, cies, standards, and guidelines. The redefinition and ex- providing such services as cross support, software de- ecution of the digital strategy are intended to be the top velopment, procurement reviews, hosting, and informa- priorities of the ICTA. tion system management to other ministries, depart- ments, and agencies (MDAs). The Ministry of Finance Jamaica has an extensive legal framework to govern and the Public Service (MOFPS) oversees the TIU, the country’s use of ICTs. The framework consists of which among other responsibilities, leads the transfor- various laws and regulations that address several as- mation programme. This encompasses the build, test, pects of ICT use and governance. These laws and reg- and deployment of shared services and integrated gov- ulations aim to protect the rights of citizens, businesses, ernment public financial management systems. Recent- and government while promoting the development and ly, the Office of the Prime Minister, which plays a liaison use of ICT. When these laws follow international stan- role for interagency cooperation, initiated the National dards, they also help to ensure the security and privacy Identification System (NIDS) project, which aims to es- of personal data and provide a framework for regulating tablish a comprehensive and secure system to identify ICT services: and authenticate the country’s citizens and legal res- idents. Finally, the Office of the Cabinet manages the » The Data Protection Act (2020) regulates personal government’s portal for service delivery, setting strategic information collection, use, and disclosure. direction and facilitating coordination, technical support, and potential funding.6 » The Cybercrimes Act (2015) criminalizes comput- er-related offenses and provides for computer crime Although various modernization project initiatives investigation, prosecution, and punishment. are underway, major digital reforms are being held back until the Information and Communications » The ICT Act (2019) establishes the regulatory Technology Authority (ICTA) is launched. The ICTA framework for providing ICT services, including tele- is supposed to serve as the cornerstone of the digital communications, broadcasting, and postal services. reform agenda. The current action plans, blueprints, and roadmaps were crafted around the proposed ICTA, which was first planned in 2017. Though the legal ba- » The National Identification Systems (NIDS) Bill was approved in 2021 to establish a reliable data- sis is in place, it had yet to be officially launched at the base of all Jamaican citizens. A National Identifica- time of this writing.7 The intention is for eGov Jamaica tion Agency will be established to manage the NIDS to transition to the ICTA and become the country’s pri- project and its regulations. mary institution for directing strategic digital government, Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 63 information. This siloing can lead to inefficiencies, such as Interoperability and shared services duplication of effort (for both citizens and civil servants), lack of coordination, and missed cost savings. Moreover, the government cannot fully leverage its collected data The GOJ aspires to provide an interoperability lay- to improve services and decision making by integrating er resembling Estonia’s X-Road. An interoperability technologies such as business intelligence. Some infor- framework is critical to ensuring the flow of information mation systems are web service capable, but efforts to between government systems for decision making and synchronize the technology stack, standards, and proto- service delivery. The Jamaica Data Exchange Platform cols used are needed to enable full interoperability. (JDXP), currently at the concept stage, would allow for data sharing across government agencies, functioning much like the X-Road system used by the Government of Service delivery: government to citizens Estonia, which promotes secure and efficient data shar- and businesses ing to help improve the delivery of public services and reduce administrative burdens. Although other interop- erability platforms are available on the market, this is the Service delivery platforms provide a standardized model that eGov Jamaica has chosen to adopt. eGov technology framework to deploy digital public ser- has developed a roadmap for the rollout of the JDXP, vices. A service delivery platform is a set of compo- with a first release targeted for the first half of 2023. nents that provide a service delivery architecture (such Functionality at this stage will be limited to data valida- as service creation, session control, and protocols) for a tion and retrieval, and the objective is for MDAs to be service delivered to the consumer—whether a custom- able to exchange data through the platform. Still, some er or another system. These platforms often require the may have difficulty reaching this goal because they can- integration of IT capabilities and the creation of services not develop the required APIs. Sustainable funding for that cross technology and network boundaries. They typ- the JDXP has yet to be identified, but eGov has been ically provide environments for service control, design, funding its development thus far by drawing from internal orchestration, execution, and monitoring. resources and collaborating with experts from other GOJ projects. The Office of the Cabinet oversees the government’s service delivery platform, www.gov.jm, and is cur- The TIU is working on a shared services platform rently working on issuing an updated version with that combines many of the government’s core func- more end-to-end digitalized services. A steering com- tions, such as human Resources, payroll, procure- mittee of representatives from different government de- ment, and financial management. By using APIs and partments and agencies assists in the decision making standards, the TIU aims to improve interoperability be- on this platform’s development. eGov technically main- tween these systems and increase their operational ef- tains the platform and provides links to various online ficiency. This shared service platform is crucial to mod- services organized by category, such as passports, li- ernizing the government’s IT infrastructure, as it helps censes, security, justice, and health. However, very few to standardize processes, simplify procedures, and lay of the services listed are entirely digitalized. Some are the foundation for future digital integration and cost sav- hybrid, where services are partially digitalized online but ings. One example is the Human Capital Management still require a physical visit to the required office to finish. Enterprise System (MyHR+), a commercial off-the-shelf Most others are informational only, listing the document (COTS) product developed by Quidgest, a software de- needed for the service and the physical address of the velopment company out of Portugal. It is customized as office(s) to visit. The Cabinet Office’s objective for phase needed for the specific requirements of the GOJ. Cur- one of the government portal was very limited: to provide rently, MyHR+ is used by 40 entities and over 67,000 a single source of information to residents and business- workers, with a user-friendly interface for employees es on which MDAs were responsible for which services and a backend for entities to manage human resource and the requirements to obtain them. matters. Additionally, eGov is exploring the concept of shared services to unify government communication and Among the services that citizens and businesses server hosting through govMail, govTalk, and govCloud. can access through the government portal, the abil- ity to review and pay taxes is one of the most ad- Despite these initiatives, interoperability between vanced. Users can sign into the portal to pay their taxes GOJ databases is still limited. Even though sever- or be directed to the TAJ systems to access more infor- al ICT systems are hosted and managed by eGov Ja- mation about their accounts using their tax registration maica, their databases do not yet communicate, and number (TRN). TAJ developed the taxpayer systems for information is shared only in limited instances. With a its own purposes, but the payment application in the por- few exceptions, most information systems are not con- tal is available for all MDAs to receive fee payments from figured to access and share data, resulting in silos of citizens and businesses. Public Digital Platforms 64 The Office of the Cabinet has undertaken a compre- Administration Information System (RAiS), Automated hensive evaluation of GOJ services to identify prior- System for Customs Data, MyHR+, TuboPay – Payroll ities for re-engineering and digitalization and to inte- System, and Electronic Public Procurement System grate them into the second version of its platform. A (ePPS). The new Public Investment Management Infor- consulting firm was hired in 2019 to develop a tool to as- mation System (PIMIS) was still being implemented as sess the technical needs and institutional hurdles of the of January 2023, and its agreed launch date has been 50–60 MDAs in their efforts to digitalize their services. delayed by over a year. PIMIS was initiated under a The process has resulted thus far in information on 281 World Bank–financed project (the Strategic Public Sec- services offered by about 40 MDAs. The assessment tor Transformation Project), financed entirely by the GOJ includes key service characteristics, such as volume of after the loan closure in December 2022. transactions, and what would be required to streamline work processes and digitalize the service from end to The MOFPS has aspired for several years to create end. The Cabinet Office aims to integrate the require- a consolidated software architecture, the Jamaica ments of the selected MDAs into a project proposal that Integrated Financial Management Information Sys- can be submitted to the Public Investment Management tem (JIFMIS) (see Figure 3.3.) The system is intended Committee for funding consideration. The goal is to to streamline financial processes, reduce manual data provide more end-to-end digital services in the second entry and errors, and provide real-time information to phase of the portal,12 with added functionalities such as policy makers to improve the quality of public financial chatbots to enhance the base software. reporting and decision making across the various plat- forms MOFPS uses. It would also be expected to im- The digitalization of services and the review of pro- prove user functionality and enhance data security and cedures could be challenging and slow to complete, transparency across platforms. Yet despite broad con- as the financial and technical capabilities of MDAs sensus across the MOFPS on the value of JIFMIS, it has vary. The Office of the Cabinet is intervening to assist not moved from the concept stage to a formal project them in digitalizing services to populate the government funding proposal. The MOFPS acknowledges that the portal and mainstream the process. However, once the momentum that was present before the pandemic has review is finalized, the GOJ must ensure the sustain- slowed, and focus has been redirected to other areas, ability of these services. To overcome this challenge, even though a JIFMIS committee still exists. the GOJ could adopt a governance framework and ca- pacity-building strategy that ensures that new services The MOFPS has a decentralized approach to govern- offered are fully integrated with the existing information ing its information systems, with individual depart- system of the respective MDA and not treated as a sep- ments responsible for the day-to-day operations and arate project. Moreover, in some services, the workflow functional management. eGov Jamaica is a preferred process requires the intervention of several entities, pos- partner for hosting and managing the technical needs ing a potential problem of ownership that could be ad- of these systems without interfering with the core busi- dressed in the governance framework. ness or interoperability. However, other systems, such as the budget planning systems, are hosted by the soft- Back-office systems ware vendor, which could present limitations when inte- grating different systems. The governance model is so Government back-office systems are a vital ele- decentralized that there is no comprehensive inventory ment of digital public platforms. Back-office systems of its back-office systems, leading to a fragmented IT are used to manage government operations, and al- landscape. However, the TIU has recently taken steps to though citizens do not directly see them, they ensure the consolidate and interconnect some core systems. upstream delivery of public services. Such systems comprise processes in key cross-cutting areas, includ- The TIU is creating a shared services platform with ing budget management, accounting, customs, revenue performance management and a help desk system. administration, asset management, procurement, and The TIU integrates the government human resource payroll management. The digitalization of government system, MyHR+, the government financial management systems has played a crucial role in the initial stages of system (GFMS) used to manage public expenditures, the digital transformation journey of many countries. ePPS, and other back-office functions, such as payroll and pensions, used by different MDAs. The TIU is build- The MOFPS oversees several back-office systems ing a technological layer where the applications could that support the government’s core functions. These interconnect using APIs. A dashboard with business in- systems include the Budget Preparation and Manage- telligence supports the shared services layer and has a ment System, Public Debt Management System, Cen- dedicated help desk to assist users from different MDAs. tral Treasury Management System (CTMS), Revenue Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 65 Figure 3.3. JIFMIS Architecture JIFMIS Architecture JIFMIS PFM Functions JIFMIS JIFMIS Portal Suppliers’ Expenditure/ Internet Portal Budget Commitments Payments Suppliers Information Management Management Management GoJ’s Revenue/ External Users Government Receipts Cash Fixed Assets Systems Business Management Management Management GovNet Transactions BPMS General Ledger, Accounting & Fiscal Reporting CS-DRMS Ad hoc Middleware PDMS Reporting (SOA, CSD interfaces MyHR+ Web/Application Server & data PEPAS exchange) Two-Factor Digital TurboPay Authentication & Signature Audit Trial ePPS Access Control Certificates GovNet/ TRD VPN/ RAiS Inbox, email, Internet ASYCUDA Workflow Business Rules SMS RTGS ACH SWIFT Electronic PIMIS Reporting Tool Database Documents Asset Mgt Management eGov Infrastructure Government Data Centre (GDC) Security GovCloud Cyber Security Policy Information (SSL, PKI, FW, GovNet IPS, SIEM, EMS, etc.) Physical (Biometric access, Hardware & Network CCTV, perimeter, fire, etc.) Source: Government of Jamaica. MyHR+ could be a blueprint for a back-office sys- MDAs are strongly encouraged to use the ePPS to con- tem, demonstrating the possibility of centralizing duct procurement activities, though this is not enforced core government operations. The advanced human from end to end. The MOFPS does not have a process resource management system offers distinct levels of to collect and evaluate system feedback, nor are signif- access based on job function. It enables employees to icant upgrades anticipated. However, performance data access their data, schedule leave, submit claims, re- and system improvements could be upcoming for ePPS quest salary advances, register for training, and contact following the decision to integrate it into the TIU’s shared the MyHR+ team to address technical issues. The HR/ services platform. payroll department can access more advanced features, such as recruitment, payroll processing, performance The TAJ system serves identification purposes and appraisal, and competency management. The system data exchange. The TRN is used to identify accounts offers enhanced efficiency, standardization, data analyt- but is not used as a login. The TRN is used by entities ics, and secure data management. that collect/withhold taxes and some social services. The tax primary payment system is developed and managed The ePPS program could prove that the decentral- by TAJ but is hosted by eGov. The application uses an ized approach to back-office system design, without off-the-shelf core system called GenTax, which is updat- clear guidelines, could lead to inconsistency in qual- ed periodically by the vendor. Data exchange is estab- ity and reliability. ePPS is one of the newer applications lished with other entities, such as the customs agencies. under the authority of the MOFPS, but reliable data on its Cybersecurity is managed by eGov, with a risk manage- functionality and benefits to users are unavailable. There ment unit within TAJ. This tax system is one of the most is anecdotal evidence that users in some MDAs have ex- developed within the MOFPS government-to-govern- perienced challenges in using all the system’s features. ment (G2G) landscape. Public Digital Platforms 66 to ensure commitment from all stakeholders, including Platform enablers political leaders, department heads, IT leaders, and oth- er key decision makers. More extensive centralization of ICT functions with- The whole-of-government approach in government would provide efficiency gains and and best practices help mitigate skills shortages. Utilizing economies of scale can lead to cost savings and more efficient use Jamaican decision makers are generally counting of resources. A centralized ICT team can also respond on the creation of the ICTA to drive the development effectively to crises, such as natural disaster risks or sig- of a comprehensive strategy to guide the nation’s nificant cyberattacks, by coordinating a swift and well-in- digital transformation. Building a solid institution capa- formed response. Additionally, a centralized ICT function ble of exercising convening power to rally key Jamaican could help attract highly skilled ICT specialists because stakeholders is a crucial step toward a successful digital it is often seen as a desirable work environment, with agenda. A common challenge encountered by the GOJ opportunities for professional development and expo- in previous attempts to modernize the public sector was sure to a broader range of technologies and practices. the leadership required to enforce mandates. The ICTA The shortage of skilled IT specialists was identified as would play a key role in promoting interoperability and a challenge for the GOJ during this assessment (see ensuring standardization across MDAs. The GOJ hopes Chapter 6). the ICTA becomes an evolved version of eGov with more institutional strength and financial and human resources. Digital ID and trust services A whole-of-government approach can only be Jamaica does not currently have a foundational ID achieved if GOJ information systems are designed that serves as general purpose identification usable and developed following a well-defined enterprise across all activities.13 Instead, the country has function- architecture. The approach requires seamless collab- al IDs, such as passports, electoral IDs, driver’s licens- oration and communication between government agen- es, and also the TRN, which is Jamaica’s most common- cies with clear leadership and vision. Proper software ar- ly used form of ID. The TRN is a unique, 10-digit number chitecture provides a clear and consistent framework for assigned to every Jamaican taxpayer and used for var- designing, building, and integrating software systems. ious government transactions, including filing taxes and It also ensures that the various systems are compatible accessing social services. It is also required for other and can communicate with each other effectively, fol- activities, such as opening bank accounts and obtaining lowing standards and protocols while providing privacy a driver’s license. The proportion of the adult population and security. Authorities believe the ICTA will be given with a TRN is unknown, but it is essential for registering the mandate and resources to develop the government’s a business with the Companies Office. enterprise architecture; however, to succeed, the ICTA must acquire the appropriate expertise and have the co- Jamaica is currently in the process of introducing a operation of GOJ stakeholders that are currently accus- new, distinctive, and unified ID system that is both tomed to the siloed approach. digital and physical. The new ID card will be equipped with a chip and a QR code, allowing for secure and ef- Before embarking on a comprehensive enterprise ficient verification and access to government services. architecture, Jamaica could take foundational steps This unique ID system should be Jamaica’s foundational to a broader strategy. The goal would be to jump-start ID to help increase security and reduce fraud. Additional- the process of setting up the enterprise architecture in ly, the GOJ plans to integrate digital ID into government order to ensure interoperability and data exchange in up- digital platforms to further streamline procedures. A ded- coming information system procurement. One of these icated Identification Agency would manage the ID, while steps could be understanding the current ICT landscape the physical infrastructure would be hosted and man- by comprehensively assessing the existing systems, aged by the ICTA.14 It is planned for the TRN to remain including applications, databases, hardware, software, separate from the NIDS, but for those who have it, the data flows, and network infrastructure. Another step TRN will be their national ID number. As part of the plan could be to develop a data governance framework to to develop the digital ID, the GOJ awarded US$4 million agree on data standards, classifications, security, and to Fujitsu Limited to digitize vital records at the Registrar quality. Finally, the government could define an archi- General’s Department, the repository for all records of tecture vision and develop a roadmap. Achieving these births, marriages, deaths, and deed polls.15 goals might require establishing a high-level committee Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 67 The GOJ could use the momentum of the digital ID strategy, including cloud hosting, to ensure the effective to set up single sign-on (SSO) for government-to-cit- and secure use of its data. izen (G2C), government-to-business (G2B), and G2G use. SSO is a system that allows a user to use one set The open data portal in Jamaica has the potential to of login credentials to access multiple