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Devastating Epidemic of Crime and Insecurity in Latin America & Caribbean | Luis Felipe López-Calva

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By Luis Felipe López-Calva

UNITED NATIONS, Wednesday May 15, 2019 (IPS)
– – Development is a very uneven process, accompanied by heterogeneity in
outcomes across sectors, across regions and across income groups. Such process,
Albert Hirschman elegantly established about 60 years ago, constantly generates
tensions and demands for redistribution of resources and power. In this sense,
conflict is inherent to development.

Long term outcomes in terms of
prosperity, equity and peace will always depend on the way in which such
tensions are processed. Indeed, it depends on the way in which actors interact
to solve these tensions; it depends on effective governance.

If tensions are solved by excluding some groups systematically, inequity and violence are more likely to characterize societies. Indeed, we see in Latin America and the Caribbean that violence has become a mechanism to adapt to these tensions and to process conflict.

The Regional Human Development
Report 2013-2014 “Citizen Security with a Human Face”
 showed
the ways in which crime and insecurity undermine development in Latin America
and the Caribbean. Crime erodes the well-being of citizens and deters economic
growth (Enamorado et al, 2013).

Despite recent progress in citizen
security and marginal reductions in violence, LAC remains
the most violent region in the world
. Indeed, a recently released report
by Igarape Institute
 states that while Latin America is home to
8 percent of the world’s population, 33 percent of all homicides take place
there.

Moreover, 17 of the 20 countries with them most homicides
in the world are in LAC. While, WHO classifies 10 homicides per 100,000
inhabitants as an epidemic, the average in LAC was 24 in 2016, marginally
reduced to 21.6 in 2018.*

We see in the figure below that homicide rates
in the region, in particular for some countries in Central America and the
Caribbean, are much higher than those of countries with similar levels of GDP
per capita
.

For example, Honduras and Congo have similar GDP per
capital rates, however Honduras suffers 56.5 homicides per 100,000 people,
while Congo suffers 9.3. Similarly, while Mexico has close to 20 homicides,
Montenegro, with a similar GDP per capital, only has 4.5.

The homicide rate in Colombia is over to 25, while in Lebanon it is 4. What explains these high rates of violent crime in LAC?

Villalta, Castillo and Torres offer
an overview of existing theories to answer this question in the region. The
economic perspective argues that individuals weight the costs (of eventual
punishments) and benefits to decide whether they engage in crime or not.

The social-structural perspective views fluctuations in
crime and violence as a result of changes in societal structures, culture and
institutions; it supports the idea that rising trends in criminality are a
consequence of changing labor market conditions, exclusion, and economic
crises.

The political perspective argues that recent processes in
LAC countries, such as transitions towards democracy, shifts in political
agendas or even the “War on Drugs”, have weakened state control and left
inefficient local governments in charge of public safety.

Finally, social disorganization theory argues that,
similarly to language, roles and social expectations, antisocial and criminal
behaviors are socially learned.

According to this view, areas within cities with low
low-income levels, racial heterogeneity, and residential instability are more
likely to experience social disorganization. Depending on the country context,
a combination of these theories helps explain crime in LAC.

Empirical
research offers support for the different theories: the sense of impunity in some countries encourages law offenders to
engage in criminal activities
; the lacks of confidence in police and justice systems sometimes
prevent victims from reporting crimes (moreover, it’s not rare that corrupt
police collaborate with organized crime in some countries, for money or fear); support
for extralegal violence is significantly higher in societies characterized by
little support for the existing political system
; and the lack of
economic opportunities also plays a role as a strong correlation between crime and youth unemployment has been
found
.

Evidence
also demonstrates the effect of inequality in crime (the case of Mexico is
discussed by Enamorado et al, 2016).

As I have mentioned in the past, the pavement of
development in LAC requires effective governance as pre-condition to improve
productivity, inclusion and resilience. That is, effective governance is about
creating socio-economic opportunities, strengthening institutions and enhancing
citizen security.

These
are challenging tasks as these figures show. Fact-based initiatives such as INFOSEGURA which
aims to promote and improve the quality of information on citizen security in
the region, are critical public policy instruments to address this challenge.

*Homicides rates are expressed per 100,000 inhabitants throughout the post.

Luis Felipe López-Calva is UN Assistant Secretary-General and UNDP Regional Director for Latin America and the Caribbean.

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Barbados PM Tightlipped on Sale of Country’s Majority Shares in LIAT

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Prime Minister Mia Mottley says she will not be having any discussions on the issue in the public domain.

BRIDGETOWN,
Barbados, Thursday May 16, 2019
– As LIAT shareholder
governments struggle to come up with a viable solution to keep the island-hopping
carrier in the skies, Prime Minister Mia Mottley is remaining tight-lipped on
the talks while a fellow shareholder suggests Barbados wants to offload its
majority stake.

