Jwala Rambarran: Trinidad and Tobago - a growing regional financial
centre in the Caribbean
Feature address by Mr Jwala Rambarran, Governor of the Central Bank of Trinidad and
Tobago, at the Institute of Banking and Finance of Trinidad and Tobago (IBF) Annual
Graduation Ceremony 2014, Port-of-Spain, 28 June 2014.
* * *
Good Evening,
We are at the end of June graduation month, a time when classes of diligent and hopeful
people are filled with excitement to attend the traditional graduation ceremonies. These
exciting ceremonies are often glamorous, as everyone makes quite an effort, like all of you
did, to look special. So the low point of the night is usually the dull speech by the guest
speaker, which luckily, for tonight is yours truly. So let me introduce myself to you. I'm Jwala
Rambarran, Governor of the Central Bank of Trinidad and Tobago, and if you believe the
headlines, the person to blame for why you can't even get 100 US dollars for your vacation.
But don't always believe headlines, and maybe I can also challenge another preconceived
notion about Graduation Ceremony speakers, that is.... I'll be boring. Let me assure you, I
will just partially bore you. I'll get to the exciting stuff first; I did not bring any US money with
me tonight. Instead I brought one simple message for you, worth more than all the excess
US dollars in the banking system right now, which stand at around 90 million US dollars. My
100 million US dollar message is:
This is just the beginning for you. Lifelong learning is the best way to keep investing in
yourself. You are on the right track with furthering your skills in the financial services sector.
There is a skills deficit here at home and continuous learning will be your currency in the job
market. As financial services professionals here's where your lifelong learning will pay off.
It's interesting that Trinidad and Tobago did not purposefully start out to become a regional
financial centre. Yet, it happened. Today, the financial services industry is the second largest
in Trinidad and Tobago, after the dominant energy sector, accounting for almost 15 per cent
of GDP.
More than 250 financial institutions perform various roles here and in the Caribbean region,
and in some instances, even globally. Our financial sector employs almost 55 thousand
people in now diverse and increasingly complex jobs. Even as the country grappled with
subpar economic performance and the CLICO crisis, our financial sector still managed to
create some 6,000 jobs in the past five years. Apart from traditional retail bank tellers and
corporate lenders, many more jobs are being created in higher value-added activities such
as trade finance, investment analysis, portfolio management, product structuring, risk
management and technology.
As Trinidad and Tobago enters a period of more sustained recovery and growth, our financial
sector has significant opportunities ahead of it, which means you have more potential
opportunities ahead for you. However, taking advantage of these opportunities will demand
deeper knowledge, expertise and skills from you. Be strategic... keep investing in yourself so
these opportunities will not pass you, as there are major counteracting forces reshaping
global finance that will influence the trajectory of our financial sector.
As Governor, I can give you some premium perspective about these global forces, simply
because my television is always on Bloomberg.
As I said, the world is facing an acute skills shortage. A 2012 study by the McKinsey Global
Institute found that the most important trend facing the global labour market is too few
highskill workers and not enough jobs for low- and medium-skill workers. At current rates of
educational attainment and labour force growth, McKinsey predicts a potential shortage of up
to 40 million high-skill workers around the world by 2020, or 13 per cent of demand for these
workers.
Second, the global financial system has shrunk, and is now smaller as a proportion of the
world economy. For three decades, capital markets and banking systems rapidly expanded
and diversified, but now that process - called financial deepening - has stalled, a lingering
effect of the global financial crisis. Global financial assets fell to around 315 per cent of global
GDP in 2012, from 355 per cent of global GDP in 2007, before the eruption of the crisis. The
drop in financial assets is not only confined to the industrial countries but also extends to the
emerging market economies whose financial deepening has largely ground to a halt. This
means fewer market players, fewer employers, fewer transactions and ... connect the dots ...
possibly fewer employees. Skills deficit and a smaller global financial system mean your
skills need to be constantly sharpened.
I'll give you another example of why "today you are in, but tomorrow you are out", which
cements my lifelong-learning-sharpen-your-skills message. In a classic case of "revenge of
the nerds", technology is rapidly redefining the way financial institutions compete, do
business and interact with their customers. From online and mobile payments to biometric
authorization, the rise of cloud computing means many more financial transactions can be
done faster, automatically and at lower cost. Financial technology companies like Pay Pal
and Xoom resemble banks, but are not. Yet they are changing the ways in which people
borrow and save, pay for things, buy foreign exchange and send money. Technology giant
Google is making serious inroads into financial services with the introduction of a new
payment system called Google Wallet.
These global forces will fundamentally change the profile of jobs in finance in the coming
decade and beyond. At the Central Bank, for instance, we have a growing demand for
specialized financial supervision skills in anti-money laundering, specialty insurance,
actuarial science, cyber security and operational risk. As financial services professionals it
may be of interest to you, to know that almost 15 per cent of Central Bank's new employees
since I assumed office are in the area of financial supervision and another 10 per cent are in
economic research. I have sought to build capacity in strategic areas to ensure we fulfil our
economic and financial stability mandate.
As the country look to the future, we must ensure we are generating the right skills to stay
relevant and competitive.