applications or be a valuable resource for transparency, account- services. The Jamaican government could already im- ability, and informed decision making. However, the plement an SSO module without waiting for the official portal’s data are outdated because of the lack of regular launch of the digital ID. In the meantime, the system updating, reducing the data’s effectiveness,16 usefulness, could use the TRN or any other unified form of ID. The and credibility. To be practical and beneficial, open data Jamaican government could pilot SSO for G2G before should be made available automatically without requir- launching a G2C/G2B version. The eventual integration ing additional effort for extraction and publication. Thus, of biometrics through the NIDS could also be used to although Jamaica’s open data policy is encouraging,17 it strengthen SSO systems. must be accompanied by practical measures to ensure that data are reliably updated and publicly available. To Data management and hosting this end, the government must prioritize the implementa- tion of a robust data management system that supports Data should be treated as a key strategic asset to the timely and regular release of information. generate public value. When governments approach data as a strategic asset, it can open the door to creating Online payments and digital currency value by leveraging new technologies. Thus, the GOJ should purposefully shift away from managing siloed The GOJ is promoting greater financial inclusion datasets and allow data to become a driver of innova- through online payments for government services tion and growth by improving strategic decision-making and the rollout of a digital currency. The TAJ e-Ser- capabilities and enabling data sharing between different vices portal accepts online payments for government digital government services. How fast the government services, including the payment of taxes, utilities, licens- can reap the benefits depends on key supporting ele- ing fees, and various other government-related services ments, such as a solid technical foundation, a strength- using a credit or debit card or a direct bank transfer. Ad- ened data governance framework, the prioritization of ditionally, some individual government agencies, such data sharing associated with the user journey in each as the Jamaica Public Service Company and the Island event, and privacy and data protection settings. Traffic Authority, offer online payment options. An ac- count must be created on the TAJ website to use the The TIU and eGov are consolidating government in- e-Services portal. In addition to payments for govern- frastructure and upgrading the GOJ’s data center. ment services, the GOJ hopes to promote financial in- eGov has a data center with near Tier-2 capabilities (not clusion through JAM-DEX18 and its digital wallet LYNK®, certified) and is upgrading it to Tier-3-equivalent spec- as they allow payments for different services without ifications to consolidate government servers for better needing a bank account (for more information, see management and security. The TIU is collaborating with Chapter 4). eGov to provide technical expertise and funding for the data center’s upgrade. It is also investing in extending GovNet, a wide area network that links various MDAs Platform constraints through fiber-optic connections. However, there is no concrete timeline for how quickly the upgrades can be implemented. Institutional challenges The Jamaican government faces several challenges in its data management practices due to limited host- The absence of a leading structure to set up the nec- ing capacity, the absence of a cloud policy, and off- essary policies, frameworks, and standards impedes shore vendor hosting. Most of the systems are hosted data sharing, interoperability, and cybersecurity by eGov, but there is limited use of cloud technology, and goals. The ICTA is meant to be the institution that would the policy surrounding it remains unclear. As a result, the enable Jamaican government information systems to government’s ability to leverage the benefits of the cloud, interconnect and share data without posing challenges such as increased flexibility and scalability, is hindered. to data availability, integrity, and security. While waiting Additionally, some critical systems, such as the budget for that transition, eGov plays a limited role in ensuring system, are still hosted offshore by vendors, which cre- basic standards in procuring government information ates concerns about data security and sovereignty. The systems. However, eGov is not enforcing guidelines for Jamaican government must address these issues and data standards, classification, cybersecurity, interopera- develop a clear and comprehensive data management bility, and virtualization, as such guidelines either do not Public Digital Platforms 68 exist or are outdated. Currently, eGov lacks the neces- these systems, meaning that the GOJ is missing an op- sary institutional support and staff to manage the exist- portunity to introduce better efficiency, data consisten- ing architecture effectively. The TIU is also working on cy, and mitigation strategies for security vulnerabilities. consolidating the government’s core functions with more These current governance problems are impeding the substantial support from the MOFPS. government’s ability to manage and utilize its back-of- fice systems effectively. Even the TIU’s consolidation Jamaica needs interim solutions for the develop- project is problematic because its systems were devel- ment of its digital agenda while it awaits the ICTA oped following different software architectures and data and a formal digital strategy. An interim updated road- standards. map is needed to ensure that a realistic digital transfor- mation, adapted to the country’s specific needs, can take The fragmented development of back-office systems place. Once developed, this interim roadmap could be (G2G) can hinder the delivery of effective G2C and integrated into a larger strategy. While the government G2B services. This siloed approach leads to inconsis- is awaiting major reforms, however, MDAs are likely to tencies, inefficiencies, and higher costs due to disparate, continue their modernizing efforts without following any non-integrated systems. Instead of adopting an API- specific guidelines, which might later jeopardize inter- based architecture, MDAs are developing their applica- connectivity and security. By taking proactive steps, such tions as stand-alone entities, making it difficult for them as issuing standards for all MDAs in data classification, to provide a seamless experience for businesses and for example, the government can ensure that the solu- individuals. The lack of integration also increases risks tions being implemented are in accordance with stan- to privacy and security. When systems are scattered, dards that ensure security and interoperability, among they are likely to be protected by different defense sys- other objectives. tems that may vary in their level of protection, making it more difficult to implement consistent security protocols Despite the TIU’s intervention, the governance of and leaving some systems more vulnerable to security back-office systems is currently a challenge that threats. The result is likely to be increased costs and in- is impeding a whole-of-government approach. The efficiencies in the digital transformation process. TIU’s consolidation project is a step in the right direction. Nevertheless, like the modernization efforts, Jamaica’s It may benefit eGov to prioritize its interventions back-office systems, which support the operational and to allocate its limited human and financial resourc- administrative functions of government, are often devel- es more effectively. While eGov is involved in sever- oped independently, without a clear overarching strate- al initiatives, some of its projects, such as the JDXP, gy. There is also a lack of adherence to standards across govMail, govChat, and govCloud, appear to be facing BOX 3.1 Development of a Sector-Wide Social Protection Information System Under a US$20 million IBRD operation, the So- Although the ministry will coordinate closely with cial Protection for Increased Resilience and Op- the various ICT authorities in Jamaica and a tech- portunity Project (SPIRO), the Ministry of Labor nical working group for the project’s IT activities will and Social Security (MLSS) will be developing an be established, there are several risks involved, integrated Social Protection Information System given capacity limitations within the MLSS and (SPIS), which the sector currently lacks, as a sin- eGov and the absence of an overarching ICT gov- gle registry, modular system for social assistance ernance framework. The working group, which will programs. It would be unified with a central intake include MLSS, eGov, and MSETT representatives, system as a single-entry point to all its services, will attempt to mitigate these risks through techni- with an advanced case management function. The cal oversight of all the IT activities (procurement current TRN would be used as a unique identifier and development) in the project to ensure that the until the launch of the national identification number SPIS complies with all forthcoming legislation and (NIN). The SPIS is aimed to become a multi-sector, national ICT standards. multi-agency system but would be launched initially to incorporate a few key programs and services at the MLSS. Source: Author’s elaboration. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 69 development challenges. To ensure the efficient use of to other countries in the region, but the cost of connec- resources, it is crucial that eGov carefully consider the tivity remains high (more details can be found in Chapter trade-off between investing in in-house development and 2). The government has made efforts to improve access procuring off-the-shelf solutions. For example, other gov- to the internet, particularly in rural areas and schools, ernment agencies have adopted commercially available through such initiatives as the Universal Service Fund solutions for productivity tools at the same time that eGov (USF) and the Connect Jamaica Project. Despite the is developing similar tools internally. Although eGov has agreements with operators to ensure free access to gov- a vital role in shaping the Jamaican digital landscape, its ernment services, the high cost of internet access could decision making should be based on economic consider- remain a barrier, and many individuals may not be accus- ations and the need for customization. tomed to using the technologies and devices involved. Platform management and cybersecurity Digital literacy among both government employees and citizens is critical to implementing digital gov- Utilization of technology in government operations ernment services. Digital literacy refers to the ability cannot be effective without clear IT architecture, a to use digital technology and devices to access, under- system inventory, and virtualization directives. The stand, and create information, a crucial skill if citizens are lack of a well-defined IT architecture hinders efforts to to benefit fully from digital government services and with- align technology with the government’s digital goals. The out which uptake and use of those services is likely to be absence of a government IT system inventory exacer- low. Government staff also need a certain level of digi- bates this problem by making it difficult to determine the tal literacy to effectively support these services. In fact, scope of technology assets and infrastructure available the shortage of skilled government personnel to perform for use or to update them if needed, leading to poten- advanced IT functions presents a significant challenge. tially duplicated efforts and misaligned investments. The lack of expertise in data analysis, cybersecurity, and Furthermore, utilizing cloud technology, an increasingly software development, and the failure to attract and re- crucial component of modern IT infrastructure, without tain skilled IT personnel, can negatively impact the gov- virtualization and a clear-cut cloud policy, would create ernment’s ability to deliver major digital platform reforms, challenges. A comprehensive IT architecture, inventory keep pace with technological advancements, and imple- management system, and virtualization/cloud policy di- ment the latest digital tools and solutions to enhance ser- rectives should therefore be developed and implement- vice delivery, increase efficiency, and improve decision ed promptly to address these concerns. making. To address this issue, the government must fo- cus on developing strategies to attract, train, and retain The GOJ has a set of policies and initiatives to ad- talented IT professionals to ensure that it is equipped to dress cybersecurity challenges, but they are not in- meet the demands of the rapidly evolving digital land- tegrated into an updated and defined cybersecurity scape. As mentioned above, the centralization of IT func- strategy. The GOJ has a cybersecurity document from tions could help mitigate this problem, though other mea- 2015 that is being updated as well as a Cyber Emergen- sures may also be needed (more information on digital cy Response Team (CERT), but the latter’s role is more skills can be found in Chapter 6). informative than strategic or operational. Meanwhile, as noted above, MDAs currently are individually responsi- The government must ensure that all citizens, includ- ble for their cybersecurity and do not have a reference ing those without a digital ID, are able to access es- policy framework to follow. After it is developed, the cy- sential government services. Jamaica’s development bersecurity strategy must be revisited and assessed pe- of a digital ID for service delivery is a positive step toward riodically to guarantee business continuity and to ensure modernizing and streamlining government services. To that it has the capacity to recover from manmade and ensure that no one is left behind in the transition, alter- natural disasters. The absence of a defined cybersecu- native ways of accessing services must be provided to rity strategy is particularly critical as the country moves those without a digital ID and/or extra assistance in ob- toward implementing a digital ID (see Chapter 7 on the taining the digital ID offered to those who do not have it. Trust Environment). Developing a multichannel digital government ser- Uptake and accessibility vice that uses the same information system in the delivery process is critical to accessibility and effi- The GOJ has a partnership with telecommunications ciency. Citizens should be able to access government operators to guarantee citizens free access19 to gov- services through various methods, such as a website, ernment platforms, but this might not be enough to mobile app, text, phone call, and/or in-person inter- increase adoption. According to the ITU, Jamaica’s in- action. The information system should be the same ternet penetration rate of 70 percent20 is high compared as any commercially available customer relationship Public Digital Platforms 70 management tool, regardless of the channel used. For In October 2021, the GOJ was a signatory to the example, if a citizen calls an operator to perform a ser- historic global agreement on a two-pillar solution vice over the phone, the operator should use a dedicated to address the tax challenges of digitalization.24 25 or similar interface to the web version that would interact Pillar One of the agreement foresees re-allocating tax with the same information system used by another citi- revenues to market jurisdictions, meaning where the zen on their mobile phone. This principle allows citizens goods were consumed, and simplifying transfer pricing to choose the best method for them and is inclusive to for routine activities. Pillar Two will see a global minimum those who may not have access to specific devices or to tax of 15 percent (effective rate) and measures to ad- the internet. dress low taxation on intra-group payments, including royalties and service payments. The World Bank has produced guidance for countries applying the minimum tax, including policy options and administrative steps for Tax policy and administration implementation.26 Timely implementation of the global minimum tax, Global tax policy reforms arising from digitalization including structured consultation with key stake- holders, can provide certainty to businesses and Digitalization of the economy has created challeng- protect the tax base. The GOJ may need to protect its es and opportunities for tax policy and tax admin- tax base by implementing a qualified domestic minimum istration for countries across the globe. The past top-up tax to prevent another country from applying a decade has seen an intensive effort to bring much-need- top-up tax on profits generated in Jamaica. In addition, it ed reforms to the international tax framework under the should examine its fiscal incentive regime to ensure that pressure of digitalization and globalization. Much of this it complies with the new rules and continues to attract reform was driven by the G20 and OECD countries. In investment that delivers sustainable employment. recent years, non-OECD countries, including developing and emerging economies, have taken a far more proac- The GOJ should also implement international gen- tive role in shaping the tax reform agenda through the eral consumption tax (value added tax [VAT]) stan- OECD/G20 Inclusive Framework on Base Erosion and dards to ensure that digital supplies and online trade Profit Shifting (BEPS) (the Inclusive Framework), which are subject to tax and that there is a level playing now has representation from 142 countries. Notably, the field for business. The BEPS process included recom- GOJ has been prominent in representing non-OECD mendations on the leakage of VAT revenues, which have members and developing countries as the co-Chair of arisen as goods and services that would have been sub- the Inclusive Framework.22 ject to VAT are now being delivered through electronic means, such as online streaming, gaming, software ap- The GOJ has been proactive in implementing the plications, and so on, in addition to goods sold through BEPS minimum standards and voluntarily adopting online marketplaces for importation. This is a challenge the guideline on automatic exchange of informa- that many countries have faced and are addressing tion of financial account information, with the first through the modernization of VAT legislation accord- exchanges taking place in 2022. Implementing these ing to international standards. Failure to address these global standards is critical to addressing profit shifting challenges not only impacts revenue collection but also and tax evasion. It will be important to ensure that the full leads to an unlevel playing field for operators (online and benefits arise from these reforms, including optimizing traditional) in Jamaica. the use of information that Jamaica receives from other countries, in part through systems developed by TAJ. The GOJ should continue the ongoing process of modernizing tax legislation. In particular, the govern- The GOJ should consider implementing new inter- ment’s intention to update excise tax legislation is wel- national standards on the automatic exchange of come, as this can facilitate the use of digital systems for information relating to income earned on internet effective and efficient controls while reducing compliance platforms currently being applied globally.23 This in- burdens on taxpayers. formation can help monitor the growth of the platform economy in Jamaica, keeping in mind that the key plat- Additional benefits of the digitalization of tax form businesses are established outside the country. administration The new standards can also assist Jamaica in ensur- ing that digital platform operators comply with their tax Digitalization of tax administration can benefit both obligations, even as the benefits of the platform econo- businesses and individuals, as it can boost tax mo- my for small business and individual entrepreneurs are rale, increase tax certainty, and deliver operational recognized. efficiencies. Continued investment in digital solutions is Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 71 essential and has been recognized by the OECD’s Fo- halls, seminars, and workshops; it also provides “how-to” rum on Tax Administration through the Tax Administra- documents on its website, and personalized client ser- tion 3.027 initiative, which sets out a vision for the digital vice is available in person, by telephone, and by email. transformation of tax administration under which taxation becomes a more seamless and frictionless process over Modern tax administration also requires investment time. in internal programs that support tax compliance through risk analysis systems. As acknowledged in Given the importance of the tax system for Ja- the recent Tax Administration and Diagnostic Assess- maica’s economy and society, it is essential that ment Tool (TADAT), TAJ has shown remarkable improve- there be continued investment in the development, ment since 2015, particularly in implementing the RAiS. maintenance, and improvement of the IT systems The RAiS has provided TAJ with greatly enhanced com- necessary for the efficient collection of taxes and pliance capabilities for taxpayer registration as well as compliance activities. Digital transformation of tax ad- better data cross-matching, interoperability, report gen- ministration will take many years and requires multiple eration, risk scoring, and compliance identification and efforts to realize the full benefits. This includes the co-de- tracking. However, further improvements can and should velopment of many of the building blocks of future tax be made to continue the digital transformation process. administration with other parts of government, private In excise taxes and the general consumption tax, there sector actors, and the international community. may be scope to implement real-time information sys- tems to support compliance, including for movements The GOJ has made significant progress28 in modern- of excisable goods, that can assist in protecting tax izing tax administration for taxpayer-facing systems revenues. and information on self-assessment tax filing and in supporting voluntary compliance. Jamaican taxpay- Digital transformation in TAJ can be supported by ers use electronic filing extensively, which is mandatory developing a medium-term strategy/roadmap. In this and available for all core taxes. TAJ reports that at least context, it is critical that the