Mottley stopped short of saying whether Government would
dispose of its 49 per cent interest in the cash-strapped carrier, declaring
instead that she will not be having any discussions in the public domain.

She would only say that she was focused on ensuring reliable and affordable regional transport.

The Prime Minister was responding to a question during the
annual luncheon of the Barbados Employers’ Confederation (BEC) at the Lloyd
Erskine Sandiford Centre yesterday.

Mottley said: “Let’s just say we agree on the mission, and
the mission is that there must always be reliable affordable access for travel
in the region as there must be nationally. And I can assure you and the country
that we are working on this every day.

“But you also have to take the reality of an existence as
you find it and then determine whether the modality that you have is the best
mechanism by which to deliver on that objective.”

Her comments come amid speculation that Bridgetown intends
to give up its shares so it could start its own airline. It’s been a week since
fellow shareholder, the government of Antigua and Barbuda, confirmed that it
had officially submitted a document to authorities in Barbados indicating
interest in buying its shares.

According to reports out of St John’s, following a recent
meeting of the airline’s shareholder governments at which Mottley was not
present, Prime Minister Gaston Browne said a proposal was submitted to the
Barbados Government on May 7, and he was anticipating a favourable response.

The Barbados representative reportedly indicated that the
proposal would be examined.

While sources have indicated that the Barbados Government
was willing to sell its shares, responding to the question for an update on
regional transport and issues relating to LIAT today, Mottley said she would
speak on the matter at an “appropriate time”, suggesting that discussions were
at a delicate stage.

“I have been in public life long enough to know that when
discussions are at a sensitive stage that the worst thing you can do is up the
ante by trying to have some kind of public expression that may well lead to
hardened positions and an inability for people to negotiate in good faith,” she
said.

“Suffice it to say that the government of Barbados, at the
appropriate time, when discussions are concluded with stakeholders at all
levels, will speak to the country.

“Whatever means we choose, whether existing or other, there
will be a commitment to providing affordable, reliable air travel between those
in the Caribbean because without that we accept that there will be a serious
constraints on our people. But there are multiple ways of being able to do that
in the context within which we operate.”

Mottley added: “Similarly, we are not the only player so
that we also have to be mindful of that. Fortunately, the feminine genes in me
do not require of me, the need to beat chest in public.”

In addition to Barbados and Antigua and Barbuda where the
airline is based, the other major shareholding governments are St Vincent and
the Grenadines and Dominica. After years of coaxing, Grenada last week
announced that it was officially a shareholder.

The four territories together make up just over 94 per cent
shareholding interest.

The remaining shareholders are made up of private companies,
other Caribbean governments and employees.

LIAT and other officials have been engaged in back-to-back
meetings trying to find a solution to keep the airline afloat, while exploring
the possibility of a minimum guarantee scheme, which would see countries
benefiting from the airline services contributing financially.

LIAT currently employs over 600 people and operates 491 flights weekly across 15 destinations. (Barbados Today)

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Jamaican Financial Group Takes over Regional Insurance Conglomerate

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NCB Financial Group Limited now owns nearly 62 per cent of the outstanding shares in Guardian Group Holdings.

KINGSTON, Jamaica, Thursday May 16, 2019 – The largest and most profitable financial services group in Jamaica now owns regional insurance conglomerate Guardian Holdings Limited (GHL).

NCB Financial Group Limited (NCBFG) says it has successfully completed the acquisition of 74,230,750 ordinary shares in GHL, following the granting of all necessary regulatory approvals, including in Jamaica and Trinidad & Tobago, and the closing of the take-over bid earlier this month.

The shares were taken-up and paid for on Monday.

Based on the shares acquired, NCBGH now owns nearly 62 per
cent of the outstanding shares in GHL.

“As we stated at the beginning of this journey, we believe
this transaction is a game-changer in the history of the region. Amidst the
context of the de-risking impacting the region, we are proud and excited about
the implications and prospects of two leading indigenous Caribbean institutions
coming together to drive economic growth, customer and shareholder value,” said
NCBFG Chairman Michael Lee-Chin.

Patrick Hylton, Group President and CEO of NCBFG added that
with each having become stand-alone regional leaders, “NCB and GHL combined
have the opportunity to become a world class financial services conglomerate,
which has positive implications for our shareholders, our region and its
citizens.”

GHL CEO Ravi Tewari said the development should allow his
firm to better serve the region.

“Since the acquisition of the first block of shares in 2016,
the Guardian Group began to see opportunities for a very positive impact for
the shareholders, clients and employees of the Guardian Group. This further
deepening of the relationship between two leading Caribbean companies augurs
well for the acceleration of these positive impacts for Guardian and the region,”
he said.

NCBFG was incorporated in April 2016 as the financial
holding company for National Commercial Bank Jamaica Limited. Through the bank
and its wealth management, life and general insurance, and offshore banking
subsidiaries, it provides a wide array of financial products and services.