In thinking about how to generate the breadth and depth of skills, I believe we can draw
lessons from the actions policymakers usually take when managing a financial crisis. Three
distinct remedies are usually applied to a financial sector in crisis: recapitalization
programmes, measures to boost liquidity, and a sober look at how the financial ecosystem
should work in the future.
As a starting point, Trinidad and Tobago needs to be able to draw talent from a bigger pool
than it currently has in the financial services industry. Recapitalization is needed to draw out
the talent that currently remains untapped. Here we should quickly leverage our Trinidadian
diaspora community. Many of us have a narrow definition of the diaspora as those born in
the country but presently living outside the country. However, if we include others with
historical links to Trinidad and Tobago, our diaspora becomes at least 360,000 strong,
consisting of highly skilled workers, graduates from colleges and universities, management
and other professionals. We need to find ways to fully tap into this potential labour pool for
human capital and financial investments.
Second, in the same way central banks took steps to increase liquidity in the financial
system, we must do better to ensure we have the necessary labour mobility to match supply
more easily with demand, both within our borders and from other parts of the world, including
the Caribbean. Too often, we hear of the difficulties that finance and other professionals have
in moving to another country where their existing qualifications are not recognized. Indeed, I
have heard one highly successful Trinidad businessman lament that it is far easier for him to
hire a security guard from Nigeria than to employ a financial analyst from Nigeria. At a time
when skills shortages are acute, such barriers cannot be allowed to remain. We need to
consider creating a common framework for skills recognition that gives employers and
employees the confidence they need to move more freely across borders.
Third, we cannot rely on emergency measures alone. In the longer term, we need to review
the financial architecture that governs skills and human capital, if we are to avoid
breakdowns in the future. We must develop a strong ecosystem that puts programs in place
to address the financial skills gaps before they become critical. As we seek to build a
knowledge-driven economy, tertiary education must play an increasingly important role in
enhancing the country's human capital base. Tertiary education imparts knowledge and
highlevel skills as well as provides basic and applied research needed to support innovation and
entrepreneurship.
In Trinidad and Tobago, the Government Assistance for Tuition Expenses (GATE)
programme has expanded access to tertiary education by making it more affordable. An
average of some 53,000 students have benefited annually from this programme over the
past five years. Total expenditure on GATE is equivalent to one-tenth of the total recurrent
education (secondary and tertiary) budget over the same period. It is not only the level of
GATE spending that is important but also the effectiveness of that spending, which needs to
better aligned to economic priority areas and to future skill needs. It may interest you to know
that 70 per cent of GATE funding is concentrated in just a few areas - Management,
Educational Services, Data Processing/IT, Engineering, Health Services, Natural and Pure
Sciences, and Accounting.
Finance, of course, is one economic priority area. At the Central Bank, we are helping to
build this financial eco-system through two major initiatives. Over the past decade, we have
partnered with De La Rue, our currency printers, to offer the annual, prestigious De La Rue
scholarship to students pursuing post-graduate studies in economics. This year, as we
celebrate our 50th Anniversary, we are offering five De La Rue scholarships beyond
economics to finance and actuarial science, areas in which we are building skills. From 2015,
we will offer three De La Rue scholarships.
Since 2007, we have spearheaded the National Financial Literacy Program (NFLP) to equip
our citizens with the knowledge, skills and tools to make informed financial decisions. We are
now transforming the NFLP into an accredited training agency. One of the programmes of
this new training agency will be a Certificate in Central Banking that will provide our entry
level staff with broad-based knowledge and understanding of monetary policy, financial
supervision and reserve management.
I firmly believe that IBF has a key role to play in helping to build our financial ecosystem in
which finance professionals keep pace with skills challenges to the future. I am pleased to
hear about IBF's future initiatives for training in banking and finance, including online
learning. But there is always more to be done. For instance, IBF can establish a set of
industry standards for finance professionals that provide a clear road map for building their
competencies, as they progress in their careers, across different jobs. Such Financial
Industry Competency Standards will also help to build a clear pipeline of talent and leaders in
finance, so that our citizens can take advantage of the opportunities that a growing financial
industry will create.
IBF can also help to develop Trinidadians for positions of leadership in tomorrow's financial
world. Many of our industry pioneers and senior professionals have a wealth of experience to
share. Every year IBF bestows fellowship awards to stalwarts who've contributed to building
the financial services industry. Among those being awarded tonight are Mr. Carl Hiralal who
is the Central Bank's current Inspector of Financial Institutions, Ms. Suzanne Roach, our
current Financial Services Ombudsman, and Mr. Wendell Mottley a former Minister of
Finance and current Chairman of the Unit Trust Corporation. The introduction of a
wellstructured IBAF Future Leaders Scheme can help to transfer knowledge from these current
leaders to future leaders such as the graduating class tonight. Such an IBF Future Leaders
Scheme would complement the succession planning schemes in individual financial
institutions.
Clearly as Trinidad and Tobago emerged as the regional financial centre and has aspirations
to become an international financial centre you, the graduating class of 2014, will perhaps
have many opportunities, which will require you to continuously engage in lifelong learning.
As the financial crisis of the last six years has taught us, there are no guarantees in the world
of finance, but your training and your own moral compass are the best tools for guiding and
defending yourselves against the Wolves of Wall Street.
I wish you well in your future careers.
I thank you.