ongoing digital transforma- 80 percent of declarations are filed online for each core tion is integrated into all areas of tax administration and tax, and 99 percent of large taxpayers file core tax dec- supported by robust governance and project manage- larations electronically. TAJ invests in a public education ment structures led by top management. program, including traditional media, social media, town Public Digital Platforms 72 Table 3.1. Digital Public Platforms: Key Challenges and Opportunities Strengths Areas for Improvement » There is a long-term vision among stakeholders to » Despite the TIU’s shared services platform, interope- digitalize public platforms. rability between GoJ databases is still rare. » Expertise is being developed through government » No system inventory exists government-wide or within institutions, such as eGov and the TIU. the MOFPS. » The government has an existing portal that the Office » The current decentralized approach can result in of the Cabinet is updating following a list of prioritized duplication of effort and stretched human resources. A services for digitalization. centralized approach to systems management may be more efficient. » There are several ongoing digitalization projects, including NIDS, PIMIS, shared services platforms, etc. » There is no updated digital strategy or interim action plan. » eGov is central to most of the digitalization initiatives, either hands-on or consultative. » Policies and initiatives addressing cybersecurity challenges are not integrated into an updated, defined » The TIU is working on a shared services platform that cybersecurity strategy. combines many of the government's core functions, such as human resources, payroll, procurement, and » Many data management challenges are due to limited financial management. hosting capacity, the absence of cloud policy, and offshore vendor hosting. » A comprehensive legal framework governs Jamaica’s utilization of ICTs. » The open data portal is not updated regularly, reducing its effectiveness. » The GoJ has a partnership with telecommunications operators to guarantee citizens free access to government platforms. Opportunities Challenges » The launch of the ICTA could guide the nation’s digital » Policies and standards for data sharing, interoperabili- transformation. ty, and cybersecurity are pending the launch of the ICTA or an equivalent leading structure. This lack of » The ongoing development of NIDS, a new, unique, leadership impedes the whole-of-government and unified ID system, could be used to set up an approach. SSO for G2C/G2B and G2G use. » There is a lack of coordination in developing the » The TIU and eGov are consolidating government service delivery platform, with each MDA developing infrastructure and upgrading the GoJ’s data center. its own services without guidelines to ensure data exchange and reuse or reliance on an interoperability » Using building blocks for the digitalization of service layer. delivery could reduce costs and help articulate a digital enterprise architecture. » Despite the eGov and TIU structures, there is a lack of clear IT architecture, system inventory, and virtualiza- » eGov is developing a data exchange platform (JDXP), tion directives. but it is still in its early stages of development and requires institutional support and funding. » There is a shortage of skilled personnel to perform advanced IT functions, including data analysis, » With regard to data management, more extensive cybersecurity, and software development. centralization of ICT functions within government would provide efficiency gains and help mitigate skill shortages. » eGov should allocate its limited human and financial resources more strategically, as some of its projects, such as govMail, govChat, and govCloud, are available commercially off-the-shelf. » The open data portal in Jamaica has the potential to be a valuable resource for transparency, accountabili- ty, and informed decision making. Source: Authors' elaboration based on digital economy assessment. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 73 3.3. Recommendations: Clarifying the polit- the ICTA in implementing the digital agenda should be ical and institutional authority, centralizing set realistically, taking into account Jamaica’s political economy context and its experience with other digital re- management of ICT assets, and adopting form efforts, for example, the TIU and eGov. Regardless a “building-blocks” approach to services of how implementation duties are allocated, a high-level online governing body (at the political level) is needed to op- timize resource allocation across objectives, to resolve The GOJ must thoroughly assess its financial and policy conflicts, to establish targets, and to remove stub- policy options when developing its digital strategy born legal or administrative obstacles that arise. No sin- to ensure that it can be realistically achieved and gle best model exists for organizing the institutional lead- sustained. The current Vision 2030 and ICT Sector Plan ership for digital transformation, as countries have used do not provide enough guidance and should be updated multiple approaches. However, it is critical that the in- to consider recent technological advancements, chang- stitutional leadership reflects the perspective of not only es in citizen and business expectations, and new cyber ICT leads, but also business process owners. threats. The digital strategy should also consider the government’s financial parameters and prioritize goals Centralizing the management of ICT assets is cru- based on explicit assumptions about financing, includ- cial if Jamaica is to achieve cost-effective and sus- ing base and high-case scenarios. Failing to include an tainable digital public platforms. The fragmented indicative resource envelope in sector strategies and approach to managing digital assets and information plans can lead to difficult trade-offs and incentivize un- leads to higher costs and excessive human resource achievable goals. demands, making it unsustainable. This fragmented sys- tem also weakens the government’s ability to maintain The GOJ should develop an enterprise architecture and improve the systems, increasing the vulnerability of for a whole-of-government approach, starting with both front- and back-end systems. A whole-of-govern- an Enterprise Architecture Vision document outlin- ment approach would better utilize financial and human ing the main direction of and standards for future resources by focusing on efficiently procured and man- ICT initiatives. Developing a comprehensive architec- aged ICT services, such as data hosting. Although some ture could seem an intimidating process, as it requires government agencies may have unique needs, these major resources, substantial political will, and a societal can be handled within the overall ICT governance frame- consensus. However, some of the steps highlighted be- work. Consolidating the management of ICT assets will low could be operationalized by existing structures, such allow Jamaica to achieve its digital transformation goals as eGov, the TIU, and other ICT leaders from line min- more effectively. istries. Ultimately, these steps could facilitate—and be reused for—a more comprehensive architecture down Human resource policies should incorporate suf- the road: ficient flexibility and innovation to ensure that the GOJ can access the talent required to sustain dig- » Elaborate a data governance framework ital government. In many countries, experienced ICT professionals are difficult to attract and retain within the » Proceed to an inventory of the ICT systems and public sector due to rigidity in public sector pay scales digital services and competition from the private sector. Jamaica is no exception and faces added pressure from outward mi- gration to neighboring countries. The government needs » Rationalize and centralize selected ICT functions to develop strategic approaches on attracting and retain- ing individuals with the right mix of skills. Some agencies » Establish interoperability standards have already begun to target new university graduates with the prospect of intensive on-the-job learning oppor- » Build on the existing shared services layer tunities but with no expectation that they will commit to public service. Some countries use market-based wage premiums to compensate for specialized, high-demand The political and institutional authority for driving positions (not just for ICT). Jamaica has also succeeded the digital transformation must be clarified so that in creating special units authorized to operate outside potential conflicts or overlaps across MDAs can be the traditional public sector pay and employment regime, identified and addressed promptly. A clear political di- facilitating the attraction of seasoned talent. Taking a rective is needed to bring stakeholders together under more whole-of-government approach to managing ICT a shared vision. MDAs will play different roles in imple- assets, as mentioned above, may also help to rationalize menting the digital strategy, but their relative responsi- the use of human resources. bilities should be clearly defined. The expectations for Public Digital Platforms 74 Jamaica could consider a “building-blocks” ap- Cybersecurity and data protection should be more proach to bringing services online, focusing on com- robust priorities for the GOJ, guided by centrally mon functions across government and developing established standards. The increasing cyberattack them centrally. Individual MDAs or service owners have threat requires the government to develop the means for tried to take responsibility for digitalizing services, but securing core systems, and MDAs should not be left to this approach has often proven to be slow and inefficient. determine their own security measures. Interconnected Interoperability is crucial to ensure a smooth exchange systems increase the risk of contagion, making stan- of information across platforms, avoiding delays in deliv- dards necessary at the whole-of-government level. Data ering services. The country can succeed in digitalizing protection and privacy provisions should align with in- services by centrally developing standard functionalities ternational standards and user expectations. A centrally as “modules” connected to customized workflows. guided data security and protection approach is required to build trust in new service channels. An ICT sector plan should guide the selection of public investment projects financed across the gov- The GOJ should continue its efforts to implement ernment. Technical experts at eGov provide input on new international tax standards to increase trans- MDAs’ project proposals, but the lack of an overarching parency, modernize tax legislation, and invest in the digital strategy or action plan limits their ability to deter- digital transformation of tax administration as a key mine priorities. A strategic framework document could element of Jamaica’s digital architecture. Implement- help prioritize projects across sectors/MDAs, put them ing international tax standards requires investment in hu- in a medium- to long-term fiscal perspective, and identify man capital, including legal capacity and IT support with critical interdependencies across the whole government. robust data security, incorporating e-filing of taxes and The short-term benefits of a project for a single MDA non-tax payments, risk analysis systems, and exchange should be evaluated against the broader goals reflected of information at a domestic and international level. This in the whole-of-government strategy. investment can provide tangible dividends by enhancing tax certainty, improving tax morale, reducing compliance costs, and increasing tax revenues through higher vol- untary compliance and targeted risk-driven audit inter- ventions.   Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 75 Table 3.2. Digital Public Platforms: Policy Recommendations (1 of 4) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Institutional, strategic, Operationalize the ICTA and the Office of the Short Yes and legal frameworks Office of the Chief Information Prime Minister term Officer. The government could MSET focus on addressing implementa- MOFPS tion challenges for the ICTA, clarifying its mandate and offering a clear roadmap with political and financial support. The government should ensure that there is a single entity with the authority to convene stakeholders across the public and private sectors, resolve policy conflicts, guide resource allocations, stimulate collabora- tion, and monitor compliance with program targets over time. Additionally, leveraging the experience of eGov and the TIU might be beneficial while thought- fully assessing the risks and benefits of potential mergers. PRIORITY Develop an interim digital Office of the Short No strategy that includes a digital Prime Minister term enterprise architecture. The MSET / eGov government can work on an interim MOFPS / TIU digital strategy, including a simplified enterprise architecture, to lay the groundwork for interconnec- tion and interoperability. Leveraging eGov and the TIU’s experience and institutional knowledge may jumpstart this process while developing a comprehensive strategy. PRIORITY Develop a digital strategy that Office of the Medium No considers Jamaica’s recent Prime Minister term achievements, the expectations MSET of users, and fiscal trade-offs. MOFPS This strategy could help guide the eGov prioritization and selection of public investment projects within the ICT sector, considering interdependencies and positive externalities across various initiatives. Develop government platforms MSET Long No following an iterative and MOFPS term incremental process. Govern- eGov ment platforms can benefit from an TIU iterative and incremental develop- ment process, allowing for ongoing adjustments and improvements, ensuring that they remain relevant and practical. Government platforms could follow a life cycle with clear metrics to determine their upgrade or phase-out. Public Digital Platforms 76 Table 3.2. Digital Public Platforms: Policy Recommendations (2 of 4) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Service delivery Use building blocks to ensure MSET Long No the sustainability of services and eGov term facilitate faster rollout. Utilizing TIU building blocks for digitalizing services can improve sustainability and reduce development time. A coordinated strategy ensures compatibility and compliance with relevant laws and regulations. Design the platforms following a Cabinet Office Short No user-centered design and follow eGov term the uptake with clear indicators. TIU Adopting user-centered design principles and tracking platform uptake with clear indicators can enhance usability and accessibili- ty, resulting in greater user engagement and satisfaction. Complete the catalog of Cabinet Office Short No government services for priority eGov term MDAs. To optimize the digitaliza- TIU tion of services that are important to internal (G2G) and external (G2B, G2C) users, the GoJ would benefit from establishing a catalog of government services that includes, among other items: the degree of digitalization, the type of data required to carry out the service, the current ownership of the data, data privacy considera- tions, etc. Efforts initiated by the Cabinet Office to survey priority MDAs may need to be scaled up so that compliance with the inventory can be expedited and the results used to support the digital strategy. PRIORITY Back-office Develop an inventory for ICT eGov Short No systems (G2G) systems. The GoJ does not have TIU term an updated list or inventory of the MSET current information systems used MOFPS by different MDAs. Developing an inventory for ICT systems, led by eGov and supported by the TIU, can help provide an overview and optimize technology usage and resources while identifying potential security risks. PRIORITY Weigh whether MOFPS systems MOFPS Long No should continue maintaining TIU term several separated solutions or invest in an off-the-shelf solution. The MOFPS could weigh the pros and cons of maintaining separate solutions versus investing in an Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 77 Table 3.2. Digital Public Platforms: Policy Recommendations (3 of 4) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Back-office off-the-shelf solution, considering MOFPS Long No systems (G2G) factors like flexibility, customization, TIU term ms costs, and specific needs. Maintai- ning different systems may offer more flexibility and customization on. but can also lead to higher costs pros and complexities regarding ate integration and interconnectivity. n Inter-operability Consolidate more services on TIU Medium No and shared services the shared platform. The TIU eGov term started consolidating a shared services platform with a ticketing technical support system and a business intelligence layer. Consolidating more services on a shared platform, including public financial management systems and license-based software, may help reduce costs, enhance security and availability, and increase usability. Develop a data governance MSET Medium Yes (policy) framework. Developing a data MOFPS term governance framework with eGov experts from various line ministries TIU can establish a data-driven public sector that improves policy and public service delivery. While waiting for the ICTA, the GoJ could decide on procedures and best practices like data formats, communication protocols, and APIs. PRIORITY Increase interoperability MSET Medium No between core government MOFPS term systems. Increasing interoperabi- eGov lity between core government TIU systems could involve supporting the JDXP with a data integration policy and adopting a data governance framework. Utilizing APIs, web services, and frequent routine backups may ensure seamless information sharing, minimize duplicates, and reduce data loss risks. PRIORITY Centralize government ICT MSET Medium Yes (policy) functions to improve effective- MOFPS term ness and reinforce security. eGov Centralizing government ICT TIU functions, such as application hosting and cybersecurity monitoring, can lead to cost savings, increased security, and more efficient use of resources. Public Digital Platforms 78 ost rity, and ources. Table 3.2. Digital Public Platforms: Policy Recommendations (4 of 4) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Inter-operability A range of approaches can be MSET Medium Yes (policy) and shared services implemented, such as reorganizing MOFPS term existing resources and adopting a eGov shared services approach similar to TIU that of the TIU. PRIORITY Digital ID Use the momentum from the NIDS Short No digital ID and TIU shared eGov term services platform to develop TIU SSO systems for G2G and G2C. Leveraging the momentum of digital ID and TIU shared services, two SSO systems could be designed: one for citizens and another for public servants. This approach can provide a unified identity for all public service delivery platforms and enhance security through controlled access management. Ensure that no one is left NIDS Short No behind in the digital ID rollout. term The government must guarantee that every citizen has access to vital government services, regardless of whether they possess a digital ID. This can be achieved by offering alternative service options for individuals without a digital ID or assistance in acquiring one. PRIORITY Data management Boost and expand Jamaica’s MSET Medium Yes and hosting open data policy. Datasets Office of the term should be made available Cabinet automatically without requiring additional effort to extract and publish them, thus making Jamaica’s open data policy more operational. A robust data management system could automate open data availability, minimizing extra effort for extrac- tion and publication. Tax policy and tax Introduce legislation in early M0FPS Short Yes administration 2024 to apply the general TAJ term consumption tax to cross-bor- der supplies of digital services and low-value goods. Finalize TAJ’s Digital Transfor- TAJ Medium No mation Roadmap by early 2024, MOFPS term and take the necessary steps to implement the actions in the roadmap. Continue implementing interna- MOFPS Medium Yes tional tax standards, including the TAJ term two-pillar solution that was agreed upon in October 2021 by over 130 countries, including Jamaica, to address the tax challenges arising from digitalization. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 79 Notes 1. The E-Government Development Index is calculated for each by averaging the normalized scores of its three components: Online Service Index (OSI), Telecommunications Infrastructure Index (TII), Telecommunications Infrastructure Index (TII). The overall index ranges from 0 to 1, with higher values indicating better e-government development. Based on the EGDI methodology, an individual country can improve its normative score but still drop in its ranking if other countries have improved more. 2. The GovTech Maturity Index (GTMI) was introduced in 2019 as a part of the World Bank’s GovTech Global Partnerships Initiative. It measures countries’ maturity in digital government transformation in four GovTech focus areas, based on information reported by governments. 3. The Core Government Systems Index (comprised of 17 key indicators) is one of the GTMI’s four focus areas and is intended to capture the key aspects of a whole-of-government approach, including government cloud, interoperability framework, and public platforms. 4. Linton (2019). 5. For more information, see https://opm.gov.jm/portfolios/agencies-of-opm/. Within the OPM a Minister without Portfolio has been assigned responsibility for the NIDS. 6. In addition to the formal structures, there are informal mechanisms through which Jamaican authorities are conceptualizing strategies for digital transformation. For example, an advisory group or think tank was established to advise the Prime Minister directly. 7. Launch of the authority has been pending final decisions by the government on the appropriate classification and grading of the new posi- tions. 8. OPM (2011). 9. The digital economy assessment does not review the quality or comprehensiveness of the laws. 10. The X-Road is an interoperability layer that facilitates the exchange of information between government agencies, businesses, and organi- zations. 11. This work was undertaken by PWC on behalf of the Cabinet Office’s Public Sector Modernisation Division (PSMD-CO) and conducted through an online Services eReadiness Assessment Tool (SEAT). 