The NCB Group includes NCBJ, NCB Capital Markets Limited and
its subsidiaries in Barbados and Cayman, NCB Insurance Company Limited,
Advantage General Insurance Company Limited, NCB (Cayman) Limited, Clarien
Group Limited and its subsidiaries in Bermuda, Guardian Holdings Limited and
its subsidiaries, as well as NCB Global Finance Limited in Trinidad and Tobago.

GHL, the parent company for the integrated financial services group Guardian Group with a focus on life, health, property and casualty insurance, pensions and asset management, serves markets in 21 countries across the English and Dutch Caribbean, including Trinidad and Tobago, Barbados, Jamaica, Curacao, Aruba, St Maarten and Bonaire.

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Fortress Funds Achieve Strong Results in First Quarter of 2019

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BRIDGETOWN,
Barbados, Thursday May 16, 2019
– Funds managed by Fortress
Fund Managers had achieved “consistently strong results” at the end of the
first quarter of 2019, following an encouraging start to the year.

The good news was shared with investors in the leading fund
manager’s March 2019 quarterly report, released this month. It comes against
the backdrop of a move by the United States Federal Reserve to pause its rate
increases implying that “global interest rates may stay lower for longer and
continue to support financial markets,” the report stated.

The report focused on three funds: the flagship Caribbean
Growth Fund, the Caribbean High Interest Fund which focuses on income and
capital preservation, and the Caribbean Pension Fund.

The Caribbean Growth Fund gained 5.7 per cent in the first
quarter and was up 1.1 per cent over the past year as global stocks recovered
strongly from the weakness of last year. The Net Asset Value (NAV), which is
the total value of the securities the fund owns divided by the number of fund
shares outstanding, finished March 29 at $6.0082. The Fund’s annual compound
rate of return since its inception in 1996 has increased to 8.4 per cent per
year. 

Solid
returns in US, international, and emerging markets drive Growth Fund’s returns

While Caribbean stocks saw mixed returns during the quarter
with Jamaica and Trinidad strengthening slightly as shares in Barbados
weakened, global equities rallied to start the year, helped by a more friendly
interest rate and global trade backdrop than had obtained through most of 2018.

“The Fund benefited from its substantial investments in the
US, international and emerging markets equities via the Fortress Global Funds,
with solid returns in these areas driving the Fund’s overall return for the
quarter,” the report said.

With regard to Barbados, the report noted that the
government’s “fiscal reforms and the aftermath of the domestic bond
restructuring are likely to keep a lid on economic growth in the
short-term.”  It went on to add, however,
that Fortress was hopeful that the steps taken would yield better prospects in
the long-term to the benefit of businesses in the island.

The Caribbean High Interest Fund achieved a return of 1.5
per cent for the first quarter though it is down 0.5 per cent over the past
year. Its annual compound rate of return since inception in 2002 is now 4.1 per
cent per year. The NAV of the Fund’s Accumulation share finished March 29 at
$1.9575, while the Distribution share finished at $0.9984. During the quarter,
the fund benefited from the “rallying bond market and from some of the same
improvement in risk appetite that lifted stock markets.”  Net assets of the Fund were $136 million, up
from $131 million this time last year.

Fortress is hopeful that the recent quieting of
international trade frictions will allow global economic growth to resume its
prior upward trend after last year’s interruption.

“If this happens, interest rate increases may eventually
re-enter the picture. The average term to maturity of the Fund’s portfolio
remains relatively short to limit its sensitivity to interest rate changes,”
the report said.

With the Fund having had only “minimal exposure to the
government of Barbados bonds prior to the default; there is consequently the
potential to add exposure selectively now that the risk/reward proposition has
shifted”.

Diversification
a significant strength of Fortress funds

The three classes of shares under the umbrella of the
Caribbean Pension Fund rose between 1.6 per cent and 5.1 per cent in the first
quarter of the year.  This constitutes a
return of between -0.6 per cent and 1.6 per cent over the past year.  The fund manager reiterated that “proper
portfolio diversification is an essential ingredient especially for very
long-term pension investing, and this diversification is a significant strength
of the Fortress funds.”

Despite Fortress’ expressed wish to see some changes on the taxation
front, the recent Barbados budget did not announce a correction to the current
double taxation of pensions.

“We remain hopeful that one will be coming soon because the
machinery of pensions everywhere is predicated on at least minimal tax efficiency
and / or outright incentives,” stated the report.

Fortress also reminded investors that it seeks and continues
to find attractively valued areas of global and Caribbean stock markets in
which to invest at prices that imply substantial future returns.

“There will always be ups and downs but we are cautiously
optimistic on the outlook from here,” the report concluded.

Fortress manages more than $650 million across 11 different funds with regional and global investments.

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