Jamaica
News - Real Estate - Finance (April
08, 2005)
Those who are blessed have a higher responsibility Says AIC's Lee-Chin
"Those who are blessed - who are born in
countries that equip them with confidence and
experiences that foster growth - have
a higher responsibility to those less fortunate," Michael Lee-Chin, Chair
and CEO, AIC Limited, told participants today at
the annual Business & Society Conference
held by the University of Toronto's Rotman School of Management.
Lee-Chin described how, as a young student, he
struggled to pay the tuition for his
first year of university, until a senior Jamaican government official
agreed to provide him with a scholarship. "I would not be standing
here today without his generosity," he said.
Years later, it was time to repay the
favor to his country of origin.
When AIC bought National Commercial Bank
Jamaica Ltd. in January 2002, the Bank
was lethargic and non-competitive. "We bought 75 per cent of the Bank
that had 40 per cent ownership of the
marketplace, and our purpose from the beginning
was nationalistic: to build a better Jamaica."
Rife with high crime, weak
currency, weak infrastructure, and citizens with low confidence, Lee-Chin
asked himself, 'if I was CEO of Jamaica, what
would I do to fix it?' Many Jamaicans
would regularly export their savings to Canada or somewhere else, which
further damaged the economic system by weakening the currency and raising
interest rates, leading to a cascading negative cycle.
"Business leaders must put their minds to
the challenges of their communities.
We looked at the challenges facing Jamaica, and we realized that if
the country was wealthier, many of its problems would likely go away. As
luck would have it, creating wealth was something
we know about."
Lee-Chin says there are two key traits of
firms that are successful over the
long-term: "first, they remain entrepreneurial in spirit as they grow; and
second, they have a bigger purpose beyond making
money."
The principles of wealth
creation are the same, whether you're an individual, a business or a country,
he says. "First, you must optimize and compound individual capital,
and there are three variables associated with
this: it entails maximizing knowledge,
experience, and control of people's emotions."
"We realized that if we could help educate
the population, we could create and
retain human capital." The result: the Jamaica Education Initiative.
"We created a credit card (called 'Key Card'), where one per cent
of all charges go to education. This allows
everyday people to be philanthropic in
their consumption." A year after this was implemented, Key Card
use was up 88 per cent. "The funds allowed us to create 200 scholarships;
13,600 students were able to write the exam
that leads them from high school to
college; and mentoring and tutoring programs were established." The
virtuous cycle was off and running.
The second thing you need to do to create wealth
is to optimize and compound financial
capital, says Lee-Chin. "We made a commitment: to not repatriate
one penny of Bank dividends back to Canada, despite the fact that the
Bank is largely Canadian-owned. Last year, this enabled us to reinvest
$25 million in Jamaica; and this year, we expect
it to rise to $35 million."
The funds have been spent on everything from
real estate, to Life of Jamaica (a
life insurance company), to the Kingston Wharfs. "The best part is, people
see AIC spending money in Jamaica and they say,
'maybe I should, too'." In 2003,
the Jamaican stock exchange saw a 45 per cent increase; and in 2004, it
rose by 67 per cent.
Three years after buying three-quarters of NCB,
there is "a cool breeze of
optimism blowing through Jamaica," says Lee-Chin. "Locals have started
to rethink their former habits and are
exporting less of their savings. Confidence
is turning - tourist resorts are expanding by thousands of rooms, the
currency has stabilized; the interest rate has dropped from 36 per cent to
under 13 per cent; and the fiscal deficit is
coming down.
"We are convinced that doing well will be
a natural by-product of doing good,"
he says. Recently, former U.S. President Bill Clinton called Lee-Chin
up to ask him to tour the world with him telling
people about AIC's initiatives in
Jamaica, which he feels constitute an ideal model for corporate citizenship.
But Lee-Chin is too busy running his companies. "Now is not the time,"
he says.
Other speakers at the 3rd Annual Rotman Business
& Society Conferenceincluded Michael E. Porter, Bishop William Lawrence
University Professor, Harvard Business
School; Susan Shepard, Chief Ethics and Compliance Officer, Nortel
Networks Corporation; Paul Tsaparis, President and CEO, Hewlett-Packard
(Canada) Co.; Rose M. Patten, Head of Office of
Strategic Management and Senior
Executive Vice-President, BMO Financial Group; Don Tapscott, President,
New Paradigm Learning Corporation; Adjunct
Professor of Strategic Management, Rotman
School; Penny Collenette, Executive in Residence, School of Management
and Adjunct Professor, Faculty of Law, University
of Ottawa; Julia Kirby, Senior Editor,
Harvard Business Review; and, Dean Roger Martin of the Rotman School.
Presented by The Monitor Group, the conference
is the official launch of the AIC
Institute for Corporate Citizenship at the Rotman School. For more details
on the AIC Institute, please visit: www.rotman.utoronto.ca/aicinstitute/
The University of Toronto's Joseph L. Rotman
School of Management is on a mission
to become one of the world's top tier business schools by taking an innovative
approach to management education, built around Integrative Thinking(TM)
and Business Design(TM).
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