12. PSMD-CO’s assessment identified 180 services as partially or fully automated, based on the information received from MDAs. Approximate- ly 67 of the 180 are believed to be “fully automated.” In this context full automation meant that users could start the process online, make payments online if necessary, with back-end processes digitalized and final product being delivered either online or physically (depending on legal requirements). 13. According to research from the Caribbean Policy Research Institute https://www.capricaribbean.org 14. See https://www.nidsfacts.com/nids-timeline/ 15. NIDS (n.d.). 16. See https://data.gov.jm/ 17. MSETT (2021). 18. SEE Jamaica’s Central Bank Digital Currency (CBDC): https://boj.org.jm/core-functions/currency/cbdc/ 19. Users accessing the government’s platforms from mobile devices are not subject to data charges. 20. ITU data 2020. 21. See https://www.oecd.org/tax/beps/inclusive-framework-on-beps-composition.pdf 22. See https://www.oecd.org/tax/jamaica-s-marlene-nembhard-parker-appointed-co-chair-of-oecd-g20-inclusive-framework-on-beps.htm/#:~:- text=01%2F03%2F2022%20–%20The,lead%20the%20group%20with%20Ms 23. See https://www.oecd.org/tax/exchange-of-tax-information/28-jurisdictions-sign-international-tax-agreements-to-exchange-information-with- respect-to-income-earned-on-digital-platforms-and-offshore-financial-assets.htm 24. See OECD (2021). 25. The Agreement does not just apply to digital business and will have broader application. The reforms respond to challenges arising from digitalization of the economy where multinational enterprises can have substantial activity in countries without physical presence, which has resulted in the erosion of the tax base in market jurisdictions as well as profit shifting to no-tax and low-tax countries. 26. Osullivan and Cebreiro Gomez (2023). 27. OECD (2020). 28. Paz et al. (2021). Public Digital Platforms 80 4. DIGITAL FINANCIAL SERVICES Accelerating the adoption of DFS for financial inclusion KEY MESSAGES » The Bank of Jamaica (BOJ), the government, and market players have made considerable efforts to work together to accelerate the adoption and usage of digital payments. This has been facilitated by new financial technologies (fintech) that advance the objective of financial inclusion. » There is a discrepancy between access and usage in Jamaica, as the levels of initiating and receiving digital payments are much lower than the level of access to transaction accounts. Although the access level to transaction accounts with financial institutions in Jamaica is relatively high (73 percent), only 40 percent of adults reported having made at least one digital payment in the previous year. » The updated Payment Systems Law is being finalized and operationalized to increase cer- tainty in the market, level the playing field, and enable the entrance of innovative payment fintech players. » The BOJ is exploring the option of developing open banking. This would encourage efficient access to financial information, allowing existing financial institutions to reduce the cost of onboard- ing new clients and third-party providers and enabling services with better terms and conditions than those of existing banks. » The country has prioritized full interoperability for JAM-DEX accounts with other types of accounts, payment instruments, and merchant acceptance devices. JAM-DEX can promote financial inclusion, as it is an easy, safe, efficient, secure, and convenient way to pay for goods and services for all Jamaicans. » Although there is interoperability pertaining to ATM and points-of-sale infrastructure on in- ternational brand card use, the lack of interoperability across different payment instruments and payment service providers for merchant acceptance leads to inconvenience and higher costs. Having national QR code standards that could support multiple payment instruments beyond just cards could help overcome these issues. » Financial literacy is an important lever to further advance financial inclusion and usage of digital payments in Jamaica. Intensifying financial literacy efforts related to digital payment usage could target specific “fear” factors, such as vulnerability to fraud, possibility of operational errors, and perceptions of a loss of privacy. Digital Financial Services 81 4.1. The importance of digital financial ser- Jamaica is considered one of the champion coun- vices: Key enabler for financial inclusion tries in the Caribbean region in terms of digitizing financial services and payments. Although more work remains to be done, there has been a deliberate effort by DFS are important enablers of the digital economy the Bank of Jamaica (BOJ), the government, and mar- and can support the public policy objective of finan- ket players to work together to accelerate the adoption cial inclusion, both from an access and usage per- and usage of digital payments, facilitated by new finan- spective. They cover financial products and services, in- cial technologies (fintech) that promote financial inclu- cluding payments, transfers, savings, credit, insurance, sion. Some of those efforts include the implementation securities, financial planning, and account statements. of a regulatory sandbox for payment service providers DFS are delivered via digital/electronic technology, in- (PSPs), the revision of the Payment Systems Law, the cluding through a payment card, online, or through a digitization of government payments, the introduction mobile phone, and various instruments may be linked to of a central bank digital currency (CBDC) JAM-DEX, electronic money (e-money) or traditional bank accounts and plans to upgrade the Real-Time Gross Settlement (collectively referred to as transaction accounts). DFS (RTGS) system and the Automated Clearing House can provide individuals and households with convenient (ACH). Moreover, in 2017 the country implemented a and affordable channels through which to pay and be National Financial Inclusion Strategy, which was updated paid, as well as to save and borrow. Moreover, they can in 2021, with five key objectives: (a) increasing the use be more accessible for lower-income and rural house- of digital payments and banking services, (b) improving holds as well as for women and youth—the segments of financial literacy; (c) enhancing consumer protection; (d) the population that are often underserved by tradition- promoting MSME finance; and (e) improving the financial al financial services. Governments can use DFS to in- inclusion data infrastructure. crease efficiency and accountability in various account- ing and payment streams, including for the disbursement Increased access to and usage of digital payments of social transfers and receipt of tax payments. and (more broadly) financial services are also one of the fundamental pillars of the Payment Aspects Digital payments are often the entry point for DFS of Financial Inclusion (PAFI) framework, which was and provide the infrastructure or “rails” through designed by the Committee on Payments and Market which additional products and use cases can be Infrastructures and the World Bank.1 This framework developed. A DFS ecosystem needs to be supported sets out several recommendations centered around the by risk-based and forward-looking legal and regulatory general premise that access to and use of transaction frameworks (for example, to allow a level playing field accounts in which to store value and conduct payments for market entry and innovation), robust financial infra- can build the foundation for the use of other financial ser- structure (for example, interoperable payment and credit vices. The framework can be used as a targeted tool for reporting systems), and deployment of delivery channels enabling and increasing financial literacy and financial uniformly across the jurisdiction (for example, agent net- inclusion and facilitating the wider use of DFS for the works, automated teller machines (ATMs), point-of-sale benefit of the digital economy. The PAFI framework has terminals, and mobile phones). been further expanded in the context of fintech, focusing on the impacts and implications of new technologies and The COVID-19 pandemic further underlined the the new types of payments facilitated by technology. importance of DFS and provided a boost to digiti- zation, particularly in the context of payments. The The World Bank Digital Economy Assessment and COVID-19 crisis heightened the focus on the role of DFS PAFI frameworks are utilized in this chapter to as- in relation to domestic and cross-border remittances and sess and analyze the current state of DFS in Jamaica the distribution of financial aid to citizens, including to the and to provide recommendations on how they can unbanked population, and in the reduction of the use of be expanded and improved. More specifically, the cash and its replacement with digital payments. chapter looks into the catalysts for access and usage, particularly pertaining to digital payments in terms of (a) policy, legal/regulatory framework, and oversight, (b) fi- nancial infrastructure, (c) market dynamics, and (d) fi- nancial inclusion. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 82 Figure 4.1. The Payment Aspects of Financial Inclusion (PAFI framework) Universal access to and frequent usage of transaction accounts Transaction Leveraging Readily Catalytic pillars account Awareness large-volume available Drivers of access and payment and financial recurrent access and usages product literacy payment points design streams Financial and ICT infrastructures Foundations Legal and regulatory framework Critical enablers Public and private sector commitment Source: WB-BIS (2016). 4.2. Current state of digital financial On ownership of payment instruments, such as deb- services: Toward financial inclusion it and credit cards, Jamaica lags behind most peers as well as LAC and UMIC averages (Figure 4.3). This through the interoperability of JAM-DEX presents a paradox, given the good levels of transaction accounts, payment instruments, and account provision. However, the fact that non-bank de- payment services posit-taking institutions and other non-bank PSPs have started issuing debit cards, alone or in partnership with The access level for transaction accounts with finan- banks, indicates that debit and credit card ownership cial institutions (banks and non-banks) in Jamaica could potentially rise. Additionally, card ownership is be- is relatively high (73 percent) when compared to re- ing given a boost by the issuance of e-money products gional peers, such as Costa Rica (68 percent) and such as prepaid cards by several PSPs, linking them to Dominican Republic (51 percent), as well as the LAC salary distributions for companies as well as utilization average (73 percent). However, Jamaica still lags when for cash withdrawals and physical point-of-sale/e-com- compared to UMIC peers outside the region such as merce purchases. Serbia (89 percent) as well as the UMIC average (84 percent). When breaking down the access levels by dif- There is an evident discrepancy between access ferent criteria, such as gender, age, income, and labor and usage in Jamaica, as the number of those who status, a similar pattern is observed, with Jamaica doing have initiated and received digital payments is much well compared to regional peers (with a few exceptions) lower than the number who have access to a trans- but lagging behind others as well as UMIC averages. action account. According to World Bank Findex 2021 However, within the country itself, the access levels of data, 40 percent of adults reported that they had made at those population segments that are typically considered least one digital payment over the course of a year in the vulnerable (e.g., the poor, those out of the labor force, country, and 32 percent had received at least one digital those living in rural areas, women) are not far off from payment. Only 23 percent of adults had made a digital the general population average. This is an indication that payment in store, and only 16 percent and 12 percent though progress has been made in Jamaica to fill the of adults had made digital payments online for goods/ gap for the vulnerable and underserved/unserved com- services or paid bills digitally, respectively. On the receiv- munities, the growth rate has been fairly flat. ing side, 59 percent indicated having received wages Digital Financial Services 83 Figure 4.2. Account Access (%, age 15+), 2021 100 89 90 84 84 82 81 77 79 80 75 73 73 72 68 69 69 68 67 68 70 66 64 65 64 61 60 60 57 51 49 50 43 39 40 36 31 30 20 10 0 Overall Female Young adults Poor Rural Out of labor force (age 15-24) (poorest 40%) Jamaica Costa Rica Dominican Republic Serbia Latin America and Caribbean (LAC) average Upper Middle-Income (UMI) average Source: World Bank Findex (2021), https://www.worldbank.org/en/publication/globalfindex. Figure 4.3. Card Ownership, 2021 (%, age 15+) 80 68 70 62 60 53 53 47 50 40 33 29 28 30 20 12 14 11 16 10 0 Debit card ownership Credit card ownership Jamaica Costa Rica Dominican Republic Serbia Latin America and Caribbean (LAC) average Upper Middle-Income (UMI) average Source: World Bank Findex (2021), https://www.worldbank.org/en/publication/globalfindex. directly into accounts, and 49 percent domestic remit- umentation, and long distance to the PSP branches. tances. In comparative terms, except for Dominican Re- The BOJ has taken steps to further improve account public, Jamaica lags behind other peers examined here levels by introducing laws that provide for low-cost ac- as well as LAC and UMIC averages across all usage in- counts and simplified due diligence for certain population dicators. segments (i.e., underserved and unserved communities) and certain merchant categories (i.e., “basic” accounts For the quarter of adults in the country who still do with limited functionalities). However, the provision is not have access to a transaction account, there are not equally applied by all financial institutions, creating several reasons cited in the Bank Findex data: lack barriers to transaction account access. In this regard, of sufficient funds/need for an account, high open- offerings new types of accounts through innovative fin- ing and maintenance costs, lack of necessary doc- tech PSPs in the BOJ’s current regulatory sandbox is Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 84 expected to lead to more competition and lower prices payment instrument and account level, the use of for end users and to help close the gap among the cur- cheques by some government agencies, and the high rently unbanked. More market-based efforts are needed costs on the digital payment side. to expand the presence of physical branches or agents across the country, reducing the distance for those who The BOJ has, among other initiatives, engaged the live in remote areas. industry to work on a national retail payments strat- egy that would also address bottlenecks to the use The low usage of digital payment instruments relates of digital payments. Four thematic areas have been to several factors that still require attention in the identified: (a) integration – leveraging the existing eco- Jamaican market. Cash is still prevalent in the coun- system; (b) innovation – supporting the growth of digital try, fueled by the long-standing cash culture, low levels payments; (c) competition – promoting knowledge and of financial literacy among some population segments, information sharing; and (d) standardization – imple- the lack of digital payment acceptance among micro menting legal frameworks and standards. and small merchants, a lack of interoperability at the BOX 4.1. Criteria for the Adoption of Digital Payment Instruments The adoption of any given retail payment instru- » Convenience: The payment instrument needs ment by consumers, businesses, and governments to be convenient to use, including with regard is influenced by how well-suited it is to specific pay- to what the payer needs to remember or phys- ment needs and by how the instrument is perceived ically carry or use when making the payment, in terms of risk, liquidity, cost, acceptance, and con- how much time the transaction takes to com- venience. The choice of payment instruments is plete, and other related considerations. typically shaped by the following factors: » Acceptance: The payment instrument should be widely accepted. For example, a card would » Cost: Usage of payment instruments entails not be useful if it is not accepted at grocery both explicit as well as implicit costs. Explicit shops or restaurants, or for utility payments or costs include the direct charges paid by the other routine payment needs. user, such as transaction fees. Implicit costs include, for example, the waiting time for pro- » Payment confirmation and reconciliation: cessing the payment request or the cost of time Payments should be processed and confirmed spent commuting to a designated place to ob- as per a defined timeline in a way that serves tain cash to make payments or to use the non- as both a reconciliation record and proof that cash payment instrument. payment has been made. This would help pay- ers to manage and monitor their payment ac- » Safety and reliability: There should be a high counts. level of trust that a payment instrument will work as expected and discharge the payer’s payment obligation as required. This includes such factors as system uptime, fraud and/or misuse of funds, processing errors, and so Source: Developing a Comprehensive National Retail Payments forth. Strategy, World Bank (2012). Digital Financial Services 85 the Department of Cooperatives and not the BOJ. Cred- Policy, legal/regulatory framework, it unions, however, submit monthly reports to the BOJ, and oversight which, in turn, issues instructions to and audits credit unions. There are several statutes governing payment sys- Remittance companies (money transfer operators) tems in Jamaica. These include the: (a) Bank of Jamai- and their sub-agents are licensed by the BOJ under ca Act (BOJA), 1960; (b) Banking Services Act, 2014; and Section 22 of the BOJA. As part of the licensing re- (c) Payment Clearing and Settlement Act (PCSA), 2010, quirements, remittance companies and their sub-agents as well as other relevant laws governing the government must fulfill the requirements of fit and proper criteria to securities and capital market segments.2 The Proceeds undertake remittance-related business in Jamaica. The of Crime Act 2007 as amended to date, along with the licensing requirements for sub-agents are onerous, as relevant Guidance Notes, govern requirements related it takes roughly three–six months on average to obtain to anti-money laundering and combating the financing a license from the BOJ. All licenses are renewed on an of terrorism (AML/CFT). The Data Protection Act (DPA), annual basis. Remittance companies have to follow and passed in June 2020, seeks to protect Jamaicans from adhere to the BOJ’s Operating Directions for Remittance unlawful and/or reckless disclosure of their personal in- Companies and AML/CFT requirements. The BOJ un- formation. The Act sets standards for data processing dertakes on-site inspections and in-house monitoring of (sections 21 through 31) to ensure that personal data are remittance companies’ activities. processed fairly and lawfully and only where necessary. The objectives of the BOJ’s oversight function as The BOJA authorizes the BOJ to clear and settle spelled out in the Payment System Oversight Poli- payment transfers between financial institutions and cy document3 are to ensure the safety and efficien- reinforces the BOJ’s oversight powers over the pay- cy of the national payment system in Jamaica. The ment and settlement systems in Jamaica. The BOJA oversight function is geared toward: (a) preventing or was amended in June 2022, designating the BOJ as the controlling systemic risk; (b) fostering fair access to the sole authority to issue the CBDC, JAM-DEX, designated payment systems for market participants; (c) promoting as legal tender in addition to notes and coins. The PCSA competition in the payment services market; (d) protect- provides the legal basis for the netting, finality, and irre- ing consumer interest; and (e) fostering cooperation with vocability of payments and provides the BOJ with stat- other regulators. These objectives are to be achieved utory powers of oversight over the country’s payment through an explicit commitment to comply with and ad- and settlement systems. The PCSA is being amended here to international standards, such as the Principles to equip the BOJ with additional authority to regulate for Financial Market Infrastructures and the General and oversee PSPs. The amendments to the Proceeds of Principles for international remittance services. Crime Act have provided banks with flexibility in the ap- plication of certain elements of the AML/CFT framework The scope of oversight covers all existing payment, for the opening of tiered, no frills accounts, adopting a clearing, and settlement systems operating in Ja- risk-based approach. The associated Guidance Notes maica and the payment channels and instruments delineate different criteria (including know-your-custom- that are offered through these systems. These in- er [KYC] requirements) needed to open accounts based clude systems owned and operated by the BOJ and oth- on the level of risk involved. er entities. A body known as Retail Payments Jamaica Limited (RPJ) has since been established to oversee the The BOJ withdrew its guidelines for electronic retail operations of the ACH. RPJ is chaired by the BOJ. Its payment services in 2019 and is now working on a objectives include promoting fair, open, and transparent new legal regulatory framework for overseeing and access criteria for the ACH. supervising PSPs. As part of the process, a consulta- tion paper, “Policy Proposal for the Legal Framework for The BOJ established a fintech regulatory sandbox in the Regulation of Retail Payment Service Providers – A 2020 to achieve a number of public policy objectives Consultation Paper, 2020,” was prepared and published by encouraging innovations in financial services by the BOJ in December 2020. The policy proposals and promoting financial inclusion and competition. recommended legislative amendments to the PCSA to The regulatory sandbox provides a framework for the further strengthen the BOJ’s powers of oversight, super- approval of new products by PSPs and ensures the ap- vision, and enforcement. propriateness of their processes, procedures, and con- tractual arrangements. The position with regard to credit unions is rather nebulous. Under the BOJA, credit unions are designat- The Guidelines for the regulatory sandbox were ed as specified financial institutions but are licensed by issued by the BOJ under Section 28 of the PCSA. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 86 Entities eligible to apply to the sandbox include: (a) reg- DTIs (commercial banks, merchant banks, building soci- ulated entities, for example, banks and deposit taking eties), the Jamaica Central Securities Depository, prima- institutions (DTIs), such as building societies, Cambios, ry dealers, the Accountant General’s Department (AGD), and remittance service providers; (b) securities dealers and the BOJ. JamClear-RTGS is owned and operated by that have been authorized by the Financial Services the BOJ. Payments settled in the JamClear-RTGS are Commission to participate in the sandbox; (c) credit final and irrevocable. unions; (d) fintech companies incorporated in Jamaica that are in partnership with a DTI or that offer solutions There are three participant categories in the JamC- not directly related to payment services that may not re- lear RTGS. Full members include the commercial and quire partnership with a DTI; and (e) entities invited by merchant banks, primary dealers, the Jamaica Central the BOJ to provide technology solutions. The types of Securities Depository, and the BOJ. Full members are products currently being tested include mobile wallets, provided with an intraday liquidity facility by the BOJ. A e-commerce solutions, branded debit cards, and pre- second category is that of restricted members,5 includ- paid cards. The types of entities currently participating ing the GOJ and building societies, which have direct are DTIs, credit unions, fintech in partnership with a DTI, access to JamClear-RTGS but no access to the intraday and remittance service providers. In preparation of JAM- liquidity facility. The last category is indirect members, DEX’s distribution, wallet providers are being assessed such as the ACH and MultiLink, which can submit their in the BOJ’s fintech regulatory sandbox. The vendor of net clearing files for settlement in JamClear-RTGS with- the JAM-DEX solution has been invited by the BOJ to out any intraday liquidity support by the BOJ. participate in the sandbox. The BOJ has initiated efforts to migrate to the Interna- The BOJ is exploring the option of open banking tional Organization for Standardization (ISO) 20022 to encourage efficient access to financial informa- message standards from the existing SWIFT MT tion that would allow existing financial institutions message standards with respect to JamClear-RTGS. to reduce the cost of onboarding new clients. This Cutoff dates for cross-border and domestic messages would also enable third-party providers to offer services are March 2023 and November 2025, respectively. at better terms and conditions than existing banks and financial institutions. Data portability is being pursued by The retail payment infrastructure in Jamaica com- the GOJ to provide greater control of and access to its prises an ACH and two card switches: MultiLink and data and the subjects of that data, and the BOJ aims to Q Net. The ACH handles the clearing and settlement of implement this same concept in the financial sector. JMD-denominated cheques and credit and debit trans- fers. The ACH does not have bulk payment processing capability, such as debiting a single account and credit- ing multiple beneficiary accounts and/or vice versa. The Financial infrastructure consortium of seven commercial banks that own the ACH has formed a company, APL Limited, with equal share- holding. The operation of the ACH has been outsourced Jamaica has a well-developed payment and settle- by APL Limited to another company, JETS. ment systems infrastructure.4 It consists of: (a) the BOJ-owned and operated JamClear-RTGS; (b) the ACH There are three clearing cycles in a day, with settle- for retail payments, owned and operated by a consor- ment of the ACH’s net clearing position files hap- tium of seven commercial banks clearing and settling pening in central bank money in the JamClear-RTGS JMD-denominated cheques and credit and debit trans- system twice a day. The net settlement file is settled on fers; (c) two payment card switches, MultiLink (owned an “all or none” basis. The ACH does not have any guar- by four commercial banks, the Credit Union League, and antee measures to ensure that a settlement takes place two building societies) and QNet (owned by the Credit even in the event of insufficient funds in a member’s set- Union League); and (d) the JAM-DEX (CBDC system). tlement account in JamClear-RTGS. Although the ACH The net settlement files from the retail ACH and the operator indicates that the BOJ would extend liquidity to payment card switch MultiLink are settled in the JamC- a bank with a debit position, the JamClear-RTGS rules lear-RTGS system. do not have any stipulation regarding provision of intra- day liquidity support to the ACH. Implemented in February 2009, the JamClear-RTGS system is a large-value (amounts ≥ J$1 million) gross Access to the ACH was previously limited only to real-time funds transfer system. It enables real-time commercial banks that had an ownership stake. After funds transfer on own accounts and third-party transfers a change in ACH rules, a building society has now been and time-critical payments by financial market partici- granted access to the ACH as a licensee even though pants on accounts held at the BOJ. Participants include it is not an ACH owner shareholder. On the other hand, Digital Financial Services 87 other entities, such as remittance service providers and The Jamaica Credit Union League owns a payment credit unions, do not have direct access to ACH services. card switch operated by QNet, an independent tech- This lack of tiered membership in the ACH has signifi- nology company. QNet is connected to the MultiLink cantly hampered the ability of remittance service provid- system, thus ensuring the interoperability of the cards ers and credit unions to provide various electronic retail issued by credit unions and used at ATMs and point- payment products to their customers. of-sale terminals across the country. The settlement of QNet card “off us” transactions is done in the MultiLink In the case of electronic transfers, credit to custom- system once a day at 11 am. “On us” transactions of the er accounts is awarded either on the same day or QNet cards are settled on a multilateral net basis in the on a T+3 basis, depending on the participant ACH books of the Credit Union League, which holds the ac- member. In the case of cheques, customer accounts are counts of all credit unions. credited on a T+3 basis. There do not appear to be any standard operating rules mandating that the ACH partic- The BOJA was amended in June 2022 to provide le- ipant members should provide credit to customers in a gal tender status to JAM-DEX. Thereafter, the BOJ ini- timely manner. tiated a phased national rollout of JAM-DEX in mid-2022, after completing a pilot phase of the project in 2021. One The ACH currently uses a modified version of the of the key objectives of the BOJ in introducing CBDC NACHA message standard with modifications to the was financial inclusion, with JAM-DEX seen as an easy, amount field in the message body. As with the BOJ, it safe, efficient, secure, and convenient way to pay for is understood that the ACH has also initiated measures goods and services for all Jamaicans. JAM-DEX is avail- to migrate to ISO 20022 message standards, but details able to members of the public through a digital wallet. of the migration schedule are not available. Potential wallet providers include banks, building societ- ies, merchant banks, or an authorized PSP. The BOJ is- MultiLink is a payment card switch that clears and sues CBDC to the wallet provider, which then distributes settles both ATM and point-of-sale transactions. The CBDC to the end user. Wallet providers incur infrastruc- MultiLink switch adopted EMV standards in 2021. It is ture costs in acquiring the solution from the vendor and estimated that 60 percent of the cards issued in Jamai- in paying the vendor annual fees. ca are smart cards. MultiLink caters only to card-present transactions and is not enabled for e-commerce transac- The National Commercial Bank (NCB) was the first tions. It is owned and operated by JETS, which is owned bank to offer JAM-DEX through LYNK®, its digital by a consortium of four commercial banks, two building wallet. Currently LYNK provides only wallet-to-wallet societies, and the Jamaica Credit Union League. There transfer payment functionality, whether these are per- are three additional entities (two commercial banks and son-to-person or person-to-merchant transfers. The one merchant bank) participating as licensed issuers in NCB has 170,000 retail customers using its LYNK wallet, the MultiLink system. including several thousand merchants. Recently, anoth- er bank, JN Bank, has been onboarded by the BOJ as a In order to mitigate settlement risk failure, JETS col- wallet provider for distributing JAM-DEX, with other pro- lects collateral in the form of pledged government viders expected to come on board later in 2023. securities equivalent to four days gross issuer po- sitions for the peak weekend period in the previous JAM-DEX has been designed as an interoperable year for each participant. The net settlement position payment solution for local use cases and does not file from MultiLink is settled in the JamClear-RTGS sys- facilitate cross-border transactions at this stage. tem once a day at 11 am. Planned initiatives include en- Use cases for JAM-DEX include person-to-person, per- hancing the capabilities of the switch to process mobile son-to-business, and government-to-person transac- payments and enabling it to process e-commerce trans- tions and loading cross-border inward remittances onto actions. However, there are no defined timelines in place the JAM-DEX wallets. Data on volumes and values of for these initiatives. transactions for the above use cases were not available. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 88 there are also several closed-loop solutions that banks Market dynamics have developed for merchant payment acceptance. In some cases, alongside a card point-of-sale terminal, a merchant displays a closed-loop QR code or might have The retail payments market in Jamaica is dominated a mobile app from a particular PSP to accept payments. by eight commercial banks (domestic and interna- Having national QR code standards that could support tional) that operate in the country (both issuers and multiple payment instruments, beyond just cards, could acquirers). Other actors include credit unions and build- help overcome cost and convenience issues. ing societies, payment aggregators, money transfer op- erators, and traditional PSPs and payment fintechs that Credit unions and building societies play an import- operate inside the regulatory sandbox implemented by ant role in the financial inclusion realm, given that the BOJ to test new products/services not covered under they tend to work with clients of a different socio-de- the current licensing legal/regulatory framework.6 mographic profile than banks. There is typically a one-time membership fee but no other fees related to Banks serve customers through their branches, account opening and/or maintenance are applied. These ATMs, agents (though only one bank currently has institutions would like to be more involved in providing deployed agents),7 and digital channels, such as in- payment services and products and thus to play a more ternet banking and mobile banking. They charge a fee proactive role in contributing to financial inclusion. Un- for opening and maintaining an account, and in the due like banks, credit unions and building societies have a diligence process, they usually require two identification more widespread physical presence in villages and rural documents. The “basic” account provision, implemented areas. by the BOJ, simplifies the process and allows for remote account opening. The due diligence process is typically There are several payment aggregators in Jamai- longer for merchants and requires more documents. The ca that collect payments on behalf of private utility “basic” account provision is not implemented consistent- companies and government agencies, utilizing their ly across the commercial banks in the country. Banks is- own stores as well as agent networks to collect pay- sue a variety of payment instruments, such as cheques, ments physically. Most payments are collected in cash, debit cards (domestic and international), credit cards (in- though payments can also be made by means of a pay- ternational), prepaid cards (international), direct debits ment card or bank account transfer in the virtual point- (intrabank and interbank), and credit transfers (intrabank of-sale of the aggregator. There is typically a fee borne and interbank). In some cases, banks also have partner- by the client, particularly when paying for multiple types ships with credit unions and non-bank fintechs in order to of bills through the same aggregator. Some of the pay- issue co-branded debit and prepaid cards. Banks apply ment aggregators also act as merchant aggregators and charges for interbank credit transfers and direct debits. work with banks to provide acquiring services to micro Several banks facilitate cross-border payments in the and small merchants, particularly when such merchants country using a network of correspondent banks through cannot directly open accounts themselves with a bank. SWIFT. E-commerce has potential in Jamaica but is still un- Banks in Jamaica collect payments on behalf of derdeveloped. Some of the factors pertain to the low us- utility companies and government agencies in their age of payment cards for purchases as well as the lack branches as well as through internet banking. Typi- of international players such as PayPal that are not reg- cally, the transaction fee for such payments is borne by istered in the country. Amendments to the Payments Law the company/agency on behalf of which the banks collect would expand the list of PSPs that could be licensed in payments. Banks are also engaged in the disbursement Jamaica and can be expected to bring more players into of government payments, such as public sector salaries, the market to facilitate e-commerce payments (one such pensions, and social assistance transfers, directly to the player is already being tested in the regulatory sandbox). beneficiary accounts. Cross-border remittances (i.e., person-to-person Several banks in the country are also acquirers, transfers) are another important use case for the providing payment acceptance infrastructure for country. Jamaica is primarily a remittance-receiving merchants (physical and virtual). However, the lack country. According to the World Bank, in 2021, remit- of interoperability across different payment instruments tances accounted for approximately 25 percent of the and PSPs for merchant acceptance leads to inconve- country’s GDP.8 Remittances from the United States nience and higher up-front and transaction costs, par- account for 70.2 percent of total remittance inflows into ticularly for micro and small merchants. Although there Jamaica. Other important originating countries are the is interoperability pertaining to ATM and point-of-sale United Kingdom at 10.2 percent, Canada at 9.7 percent, infrastructure on international brand card use in Jamaica, and the Cayman Islands at 6.2 percent. Digital Financial Services 89 The cost of receiving cross-border remittances 3. Promoting financial literacy. In 2018, the is still higher in Jamaica than the LAC average. In BOJ, in collaboration with its financial inclusion the latest World Bank data, the average cost of send- partners, completed the development of a Na- ing US$200 to Jamaica was 6.20 percent of the value, tional Financial Literacy Action Plan. In 2020, it while the LAC average was recorded at 5.64 percent.9 launched its financial literacy initiative through Overall, there is lack of consolidated data in Jamaica’s traditional and social media, targeting the youth. remittance market. Commercial banks in the country are A demand-side survey on financial literacy not particularly engaged in cross-border remittance ser- among the youth (in school and at risk) is on- vices, even though they could play a more active role. going. Currently, most remittances are facilitated in cash 4. Boosting financial consumer protection. In (cash-in/cash-out at agent locations of money remit- 2018, the BOJ formulated policy proposals for ters) through local and international money transfer the development of legislation on financial pro- operators. As described above, remittance companies tection for consumers of financial services from and their sub-agents have to conduct their activities in the BOJ’s regulated entities. The legislative pro- compliance with the Operating Directions for Remittance cess commenced in 2020 and is ongoing. Companies, along with AML and CFT legislative require- ments, and fulfill the fit and proper criteria as part of the 5. Improving MSME finance. Since 2017, the licensing conditions. The licensing requirements for sub- BOJ has supported the work of the Ministry of agents are burdensome, and there are no explicit regu- Industry, Investment and Commerce and the lations banning exclusivity arrangements for agents and Development Bank of Jamaica in initiatives de- their sub-agents. The BOJ annually reviews all licenses. signed to improve access to finance. The bulk of the remittances are cashed out by the beneficiaries. Though credit to a bank account is pos- 6. Supporting fintech. The BOJ launched its fin- sible, the process is slow (taking a day or more), and tech regulatory sandbox in March 2020, which hence beneficiaries prefer to cash out the funds, which seeks to encourage fintech providers and regu- is real time. Moreover, remittance proceeds cannot be lated financial institutions to explore innovative credited to tiered, no-frill beneficiary accounts as per payment solutions to promote financial inclusion. existing BOJ regulations. Remittance proceeds can be credited to a card, provided the remittance has been Financial literacy is an important lever to further ad- made through international card scheme products, such vance financial inclusion and the use of digital pay- as Visa Direct and MasterCard Send, as these also are ments in Jamaica. In 2020, the BOJ launched a finan- real time in nature. cial literacy program to promote greater understanding of financial concepts and the relevant laws, including simplified customer due diligence (CDD) requirements through traditional and digital media. Key financial lit- Financial inclusion eracy programs include BOJ Real Talk and BOJ Em- powering You. The BOJ also distributes financial litera- cy content through radio stations, nationally circulated The BOJ is focusing its financial inclusion efforts in newspapers, and a television station. The goal of these six areas, while also rallying other relevant stake- programs is to build an inclusive economy by equipping holders: persons with information on financial services and ex- plaining key financial concepts, including savings, bud- 1. Enhancing the legal and regulatory environ- geting, credit, CDD, and the roles of the financial service ment for banking and payment services. In regulators. 2021, amendments were made to the Banking Services Act recognizing electronic retail pay- At the core, though, there is still a need for financial ments as financial services. literacy programs to target the main factors that in- hibit individuals and merchants from accessing and 2. Improving the financial inclusion data infra- using transaction accounts and digital payments. structure. The BOJ has had a detailed moni- The programs could specifically address how accounts toring and evaluation framework for financial can effectively help meet payment and store-of-value inclusion impact and intermediate indicators needs, and could also target specific “fear” factors, such since the launch of the National Financial Inclu- as: i) the lack of sound proof of payment if paper is not sion Strategy in 2017. used; (b) vulnerability to fraud; (c) unresponsive, compli- cated systems prone to operational error; and (d) the loss Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 90 Box 4.2. Examples of Financial Literacy Programs around the World The Central Bank of Brazil has used social media mediators can further facilitate the exchange. campaigns and cooperated with digital influenc- ers to increase awareness among Brazilians of In Malaysia, the Securities Commission, as part a new digital payment scheme (Pix). The central of the Financial Education Network, has launched bank produced over 30 videos posted on YouTube an initiative to improve the digital literacy of seniors and disseminated over 100 social media posts to (55 and over) with the aim of increasing their digital explain the technical features of Pix and generate financial inclusion. The program includes monthly trust in the population at large. This approach and webinars for seniors who have access to the inter- cooperation with digital influencers allowed the net and the ability to join online, and a face-to-face quick and widespread take-up of this innovation “digital clinic” involving tutors and a small group of (see Box 4.3). seniors with little knowledge on digital applications. The face-to-face sessions provide step-by-step In Argentina, the Central Bank, in cooperation with guidance on digital knowledge, covering basic fi- the Ministry of Education, has undertaken a finan- nancial literacy, banking, and investing. cial education campaign that includes tutorials to promote the use of debit cards, management of In response to the challenges of the COVID-19 security codes for ATMs and non-bank cash with- pandemic, the Bank of Italy implemented (virtual drawal points, the use of online banking and digital and face-to-face) training courses for low-income wallets for the payment of services, cybersecuri- and/or low education women. Topics relevant to the ty, and the protection of financial consumers. The crisis were covered in the modules, including digital campaign was distributed digitally and on public payments and the risk of fraud and scams. television to reach those without internet access and is also used in schools. The Financial Education Foundation in Morocco hosts a section on entrepreneurship on its finan- In Germany, BaFin collaborates with a local non- cial education website. Owners of micro and small governmental organization to organize webinars firms can test their knowledge of accounting and for elderly people that can be watched individually other important aspects of business creation and online or in small group meetings in person with a development, find calculators to better manage mediator (through so called “regulars’ tables”). The business finances, and navigate tax issues. During webinars cover various digital topics, including new the COVID-19 crisis, the Foundation stepped up its developments in digitalization in the banking sector digital initiatives to support MSMEs on topics linked or the risks of fraudulent activities that consumers to DFS and management of a company in times of need to be aware of. Elderly people have an op- crisis. portunity to ask questions to BaFin experts, and of privacy. This could also be done by targeting specific Government payment digitization (both receiving population segments such as remittance recipients that and disbursing) also presents an opportunity to ad- might benefit even more from such programs and cam- vance financial inclusion. TAJ is the agency responsi- paigns. One example is the Greenback program of the ble for tax collection in Jamaica, such as stamp duties, World Bank, which works with remittance recipients and income, general consumption, and property taxes, traffic PSPs to increase awareness, efficiency, and transparen- ticket fines, and driver’s license fees. Some of these tax- cy in the remittance market.10 Moreover, the International es are classified as core taxes and others as non-core. Gateway for Financial Education, led by the OECD, pro- TAJ has accounts with the Scotia Bank and NCB. Twice vides principles and frameworks for integrating financial a day, the balances in these accounts are swept by the education programs into the formal school curricula and BOJ to the Treasury Single Account held with the BOJ. provides examples of how a number of countries have Customs duties are dealt with exclusively by customs of- done this.11 The World Bank has also developed a set of fices and are not part of the TAJ mandate. tools on financial literacy under the consumer protection framework.12 Digital Financial Services 91 Digital payment methods are available for the pay- Further digitization is also needed on the social as- ment of taxes. First, Scotia Bank customers can pay sistance disbursement front. Jamaica’s main social as- their taxes online through the electronic funds transfer sistance program, the poverty-targeted conditional cash facility implemented in 2015. Second, a direct funds transfer Programme of Advancement through Health transfer can be made through the TAJ portal for cus- and Education (PATH) has been successful in reducing tomers of other banks. This process includes the gen- poverty and is among the top-performing programs in eration of a direct funds transfer number to be inputted the region. Although the COVID-19 pandemic facilitated by the customer to initiate a bank transfer from his ac- an increase in PATH digital payments, they are still made count to the TAJ account. The customer receives an mostly by check, and access to payments for people with acknowledgement of payment made but actual receipt disabilities and the elderly is a challenge. Moreover, the is provided only the next day, a system implemented in lack of full coverage of digital payment mechanisms led 2021. Third, payment of taxes by credit card is possi- to processing delays during the pandemic. The Ministry ble through the government’s eGov portal, which is in- of Labour and Social Security (MLSS), which manages terlinked to TAJ; at the end of the day, eGov sends a PATH and other social assistance programs, is prioritiz- confirmation of the payment made and TAJ carries out a ing the further digitization of payments. According to their reconciliation. And fourth, TAJ is a payee on the bill pay- 2022–2026 Strategic Plan, currently 40 percent of PATH ment facility of the Scotia Bank and NCB. This has been families receive their payments digitally. As part of the recently introduced, and the experience so far is that it is upcoming IBRD-financed Social Protection for Increased reflecting significant user acceptance. Finally, payment Resilience and Opportunity (SPIRO) project, the MLSS of taxes through cash and cheques can continue to be aims to increase this number to 57 percent by the end made to TAJ. of 2028. To achieve this goal, it is currently conducting a digital wallet pilot with the World Food Program for emer- On the disbursement side, the AGD processes the gency benefit payments. The SPIRO project will build payments for most government MDAs. The MDAs on this pilot to expand digital payments to regular PATH and the AGD electronically upload the payments into benefits and create a digital payment module in the So- the CTMS through the BOJ. The MDAs and the AGD cial Protection Information System funded by the project. use a web-based application GFMS to process the pay- To achieve this goal, however, further understanding of ments. The BOJ then channels the payments (salaries, the level of mobile penetration among poor and vulnera- pensions, social benefits transfers, supplier payments, ble groups, their level of digital literacy, and other barriers etc.) to the bank accounts of the beneficiaries/compa- they may face in accessing digital payments (particularly nies through RTGS or ACH, as applicable. Where the the ease of opening a JAM-DEX account) is needed to beneficiaries do not have bank accounts, for instance, design an accessible platform that will include the most in the case of social benefit transfers, remittance com- vulnerable and hard-to-reach beneficiaries. panies are used for cash payouts. Pensions are also paid through a legacy system in which (2) cheques are drawn with the pensioners’ details and sent to commer- cial banks. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 92 Table 4.1. Digital Financial Services: Key Challenges and Opportunities Strengths Areas for Improvement » Relatively high level of access to transaction accounts » Usage of digital payments still low compared to for the general population and vulnerable communities access levels (e.g., those living in rural areas, the poor, those out of the labor force) » Lack of wide digital payment acceptance infrastructure by micro and small merchants » Well-rounded underlying payments infrastructure » Lack of interoperability at the account and instrument » Central Bank and financial authorities proactive and level open to innovation » Lack of digitization in cross-border remittances » Existence of a fintech regulatory sandbox » Lack of interoperability framework for sub-agents » Agent exclusivity agreements not yet banned Opportunities Challenges » Further digitization of government payments » Lack of access to ACH for non-bank PSPs » Operationalization of additional features of JAM-DEX » Low levels of financial literacy » New players entering the DFS market of Jamaica » Use of cheques by some government agencies » Modernization of the RTGS and ACH » Tax payment system still not fully automated » Lack of national QR code standards Source: Authors' elaboration based on digital economy assessment. 4.3. Recommendations: Enhancing pay- consultation paper proposing a legal framework for the ment system infrastructure, expanding regulation of retail payment service providers continues to be a consultation paper with no legal backing, as the access for non-bank payment service pro- requisite amendments to the PCSA are yet to be carried viders to the ACH, and updating the legal/ out. (Short Term – High Priority) regulatory framework for fintech and open banking The BOJ should consider amending its sandbox guidelines to promote competition and innovation in the payment ecosystem in Jamaica. DTIs that require support from a fintech firm for an innovative payment Policy, legal/regulatory framework, solution pose a risk for the fintech, as sharing this infor- and oversight mation could potentially result in the firm’s losing its com- petitive advantage. In addition, the BOJ should publicly disclose the criteria under which it extends an invitation The BOJ should consider putting in place a regu- to entities to enter the sandbox, as this would promote a latory framework for electronic retail payment ser- level playing field and foster transparency. (Short Term vices using the existing provisions of the BOJA and – Medium Priority) PCSA, pending the amendments to the latter. The BOJ must bring in an interim guidance and regulatory The BOJ could undertake a gap analysis on the re- framework (with a sunset clause) to transition entities form toward open banking focused on areas of op- graduating or likely to graduate from the sandbox into portunity and existing challenges. In particular, a bet- authorized and licensed entities, given that the amend- ter understanding of the different data-sharing initiatives, ments to the PCSA could take more time. The withdraw- API adoption, and legal and regulatory framework, as al of the guidelines for electronic retail payment services well as the role that existing infrastructures and services, has left a regulatory vacuum since 2019. The 2020 such as credit bureaus and retail payments, could play in Digital Financial Services 93 the provision of account information and payment initia- facilitate non-bank PSPs’ ability to develop products and tion services, could form part of this gap analysis. (Short services that banks may not offer to their clients. (Short Term – Medium Priority) Term – High Priority) The BOJ is encouraged to engage in the develop- The interoperability feature of JAM-DEX should be ment of an e-KYC platform that includes informa- operationalized at the earliest by the wallet provid- tion related to CDD in coordination with all relevant ers under the overall direction of the BOJ. End users stakeholders. The onboarding costs for banks and holding wallets should be enabled to transact seamless- other financial institutions that follow the BOJ Guidance ly from CBDC to commercial bank money and vice versa Notes on AML/CFT (related to regulatory expectations across providers. Currently, the LYNK wallet provides and high and low risk scenarios) could be mitigated by only wallet-to-wallet transfer capability within the NCB. such a platform. Its implementation should include a re- (Short Term – High Priority) view of the existing rules for all types of institutions and close coordination with other current efforts on digital ID The ACH should consider establishing settlement at the national level if necessary. (Medium Term – Me- risk mitigation measures, such as collateral or a dium Priority) guarantee fund mechanism, to mitigate any unwind- ing risk of the net clearing file in the event of a par- The BOJ should clearly spell out the legal basis for ticipant default. An unwind can cause liquidity risks to RPJ’s functioning as an overseer of the ACH. Under the remaining participants and in extreme scenarios con- the existing legal framework (BOJA and PCSA), the BOJ tribute to and exacerbate systemic risks. Such risk mit- is the overseer of the ACH and not the RPJ. Given this, igation measures are already in place for the MultiLink the BOJ should reexamine the current role of RPJ as an switch. (Short Term – Medium Priority) overseer to transition it into a stakeholder consultation body of licensed entities. RPJ’s role should be to pro- The ACH, in consultation with all relevant stakehold- vide stakeholder inputs to the National Planning Coun- ers, should take measures to further streamline and cil and BOJ on various issues, such as widening and enhance the capabilities of the ACH to provide saf- streamlining risk-based, fair, and open access criteria to er and more efficient services. Illustratively, these in- the ACH; introducing ISO 20022 message standards; in- clude: (a) prescribing standard operating rules in its rule stituting rule changes mandating a timeline (for instance, book mandating that ACH members should afford cred- two hours to credit a beneficiary customer’s account); it to customers in a definitive time period (of, say, two modernizing the ACH infrastructure aimed at implement- hours to begin with); (b) developing a bulk clearing facili- ing fast payments; and adopting a nationwide QR code ty catering to the needs of governments and businesses; standard. The BOJ could continue to participate in such (c) taking measures to migrate to ISO 20022 message a body as part of its oversight function. (Medium Term standards over a fixed timeline; and (d) actively consid- – Medium Priority) ering and introducing fast payment capability. (Medium Term – High Priority) Financial infrastructure MultiLink should engage with stakeholders and draw up a blueprint and action plan to enhance its capaci- ty to process mobile payments, QR code–based pay- ments, and e-commerce transactions. This will further In line with Principles 18 and 19 of the Principles for spur electronic retail payments adoption in Jamaica. Financial Market Infrastructures, the ACH should (Medium Term – Medium Priority) consider revising its existing access and participa- tion criteria to enable both direct access and indirect JAM-DEX should be made fit for use, such as al- tiering arrangements to all entities licensed by the lowing QR code–based payments and e-commerce BOJ, such as remittance service providers. The ACH transactions. JAM-DEX should also be enabled to re- should also streamline its processes and procedures ceive cross-border inward remittances. The additional with a defined timeline to enable eligible financial institu- functionalities will provide greater customer stickiness tions to become licensee participants. These measures and increase the usage of JAM-DEX. (Medium Term – will lend a spur to the greater digitization of the retail pay- Medium Priority) ments sector in Jamaica, promote interoperability, and Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 94 Box 4.3. Fast Payments in Brazil: the Case of Pix Brazil’s fast payment scheme “Pix” was launched The strong adoption trend of the platform demon- by the Central Bank of Brazil in 2020. It allows fund strates that the effects go beyond a simple switch transfers between all types of transaction accounts to a new digital means of payment and to positive in the Brazilian market—current, savings, and pre- digital financial inclusion outcomes. Some of the paid payment accounts—creating a payment ser- main drivers behind the adoption rates have been vice ecosystem with low acceptance costs and high single name and brand building recognition and levels of usability. Pix aliases, which inform the ac- trust in the system; the mandatory participation of count data to start a transaction, are as simple as big banks, creating network externalities and scale; an e-mail address or a mobile phone number. The low transaction costs compared to other retail pay- platform also actively uses QR codes as the ac- ment instruments (transaction is free for end us- cess channel. Since its launch in November 2020, ers) and improved customer experience due to the Pix has grown rapidly and by December 2021 there standardized way Pix is provided in participating were approximately 109 million consumers and 7.6 institutions’ app; and the multiplicity of use cases, million businesses, mostly MSMEs, as active users including person-to-person transfers, tax and bill of the platform. That includes around 45 million cit- payments, and online and card-present purchases. izens who previously did not have access to DFS. country’s needs and circumstances. (Medium Term – Market dynamics High Priority) The BOJ should consider assessing the remittance The process of licensing the sub-agents of remit- market in the country. Given the lack of data in the tance service providers should be a time-bound pro- remittance market on direct credit to a beneficiary’s cess and not open ended as it is now. Further, the account relative to cash payouts and the potential dig- BOJ should consider automating the license approval itization benefits that direct credit offers, the BOJ could procedure, including submission of relevant documenta- conduct a thorough assessment using the Committee on tion to the extent feasible for administrative efficiency in Payments and Market Infrastructures – World Bank Gen- HR utilization. The BOJ should also explore whether the eral Principles for International Remittance Services.13 tiered KYC and CDD requirements could be suitably tai- This could help document the current business models, lored and adopted for licensing sub-agents. (Short Term data gaps, and bottlenecks and demonstrate how the – Medium Priority) BOJ can work along with the private sector to unlock the potential of the market and accelerate the digitiza- The BOJ should explicitly ban exclusivity arrange- tion pace.14 In the process, the current G20 cross-border ments, as they stifle market competitiveness and payments roadmap work could also be utilized.15 (Medi- lead to de facto monopolies. Exclusivity conditions can um Term – Medium Priority) pose difficulties, especially where an exclusivity clause would mean that an agent retail outlet would be able to The BOJ should consider establishing a sub-agent cater to a sole remittance service provider, resulting in interoperability framework, as current guidelines ne- higher remittance costs. (Short Term – Medium Prior- glect this aspect. The sub-agent, while serving custom- ity) ers with a different PSP, would continue to be respon- sible to a sole principal. The principal continues to be The BOJ, together with private sector stakeholders, responsible for agent float management, training, and should consider developing national QR code stan- other needs. The settlement of transactions would be dards to foster interoperability across different pay- carried out at the back end. Such a harmonized policy ment instruments and payment service providers, framework addressing the principal-agent relationship, particularly for merchant acceptance. The BOJ could liquidity management, and consumer grievance redress spearhead the process, while also getting the industry mechanisms in the context of interoperability will provide on board. The EMVCo specifications could be used as direction and stimulus to the market. (Medium Term – a reference template for further customization to the Medium Priority) Digital Financial Services 95 operational risk and would also facilitate the reconcilia- Financial inclusion tion of balances in the CTMS and the GFMS systems. (Short Term – High Priority) Customers should be provided with instant receipts The need for TAJ to have a single tax payment sys- by TAJ on any of the various systems for the tax tem should be examined to avoid duplication of re- amount paid. Customers are provided an acknowledge- sources, given that currently there is more than one ment on the day of payment followed by the issuance of system. The synergies between the eGov and the TAJ the actual receipt by TAJ on the next day. In the event portals should be exploited to their fullest capability to of a dispute, the legal validity of this acknowledgement optimize the use of resources and to provide a seamless as the customer’s proof of payment is not clear. (Short and efficient experience to taxpayers in Jamaica. (Medi- Term – High Priority) um Term – Medium Priority) The BOJ and the GOJ should explore the possible Reconciliation procedures should be automated as expansion of existing financial literacy programs. soon as possible by the relevant authorities. The The BOJ is encouraged to consider adding e-merchants current manual reconciliation procedures between TAJ (selling products/services online) and remittance recipi- and the two commercial banks where it holds accounts ents as target groups of their financial literacy programs, could lead to delays and operational errors. (Short Term utilizing frameworks such as the World Bank’s Green- – High Priority) back program. Moreover, the scope should be expanded to include the digital aspects of financial services, the The BOJ and AGD should consider taking measures different digital payment instruments, access channels, to automate the current manual procedures used and cost efficiencies and to address specific “fear” fac- for uploading government payment files, whether tors that individuals and merchants have in using DFS. into the RTGS or the ACH. This would minimize any (Medium Term – Medium Priority) Table 4.2. Digital Financial Services: Policy Recommendations (1 of 3) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Policy, Legal/Regulatory Establish a regulatory BoJ Short Yes Framework, and Oversight framework for electronic retail term payment services using the existing provisions of the BOJA and PCSA. PRIORITY Amend sandbox guidelines to BoJ Short Potentially promote competition and term innovation in the payment ecosystem. Undertake a gap analysis to BoJ Short No identify the areas of opportunity term and existing challenges to move forward on the reform toward open banking. Engage in the development of BoJ Medium Potentially an e-KYC platform, including Term information related to CDD, in coordination with all relevant stakeholders. Spell out the legal basis for the BoJ Medium Potentially functioning of RPJ as an Term overseer of the ACH. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 96 Table 4.2. Digital Financial Services: Policy Recommendations (2 of 3) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Financial Infrastructure Consider revising the ACH’s ACH Operator Short No existing access and participation term criteria to enable both direct access and indirect tiering participation arrangements to all entities licensed by the BOJ, such as remittance service providers. PRIORITY Quickly operationalize the BoJ Short No interoperability feature of term JAM-DEX by the wallet providers under the overall direction of the BoJ. PRIORITY Put in place settlement risk ACH Operator Short No mitigation measures, such as term collateral or a guarantee fund mechanism, to mitigate any unwinding risk of the net clearing file in the event of a participant default. Take measures to further ACH Operator Medium No streamline and enhance the term capabilities of the ACH to provide safer and more efficient services. PRIORITY Ensure that MultiLink engages MultiLink Medium No with stakeholders and draw up a term blueprint and action plan to enhance its capabilities to process mobile payments, QR code–based payments, and e-commerce transactions. Ensure that JAM-DEX can use BoJ Medium No QR code–based payments and term e-commerce transactions. Market Dynamics Ensure that the process of BoJ Short Yes licensing sub-agents of the term remittance service providers is time-bound (currently it is open ended). Ban agent exclusivity arrange- BoJ Short Yes ments, as they stifle market term competitiveness and lead to de facto monopolies. Develop national QR code BoJ + Private Medium Potentially standards to foster interoperability Sector term across different payment instru- ments and PSPs, particularly for merchant acceptance. PRIORITY Digital Financial Services 97 Table 4.2. Digital Financial Services: Policy Recommendations (3 of 3) Is Legal Responsible Reform Area Recommendation Timing Change Entities Required? Market Dynamics Assess the remittance market in BoJ Medium No the country. term Establish a sub-agent interope- BoJ Short Potentially rability framework. term Financial Inclusion Ensure that customers are TAJ Short No provided with instant receipts term by TAJ on any of the various systems for the tax amount paid. PRIORITY Automate reconciliation TAJ Short No procedures through coordination term by the relevant authorities. PRIORITY Define and test the method of BoJ + AGD Short No integration between the AGD term and BOJ’s network through an Application Programming Interface (API) to automate the current manual procedures used for uploading government payment files. PRIORITY Explore synergies between the TAJ Medium No eGov and the TAJ portals to term optimize the use of resources and to provide a seamless and efficient experience to the taxpayers. PRIORITY Examine the current need for TAJ Medium No TAJ to have a single tax payment term system to avoid duplication of resources, given that currently there is more than one system. Expand the existing financial BoJ + Medium No literacy programs. Government term Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 98 Notes 1. GPFI (2016). 2. Government Securities Dematerialization Act (GSD Act), 2010; Financial Services Commission Act (FSC Act), 2001; the Securities Act, 1993. 3. The oversight policy document outlines the scope, approach, guiding principles and standards, and the tools of oversight. 4. The other components include: (a) JamClear-CSD (the central securities depository for the Government and BOJ securities), owned and op- erated by BOJ; (ii) Jamaica Central Securities Depository (JSCD) a fully- owned subsidiary of the Jamaican Stock Exchange (JSE) perform- ing the roles of a central securities depository (CSD), securities settlement system (SSS) and central counterparty (CCP) for corporate secu- rities. The funds leg of the securities transactions of both the government and corporate markets are settled in the JamClear-RTGS system. 5. Though the rules permit Cambios, and money service providers to become restricted members, it is not evident that these two types of enti- ties have been provided with restricted membership in JamClear-RTGS. 6. The regulatory sandbox includes deposit taking institutions, credit unions, money transfer operators, and fintech PSP in partnership with commercial banks. Products/services being tested include mobile wallet, e-commerce solutions, branded debit card, prepaid card. 7. Agents must be approved by BOJ as a safeguard for AML/CFT. 8. More information: https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?locations=JM 9. World Bank Remittance Prices Worldwide (2022): https://remittanceprices.worldbank.org/ 10. For more information on the World Bank Greenback Program, see https://remittanceprices.worldbank.org/project-greenback-20-remittanc- es-champion-cities 11. Fore more information on the OECD financial education frameworks: http://www.financial-education.org/home.html 12. Mylenko (2013). 13. World Bank (2007). 14. World Bank (2007). 15. FSB (2022). Digital Financial Services 99 5. DIGITAL BUSINESSES Promoting digital business growth through an enhanced business environment and capacity building KEY MESSAGES » Jamaica is relatively well ranked in terms of the number of digital businesses based on what the market size would have predicted. The country is ranked eighth in a list of 20 LAC countries on the World Bank’s 2022 Digital Business Indicators, showing that Jamaica has more digital firms relative to its market size and population compared to regional peers. » Jamaica’s top digital subsectors include web services, fintech, and marketing technology. The software and software-as-a-solution segments, which generally require higher skill levels, are growing but remain among the least developed. » Although e-commerce has been growing steadily since the adoption of the E-Transaction Act in 2007, high transaction costs limit further expansion. With projected revenues of US$669.1 million in 2023, e-commerce is forecast to continue to grow at a compound annual growth rate of 12.74 percent to reach US$1.1 billion in 2027. The GOJ, in collaboration with trade associations such as the Jamaica Manufacturers and Exporters Association, has been coordinating partnerships with global and regional businesses, including Amazon and Caribshoppers.com, to support Jamai- can companies seeking to expand their export activity through e-commerce. Despite this traction, there is still opportunity to reduce transaction costs and support the business development capacity of local firms. » Digital transformation among MSMEs appears limited. Less than 10 percent of digital business- es in Jamaica use platform-based or data-driven business models, which is below most regional peers. The next stage of digital transformation would be the wide adoption of both front-office and back-office functions (e.g., enterprise resource planning, customer relationship management, busi- ness analytics, and AI). This will help enhance the competitiveness of targeted Jamaican industries. » A few government programs, such as the Innovation Grant from Ideas to Entrepreneurship (IGNITE) and the Boosting Innovation, Growth and Entrepreneurship Ecosystems (BIGEE), are building the capacity of digital businesses and improving their access to finance to sup- port their growth potential. However, these programs are relatively small and could be scaled to further nurture digital start-ups to mature stages. Specialized business development services are insufficient to accelerate the pace of digital transformation. Digital entrepreneurship and associated soft skills, including leadership, need to be enhanced. Lastly, there is a need for more special- ized financing vehicles while promoting capital market development for digital businesses that have matured. Digital Businesses 100 5.1. Importance of digital businesses: through the digital transformation of traditionally offline Promoting productivity and economic businesses. Digital businesses supply new or improved digital technologies and services, facilitate access to inclusion larger and more dynamic markets for local firms, and generate strong network and demonstration effects that Digital businesses are defined as those that make in- promote the adoption of innovative business models and tensive use of digital technologies or adopt digitally digital technologies by offline companies. enabled business models to boost efficiency, reach new markets, and improve customer interaction. Digital businesses can enable the digital transforma- They are divided into two broad categories, each with tion of multiple sectors of the Jamaican economy, its distinct characteristics: (a) digital start-ups, and (b) leading to profitability improvements and produc- established digital businesses. More specifically, digital tivity gains to make Jamaican firms more compet- start-ups refer to early-stage ventures that create new/ itive in local and international markets. A 2021 dig- innovative digital solutions or business models as part of ital entrepreneurship assessment by the International their core products or services. Established digital firms Finance Corporation highlighted this finding, showing refer to platform-based and data-driven firms that have that the firms that adopted digital technologies were passed the initial start-up stage, having acquired suppli- more likely to have higher levels of productivity, output, ers, contractors, and consumers. profits, employment, and wages.1 More specifically, em- ployment and labor productivity are higher in firms that Digital businesses can play a strategic role in un- use electronic devices, digital transaction technologies locking opportunities for economic growth, job cre- (such as mobile money to pay suppliers and receive ation, and social inclusion in Jamaica (see Figure customer payments), and digital management solutions 5.1). In addition to their own contributions to productiv- (accounting and inventory control/point-of-sale soft- ity growth and competitiveness, both start-up and es- ware). In Jamaica, the expansion of digital businesses tablished digital enterprises are key enablers of growth offers employment opportunities and can improve the Figure 5.1. Digital Businesses New digital business models (e.g. platform or data firms) present unique opportunities for MSMEs to improve market access, scale, and increase efficiency. Commercial digital platforms are multisided online marketplaces that enable producers and users to create value together by removing market frictions, facilitating interactions and matching, and by exploiting and managing direct and indirect network effects. Data-driven technology firms systematically and methodically collect or aggregate large datasets and leverage advanced analytics to create value to customers. Opportunities Users » Removing inefficiencies: lower transaction costs, lower search costs, lower prices of intermediate and final goods, better quality of products and services. » Creation of new activities: platforms tap into spare physical or human capacity and identify new market niches, creating new jobs, improving Use financial inclusion, and increasing women labor force participation. Cases » SMEs digital tecnology and digital platform adoption: (i) fighting tax evasion, (ii) making formal the informal, (iii) helping SMEs upgrade quality of their products/services and better comply with sector specific standards, (iv) use data-driven solutions to streamline production and Efficient Market More operation processes. Intermediation transactions » & better Financial Inclusion: through digital payments and access to credit, but (BTB and BTC) matches also fostering greater (e)commerce for excluded segments i.e. SMEs, informal economy Core components New jobs Risks Creation of new opportunities & inclusive markets esp. for women » Growing dominance of one firm due to network effects and the & youth “winner-takes-all” market characteristic, especially platform and data-driven business models » Anticompetitive practices like exclusion and discriminatory practices Better compliance » Spontaneous deregulation despite the need to build trust esp. for Support SME with standards & quality new sharing-economy business models e.g. uber vs. taxi. upgrading & upgrading; » Use of data as a new source of market power. The increased networking lower costs collection and use of data can result in negative welfare effects if it is of operations used to exclude rivals from the market to the detriment of consumers. Source: World Bank Digital Assessment Diagnostic Methodology 2.0. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 101 competitiveness of key economic sectors, such as edu- Jamaica is a relatively high performer in terms of cation (for example, rapid skills trainings, digital learning digital business density in comparison to other marketplaces, and online education programs), agricul- LAC countries. Digital density is estimated using only ture (crop monitoring and soil quality programs), and CB insights data. The CB insights database is smaller logistics (business-to-consumer rideshare and busi- (with only 26 Jamaican businesses compared to the 106 ness-to-business delivery services from production ar- mentioned above) but gives a better sense of density us- eas to consumer centers), as highlighted in Jamaica’s ing only comparable data for a list of 20 LAC countries. Private Sector Diagnostic. Whereas most LAC countries are low performers when comparing globally, Jamaica is a high performer in terms of the number of digital businesses relative to its market 5.2. Current state of digital businesses: size (i.e., GDP and population in 2021). This shows that Limited digital business maturity and a Jamaica has more digital businesses relative to its mar- ket size compared to regional and other global peers. challenging enabling environment Most digital businesses operating in Jamaica are do- mestically headquartered. Based on a small sample of According to the World Bank Finance, Competitive- funded digital firms for which data are available, 82 per- ness, and Innovation’s Digital Business Indicators,2 cent are domestically headquartered (Figure 5.4) com- Jamaica saw the largest surge of new digital firms pared to 66 percent in LAC. Eighteen percent of foreign between 2011 and 2015, part of a broader trend in firms in Jamaica are from the United States, Sweden, the LAC region, based on 106 active businesses. India, and the United Kingdom. The available sample This number was obtained following a web scraping pro- size is small but, as shown in Figure 5.5, domestical- cess and may therefore largely underestimate the actual ly headquartered firms seem to be more or less equally number. As indicated in Figure 5.2. below, more than 63 distributed across 12 sectors, ranging from edtech to en- percent of digital businesses are less than 15 years old tertainment technology.3 compared to 58 percent for the LAC region. However, this relatively young digital business sector is one of the largest in the Caribbean region. Figure 5.2. Digital Businesses by Founding Years 40% 36% 35% 31%32% 30% 27% 25%26% 25% 20% 16%16% 15% 12% 10% 9% 10% 10% 7%7% 5% 3% 3%3% 4%4%4% 4% 2% 1%1%1% 0%1%1% 1%1% 0% 1971-1975 1976-1980 1981-1985 1986-1990 1991-1995 1996-2000 2001-2005 2006-2010 2011-2015 2016-2020 Jamaica: 106 Upper middle income LAC (excl. Jamaica): 24247 Latin America & Caribbean (excl. Jamaica): 28257 Source: FCI Digital Business Database 2022. Digital Businesses 102 Figure 5.3. Digital Business Density Performance and Number of Digital Businesses (2022) "Digital Business Density Number of digital LAC Performance when compared to business as of Country Name other LAC countries: Defined as 2022 (only using (Actual-Potential) / potential) *100" CB Insights data) Belize High-performers: Q5 21 Brazil High-performers: Q5 3624 Chile High-performers: Q4 566 Colombia High-performers: Q4 483 Barbados High-performers: Q3 13 Uruguay High-performers: Q3 104 Argentina High-performers: Q2 540 Digital business gap Jamaica High-performers: Q2 26 defined as (Actual-Potential) Honduras High-performers: Q1 29 / potential) *100 Mexico High-performers: Q1 919 High-performers: Q5 Costa Rica Low-performers: Q1 74 Q4 Peru Low-performers: Q1 176 Q3 Bahamas, The Low-performers: Q2 19 Q2 Panama Low-performers: Q2 57 Q1 El Salvador Low-performers: Q3 17 No data/excluded Guatemala Low-performers: Q3 45 Q1 Bolivia Low-performers: Q4 15 Q2 Ecuador Low-performers: Q4 51 Q3 Dominican Republic Low-performers: Q5 23 Q4 Trinidad and Tobago Low-performers: Q5 12 Low-performers: Q5 Source: FCI Digital Business Database 2022 (using CB insights data only). Figure 5.4. Percentage of Digital Businesses that are Headquartered Domestically vs. Abroad % of digital businesses operating in the economy 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jamaica (n=33) 82% 18% Upper middle LAC (excl. Jamaica)* (n=1939) 64% 36% LAC (excl. Jamaica)* (n=2985) 66% 34% Domestic firms Foreign firms Source: Analysis using Pitchbook data, which provide both operating and headquarter information. Note: *Pitchbook data only cover selective LAC countries, which are Argentina, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Jamaica, Nicaragua, Panama, Peru, and Uruguay. Note that Brazil is not in this analysis. In addition to being younger and more homegrown Jamaica’s top digital subsectors are web services, than the regional average, Jamaican digital busi- fintech, and business management technology. Al- nesses offer services across multiple sectors/prod- though most of Jamaica’s top digital subsectors are simi- uct markets. Over half of digital firms in Jamaica are lar to those in the LAC region, web services, edtech, and active in more than one subsector or product market, digital media stand out as uniquely prevalent in Jamaica. with 22 percent operating in three or more subsectors/ The relative size of the software/software-as-a-service product markets, higher than the regional average. segment, a uniquely skills-intensive segment, is slightly lower than in LAC, but with 10 businesses in a relatively small market, Jamaica seems to be faring well, though growing this segment further could help create a more vibrant regional market dynamic. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 103 Figure 5.5. Top Subsectors of Digital Businesses Headquartered and Operating in Jamaica Number of digital businesses 0 1 2 3 4 5 EdTech 4 FinTech* 4 Ecommerce* 4 MarketingTech* 4 Telecom 4 HealthTech 3 SecurityTech 3 SocialNetwork 3 TechHardware 3 BigDataAnalytics* 3 BusMgmtTech* 3 EntertainmentTech* 3 Source: This analysis only uses Pitchbook data, which provide both operating and headquarter information. Given that the sample size is small, overgeneralizations or broad conclusions on domestic vs. foreign comparisons should be reviewed with caution. Note: *Pitchbook data only cover selective LAC countries, which are Argentina, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Jamaica, Nicaragua, Panama, Peru, and Uruguay. Note that Brazil is not in this analysis. Figure 5.6. Distribution of Firms according to Presence in Number of Subsectors/Markets 60% 52% 51% 50% 43% 40% 31% 31% 31% 30% 20% 12% 12% 12% 10% 10% 4% 4% 3% 1% 2% 0% 1 Subsector 2 Subsectors 3 Subsectors 4 Subsectors 5 Subsectors or More Jamaica Upper middle income LAC (excl. Jamaica) Latin America & Caribbean (excl. Jamaica) Source: FCI Digital Business Database 2022. Note: Number of digital businesses with subsector information - Jamaica : 69, Upper middle-income LAC (excl. Jamaica) : 16947, Latin America & Caribbean (excl. Jamaica) : 20170 Overall trends are indicative of the type of digital technology, e-commerce,4 big data and analytics, busi- solutions being brought to the market. In the earlier ness management technology, and software/software as years, fintech and web service firms were first to enter the a service. Jamaican market, followed by more business-to-busi- ness sectors, such as marketing technology, security Digital Businesses 104 Table 5.1. Jamaica’s Top Digital Subsectors Upper middle-income LAC Upper LAC countries Jamaica (excl. Jamaica) (excl. Jamaica) Total Total Total Top 10 Firm % of Funding Top 10 Firm % of Funding Top 10 Firm % of Funding Subsectors **n firms** (Million Subsectors **n firms** (Million Subsectors **n firms** (Million USD) USD) USD) 1 WebServices* 17 11% 0 Ecommerce* 2841 10% 46 Ecommerce* 3332 10% 39 2 FinTech* 16 11% 19 MarketingTech* 2515 9% 42 FinTech* 3010 9% 47 3 BusMgmtTech* 14 9% 18 FinTech* 2377 9% 50 MarketingTech* 2852 9% 36 4 Ecommerce* 14 9% 2 Software/SaaS* 2190 8% 30 Software/SaaS* 2592 8% 37 5 MarketingTech* 13 9% 3 BusMgmtTech* 2080 8% 26 BusMgmtTech* 2481 8% 23 6 Entertainment Tech 12 8% 250 WebServices* 1753 6% 56 WebServices* 2045 6% 49 7 BigData & Analytics* 10 7% 0 BigData & Analytics* 1106 4% 37 BigData & Analytics* 1315 4% 33 8 EdTech 10 7% 0 SecurityTech 1016 4% 34 SecurityTech 1240 4% 30 9 Software/SaaS* 10 7% 10 EdTech 993 4% 13 Entertainment Tech 1194 4% 26 10 DigitalMedia 8 5% 0 HealthTech 967 4% 72 HealthTech 1173 4% 60 Note: *Denotes that this subsector is common across top 10 subsectors in Jamaica, upper-middle LAC (excluding Jamaica), and LAC countries (excluding Jamaica). **Some digital businesses offer digital solutions in multiple subsectors, and hence this number is firm-sector pairs. Total funding can be counted multiple times in different subsectors in this case as the total funding does not differentiate which subsector it supports. Since there are global digital businesses operating in multiple countries and total funding does not differentiate which country the funding is going into, the analysis uses headquarter countries to count them only once. Table 5.2. Top Five Subsectors by Founding Years – Jamaica Top 5 Subsectors by Founding Years - Jamaica 1991-1995 1996-2000 2001-2005 2006-2010 2011-2015 2016-2020 1 FinTech (n=2) WebServices (n=4) Ecommerce (n=3) WebServices (n=5) FinTech (n=6) BusMgmtTech (n=7) MarketingTech (n=3) MarketingTech (n=2) BigDataAnalytics Ecommerce (n=5) 2 (n=6) 3 WebServices (n=2) SecurityTech (n=2) MarketingTech (n=3) FinTech (n=4) 4 BusMgmtTech (n=3) MarketingTech (n=3) WebServices  SoftwareSaaS (n=3) SecurityTech  EdTech (n=3) ECommerce  5 SocialNetwork  SofwareSaaS  EdTech (each n=2)  Note: Top funded subsectors are subsectors with more that 1 digital business that received funding in that time period.  Means the subsector became higher in ranking compared to the previous founding year bracket.  Means that the subsector became lower in ranking compared to the previous founding year bracket. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 105 Jamaica’s digital businesses and entrepreneurs catalyzed numerous initiatives, including the establish- have made their mark on the global stage.5 Some ment of the E-Learning Project, the Universal Access digital entrepreneurs and innovators who come from the Company Limited, and the Jamaica Intellectual Property diaspora and are co-founders and alum of leading glob- Office. Moreover, the plan required the development of al accelerator programs (for example, Silicon Valley’s a National Cybersecurity Strategy in 2015 and a busi- Y Combinator) are creating similar programs, as in the ness process outsourcing (BPO) services sector with the case of Tech Beach Retreat Lab (TBR Lab),6 to benefit objective8 of doubling revenue between 2016 and 2020. Jamaican and Caribbean entrepreneurs specialized in Several foundational policies are currently underway to digital solutions ranging from agriculture to health care. accelerate the digital transformation, support the upcom- Globally, Jamaica enjoys a vibrant diaspora that stays ing national digital ID policy, encourage open data ini- connected through professional associations and Ja- tiatives, prevent cybercrime, regulate e-commerce, and maican Chambers of Commerce in major metropolitan protect consumer data, all of which could help unlock the areas, particularly in the United States, Canada, and the digital transformation of the economy. United Kingdom. In addition, institutional organizations, such as the Ministry of Foreign Affairs Diaspora Founda- As part of the GOJ’s vision, the growth of the BPO tion and the Global Jamaica Diaspora Council, seek to sector motivated a new National Strategy for the strengthen Jamaican ties through conferences, invest- Global Digital Services Sector in 2022.9 The new strat- ments, partnerships, business development, training, egy focuses on higher-value jobs and shifts BPO to in- and mentoring. formation technology outsourcing (ITO) and knowledge process outsourcing services provided at a 4:1 to 1:1 Despite the lack of firm-level technology adoption ratio by 2025. Jamaica’s proximity to the North American data, there are indications that firms in general are markets, the COVID-driven mandate of remote work, the not adopting technology. Internet adoption among Ja- country’s qualified English-speaking workforce, and its maican firms is limited, and activities that the internet cost competitiveness have unlocked a steady and signif- is used for are generally unsophisticated. According to icant growth of the BPO services sector, with revenues a 2018 survey conducted by the Planning Institute of doubling from US$400 million in 2016 to US$780 mil- Jamaica, approximately two-thirds of firms in Jamaica lion by mid-202110 and supporting employment growth did not use the internet. Among those that did, the vast from 17,000 to 43,167 direct employees in 2021. Based majority (94.5 percent) used it for sending or receiving on the 2025 strategy,11 the objective would be to reach emails, and only a few used it for other activities, such as US$1.15 billion in revenue and employment growth of receiving orders for goods and services (45.1 percent), 70,400 direct employees by challenging regional peers, training staff (28.5 percent), or delivering products online particularly the Dominican Republic and Costa Rica, with (14.3 percent).7 However, it is worth noting that globally, higher-value services to continue building Jamaica’s adoption accelerated in response to the pandemic, lead- comparative advantage in specific vertical market offer- ing roughly a third of companies across the developing ings and digital technologies. world to increase their use of, or to start using, the inter- net, social media, and digital platforms, and 17 percent The 2013 MSME and Entrepreneurship Policy Frame- to invest in new equipment, software, or digital solutions. work was updated in 2018 but does not specifically However, lack of data in the context of Jamaica limits this target digital businesses or support the further dig- kind of post-COVID-19 analysis in that country. italization of MSMEs.12 The framework remains incom- plete, with a dual agenda to promote transformation and innovation among MSMEs, ranging from existing small firms looking to export to newly established start-ups Policy and regulatory environment looking to become a business. This sector-wide frame- work sought to enhance policy elements across stages of the enterprise growth cycle, from inception to read- The Vision 2030 Jamaica ICT Sector Plan provided a iness for the regional and international export market. framework in 2012 and emphasized the importance Priority areas include creating an enabling environment, of ICT adoption across all sectors, including the pub- increasing financing access, enhancing business devel- lic sector. The Office of the Prime Minister envisions Ja- opment support, fostering a culture of entrepreneurship, maica as a digital society and has the responsibility to and creating social value and tackling cross-cutting is- provide an overall policy framework to guide a national sues. strategy. Under the leadership of the Office of the Prime Minister and the MSETT, the Vision 2030 Jamaica ICT Although there is no comprehensive digital business Sector Plan ensured consistency and continuity in the policy, the GOJ supports the development of digi- long-term planning across the economy, emphasized tal businesses through various programs. In 2019, the importance of an ICT plan across key ministries, and The Ministry of Industry, Commerce, Agriculture and Digital Businesses 106 Fisheries implemented a three-year digital marketing economy are particularly important and urgent as the program in collaboration with the Organization of Ameri- government is seeking to foster job creation. can States (OAS) to support up to 25,000 MSMEs with a web and social media presence. In May 2022, the same ministry announced a more comprehensive MSME dig- Ecosystem constraints italization plan in collaboration with the EU, which pro- vides funding for MSMEs to go fully digital. The objective is to help MSMEs digitize their processes and shift their software resources into cloud-based platforms. Other The digital business ecosystem faces key con- public institutions, including the Jamaica Promotions straints impeding its development. In addition to Corporation (JAMPRO) and the Jamaica Business De- the gaps in the legal and regulatory environment men- velopment Corporation (JBDC), and trade associations, tioned above, these constraints include lack of access including the MSME alliance, Smart Business of Jamai- to finance, insufficient business development services, ca, and the Jamaica Manufacturers and Exporters As- weak human capital, poor access to markets, and lack sociation (JMEA), are promoting specific programs and of platform- and data-based tools. Before presenting the member MSMEs are capturing the digitalization bene- main constraints below, it should be noted that no major fits. Moreover, the JMEA is coordinating partnerships disparities between women and men or specific chal- with global and regional businesses, including Amazon, lenges to pursuing digital business development oppor- SAP, and Caribshoppers.com,13 among others, to facili- tunities have been identified at this stage. tate their members’ business transformation and export market readiness. The Development Bank of Jamaica Access to financing: from early-stage to credit fi- (DBJ) has several programs that include (a) the Innova- nancing tion Grant from Ideas to Entrepreneurship (IGNITE) pro- gram, launched in October 2015, to provide grants to 27 Access to finance is one of the main constraints innovative businesses; and (b) the Boosting Innovation, companies face with respect to growth, transforma- Growth and Entrepreneurship Ecosystems (BIGEE), tion, and digitalization. Overall, 27 percent of MSMEs launched in 2020, a 10-year project to help scale 1,500 have a bank loan or line of credit compared to the LAC businesses through grants and technical advisory ser- average of 48 percent.14 More than 40 percent of Jamai- vices in the first five-year cycle of the program. Lastly, in can firms—and 47 percent of MSMEs—consider access 2022, the GOJ, through the DBJ, established a US$100 to finance to be a limitation compared to an average of million patent grant facility to help innovators to protect 32 percent in the region.15 As highlighted by the Country their intellectual property locally and internationally. Private Sector Diagnostic,16 several factors can explain these disparities, including (a) banks’ perception that The implementation of policies aimed at supporting MSMEs are high risk due to information asymmetries digital businesses will require an overhaul of the and prevalent informality in these firm segments; (b) lack regulatory environment. An in-depth review of the legal of adequate traditional collateral owned by MSMEs that and regulatory environment has not been conducted in banks require; (c) limited bank strategies and programs this study, but the overall regulatory context can benefit that are tailored to MSMEs; and (d) limited financial his- from improved provisions that would be specific to digital tory for MSMEs that makes it difficult for banks to assess markets. Additional legal and regulatory reforms might risks. When MSMEs do manage to access credit, it usu- be necessary in the following areas: (a) e-transactions ally tends to be at a double-digit interest rate to factor in to ensure the legal validity of data messages and digi- the risks involved. Consequently, most MSMEs tend to tal contracts, for example, in e-commerce; (b) consumer use their own funds or seek alternative sources of credit, data protection to promote digital trust and supplier data delaying expansion and limiting productivity and compet- protection and ensure fair trade practices among digital itiveness. platforms; (c) competition policy and contestable digital markets to prevent unfair market advantage by, for in- Given that 79 percent of entrepreneurs17 are between stance, limiting a platform’s ability to give preference to the ages of 18 and 44, access to finance in the pri- its own products in rankings or advertisements; (d) taxa- vate market is particularly challenging for these tion of digital activities to achieve equitable taxation be- younger groups in Jamaica and LAC, especially tween digital and analog firms; and (e) the gig economy when their digital firms and start-ups are also young. to better regulate platforms that connect individual con- Most options for formal access to finance require that tractors to employment opportunities so as to promote companies have a long history of operating and holding adequate business practices and social protections for assets to back up their loans. Banks tend to shy away these workers, such as drivers, tutors, and other free- from financing young and small businesses, driving en- lancers. Reforms that are aimed at promoting the gig trepreneurs to alternative financial entities that provide Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 107 expensive credit. While most digital start-ups need cap- regional institutions to educate investors and others in the ital rather than debt to grow, the market for seed, ven- venture capital/private equity space in the region. Since ture, and private equity funds remains underdeveloped. 2021, the DBJ has been assessing strategic options to Moreover, incubators and accelerators tend to focus on pursue a Pan-Caribbean fund-of-funds that would boost competency-building and advisory services in the early private capital investment and institutional and retail in- stages, unlike those in developed markets. vestor opportunities to participate in the growth of Jamai- can businesses. In 2022, the DBJ, in partnership with the In response to the financing challenges that MSMEs MOFPS, the World Bank and private equity firms, estab- face, the GOJ implemented a series of programs lished three equity financing alternatives18 for SMEs.19 aimed at developing capacity among MSMEs and within the digital entrepreneurship ecosystem. In Overall, Jamaica’s funding landscape is still in its 2013, the Jamaica Venture Capital Programme was de- early stage. As highlighted in Figure 5.7 below, the num- veloped by the GOJ through the DBJ to provide alter- ber of investment deals for digital businesses in Jamai- native equity financing. Entrepreneurs and small busi- ca remains low (n=11) and they are mostly early-stage ness owners had the opportunity to receive funding by financing, which is consistent with the country’s small pitching their business ideas to qualified local and inter- digital business ecosystem. The financing size remains national fund managers. In 2015, the DBJ launched the very small (18 - - - X 90 hours X X Unknown Odyssey SheCodes SheCodes - - - 1.000 X 6 months - X Active Foundation Workshops » IADB Lab » NCB Foundation » Citi Foundation » Microsoft Foundation » Jamaica Trust for Chamber JET Program 17-34 - Unemployed 1.200 X X X Active the Americas of Commerce Underemployed » PSOJ » Caribbean School of Data » MOEY » Private training institutions Distance Likely Learning and University of minimum: Employed UNESCO Teacher Training - 2.000 X X - - X Unknown the West Indies undergraduate as a teacher Strategies in degree the Caribbean Virtual Likely National College Instructional minimum: Employed UNICEF for Educational - 2.428 X X Self-paced - X Completed Leadership undergraduate as a teacher Leadership Programme degree » Caribbean Technology Maritime Advancement 18-29 - Unemployed 1.600 X X X 1 year X X Active University Program » Amber Group Universal Service Fund Jamaica Highschool ICT Technology and <18 Middle school Unemployed - X - - X Active Clubs Digital Alliance University of Caribbean Mobile Innovation Project - - Entrepreneur 464 X - X Unknown the West Indies World Bank Youth Office of the Employment in the Digital and - - - 1.534 X X - X Unknown Prime Minister Animation Industries Source: Author’s compilation from multiple sources and interviews. Note: This list is indicative of the engagement of multiple stakeholders in digital skills development in Jamaica. It includes initiatives that have been implemented in the last five years and have publicly available information on the internet, but it is not exhaustive. Sources of information vary in terms of quality and detail; the author has made informed assumptions whenever possible but they can be mistaken. Programs are constantly evolving and updated information is usually unavailable, which may make some of the information in this table outdated, imprecise, or mistaken. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 175 Annex 8. Main Skills Demands in the Jamaican Economy ª 3-D Printing ª Information/Network Security ª Application Development ª Innovation/Product Development ª Application of GIS ª Internet of Things ª Artificial Intelligence ª Legal Research ª Augmented and Virtual Reality ª Machining and Fabricating ª Bitcoin ª Market Research ª Blockchain ª Nanotechnology ª Building Information Modelling ª Precision Farming ª Business Analytics ª Programming ª Cloud Computing ª Project Management ª Content Writing ª Quality Auditing ª Cryptocurrency ª Renewable Energy ª Customer Service ª Research and Development ª Data Mining and Analytics ª Risk Identification and Management ª Digital Literacy ª Robotic Process Automation ª Digital Marketing ª Smart Farming ª Drone Technology ª Social Media Management ª Engineering ª Software Development ª Entrepreneurship ª Soil Fertility Management ª Foreign Language ª Systems/Networks Administration ª Green Manufacturing ª Wastewater Management ª Hydrologic Management and Monitoring ª Web Development Application ª Hyperbaric Welding ª Writing and Understanding Codes ª Industrial Maintenance Source: HEART, 2021. “Skills Demand Survey.” Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 176 Annex 9. Occupations with Growing Demand that Require Advanced and Highly Specialized Digital Skills Skill level Growing or emerging Examples of ICT-dependent (sub)sectors occupations Basic / Advanced / Intermediate Specialized Cybersecurity Security, malware, data, threat intelligence, system security configuration, and forensic analysts Security engineers Technology risk, security software development managers Knowledge Process Data entry clerks. Business support (legal, financial, Outsourcing HR, and managers) (formerly known as BPO1) Technical support specialists, IT Technicians Software engineers Tourism Customer service staff Marketing staff Business managers Health General and specialist medical practitioners Nurses Medical technicians Pharmacy professionals Administrative staff Creative industries Graphic, web, and video game designers Animators Video and film editors Digital marketers Construction Project managers Civil, structural engineers Architects Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 177 Skill level Growing or emerging Examples of ICT-dependent (sub)sectors occupations Basic / Advanced / Intermediate Specialized Manufacturing Mechanical, civil, mechatronics, electronic, industrial engineers Data, environmental, food, computer scientists Software developers, programmers, robotics technicians Agriculture Chemists and biotechnologists Production technology engineers and managers Source: Author, with data from labor market trends reports compiled and published by the Ministry of Labor and Social Services between 2018 and 2021. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 178 Annex 10. Primary Laws and Regulations Govern- Sectoral Laws and Regulations ing the Data Protection Framework in Jamaica ª The Telecommunications Act of 2000 protects privacy of customers’ information. In addition to the Data Protection Act of 2020 (Act No. 7), the Jamaican legal and regulatory framework covers the following data management, privacy and data protection ª The Banking Services Act of 2014 provisions: General Laws and Regulations Case Law ª The Constitution of Jamaica (1962, amendments ª The Supreme Court of Judicature of Jamaica through 2015), in article 13(3)(j), safeguards the issued, on April 12 2019, a ruling (Claim No. right to privacy. 2018HCV01788) which found the National Iden- tification System in violation of the constitutional ª The Electronic Transactions Act of 2006 (Act No. privacy safeguards and unanimously declared 15 of 2006) regulates data messages, electronic the entire National Identification and Registra- commerce, electronic signature, and electronic tion Act of 2017 void. The Supreme Court found evidence, among others. that the mandatory requirement of biometric identification abrogated the right to privacy.2 ª The Interception of Communications Act of 2002. ª Access to Information Act (ATI) of 2002 ª Official Secrets Act of 1920 ª ATI Regulations of 2003 ª National Identification and Registration Act 2021 (Act No. 25 of 2021). ª The Cybercrimes Act of 2015 ª The Law Reform (Fraudulent Transactions) (Special Provisions) Act of 2013 Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 179 Annex 11. Main Provisions under the DPA a State or territory outside of Jamaica unless it ensures adequate protection for the rights and freedoms of the data subjects. In determining what is considered an ‘ad- The DPA establishes the following legal bases on equate level of protection’, the Commissioner would con- which personal data must be processed: explicit sider, among others, the following aspects: (a) the nature consent, contractual necessity, legitimate interests, of the data; (b) the State or territory of the final destina- legal obligations, interests of data subjects and pub- tion; (c) the laws of the State or territory; (d) the inter- lic interest. Any processing of personal data must sat- national obligations of the State or territory; and (e) the isfy at least one of those legal bases to be deemed law- security measures taken by the State or territory. Also, ful. However, the data controller’s obligations under the the DPA sets out certain limitations to this data protection DPA are subject to certain exemptions, such as where standard, such as where the data subject has consented the personal data is being processed in the interest of to the transfer or where the transfer is necessary for sub- national security or for journalistic, literacy, artistic, and stantial public interest or the performance of a contract.4 research purposes, among others. The data controller Furthermore, the DPA has no explicit restrictions con- would be exempted from complying with specific data cerning the cross-border data flow of non-personal data. protection standards under the DPA and disclosure re- quirements.3 The DPA also sets out some legal requirements for the data controllers, including (a) the appointment of The DPA requires data controllers to comply with the a qualified data protection officer when applies; (b) the following eight data protection standards: (a) fair and registration with the OIC and payment of an annual reg- lawful processing, (b) purpose limitation -specified and istration fee; (c) processing of personal data following lawful purpose-, (c) data minimization -adequate, rele- the data protection standards and principles of the DPA; vant and limited-, (d) data accuracy -accurate and up (d) complying with the data subject’s rights; (e) submit- to date-, (e) data retention -not kept for longer than is ting an annual data protection impact assessment; (f) necessary-, (f) always considering data subject’s rights, like GDPR, reporting any contravention of the data pro- (g) data security -implementing the appropriate techni- tection standards or security breach to the OIC within 72 cal and organizational measures- and (h) international hours after becoming aware of the situation; and (g) no- transfers not allowed unless the destination ensures an tifying every affected data subject of any contravention adequate level of protection. Contravention of those data or security breach which is aware of. Although the DPA protection standards shall be punishable by significant outlines certain rights, obligations and responsibilities of fines or imprisonment. data controllers5, such a legal framework is missing pro- visions on the status of data processors, their obligations The DPA also outlines certain safeguards concerning and benchmarks of compliance. cross-border data transfer aligned with the GDPR. The cross-border data transfer provision (Sec 31) con- templates that personal data shall not be transferred to Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 180 Annex 12. The OIC’s Mandate “Watchdog” powers include monitoring compliance with the DPA, and any regulations made under the statute. Additionally, the Commissioner may intervene as a party The OIC’s legal mandate includes enforcing data in any proceedings before a court, in any matter concern- subjects’ rights, monitoring and enforcing the data ing the processing of personal data or the enforcement of protection standards, performing rulemaking and any provision of the DPA, except those proceedings for advocacy functions, and executing investigatory, the prosecution of an offense. ‘Corrective powers’ such advisory, watchdog, and corrective powers. Under as issuing warnings, orders, and reprimands in cases of the DPA, the OIC has powers to monitor and enforce non-compliance are also attached to the Commission- data protection standards. The OIC also performs a er’s mandate. Advocacy functions include promoting ‘rulemaking’ function to prepare data protection guid- data protection requirements and good practices by data ance and codes. Its mandate includes investigatory pow- controllers, disseminating information to the public about ers, including the assessment of compliance with data the application of the law, and educating and advising protection standards by data controllers and ‘advisory representatives from specific industries and the general powers, including providing recommendations and opin- public on any data protection-related matters. ions to Parliament and other government bodies on any matter relating to the application of the Act. The OIC’s Notes 1. Business Process Outsourcing 2. DigWatch (2019). 3. Jamaica - Data Protection Overview | Guidance Note | DataGuidance 4. Jamaica - Data Protection Overview | Guidance Note | DataGuidance 5. DPA, Sec. Digital Economy for Latin America and the Caribbean - Country Diagnostic: Jamaica 181 Administ r d b