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JOLLY INVESTMENT OR JOLLY RISK? A TEST OF VISION AND GOVERNANCE
By Professor C. Justin Robinson
Pro Vice-Chancellor and Principal, UWI Five Islands Campus
The Antigua and Barbuda Social Security Board’s proposed $75 million investment in the defunct Jolly Beach Resort has ignited debate and deep reflection across the nation.
Critics have raised alarms over transparency and fiduciary risk, while others argue that this bold move could become a pioneering model for how pension funds support national development.
Aside from the political and trust issues, “me nah touch dem,” I am of the view that the proposed investment highlights the challenges of managing pension funds sustainably in Small Island Developing States with limited capital markets.
A Pillar Sector with Fragile Roots
Tourism is the beating heart of the Antigua and Barbuda economy, accounting for over 60% of GDP and thousands of jobs. Yet ironically, relatively few major tourism assets are locally owned.
While foreign investment has brought scale and marketing reach, it has also left Antigua and Barbuda with somewhat limited domestic control over its most vital industry.
The proposed acquisition of Jolly Beach by the Social Security Board offers a rare opportunity to change that.
Reviving Jolly Beach—a once-thriving property that drew thousands of visitors and employed hundreds—presents not just a chance for returns, but also for reclaiming local ownership in the tourism economy. That, however, demands not just ambition, but careful execution.
An Investment Constrained by a Thin Capital Market
Like most Eastern Caribbean nations, Antigua and Barbuda operates within a narrow capital market ecosystem.
Domestic stocks and bonds are limited, real estate investment trusts are virtually non-existent, hence the available pool of diversified, high-return instruments is shallow.
For pension funds with growing liabilities and an aging population, this creates a strategic dilemma: how to find adequate returns in a low-yield, low-liquidity environment?
Global Evidence: Real Estate in Pension Portfolios
Global pension fund practice provides compelling evidence for real estate investments as a strategic asset class.
According to the latest industry data, pension funds worldwide now allocate approximately 10% of their portfolios to real estate investments, with this allocation generating average returns of 8.1% in 2024, outpacing many other asset classes.
The $55.7 trillion global pension fund industry has increasingly recognized real estate as providing both diversification benefits and inflation protection essential for long-term pension obligations.
Leading institutional investors such as CalPERS in California, Canada Pension Plan Investment Board and Fortress Pension Fund in Barbados have demonstrated the strategic value of real estate investments. The key in every successful case? Professional oversight, strategic alignment, and risk management.
The Critical Importance of Cash Flow Matching
Pension Obligations Must Be Met in Cash
A fundamental principle that cannot be overlooked is that pension commitments must ultimately be met through cash payments to beneficiaries.
This creates unique liquidity management challenges that real estate investments must address through careful structuring. Leading pension fund practice emphasizes cash flow matching strategies to ensure liquidity needs are met. As demonstrated by successful implementation at major funds:
- Short-term cash flow matching earmarks the next several years of benefit payments and administrative expenses so plans do not need to sell assets during market downturns to meet liquidity obligations.
- Mature pension plans with negative cash flows (paying out more in benefits than receiving in contributions) must be particularly careful about illiquid investments.
For the Antigua and Barbuda Social Security Board, this means the Jolly Beach investment must be structured to ensure:
- Predictable cash generation through hotel operations that can contribute to meeting pension obligations.
- Liquidity buffers maintained separately from the hotel investment to meet short-term benefit payments.
- Professional cash flow forecasting to match expected hotel returns with projected pension outflows.
The evidence from successful pension fund real estate investments demonstrates several elements:
Professional Hotel Management: Jolly Beach must be operated by an international hotel management company with proven Caribbean experience, measurable performance metrics, and alignment with pension investment objectives.
Comprehensive Risk Framework: Implementation of institutional-grade risk management including stress testing, scenario analysis, and regular performance monitoring against hospitality benchmarks.
Transparent Governance: Public disclosure of all investment terms, performance metrics, and risk management procedures, following international pension fund transparency standards.
Liquidity Management Excellence: Maintenance of adequate liquid reserves, professional cash flow forecasting, and contingency planning for tourism downturns.
Portfolio Integration: Ensuring the hotel investment complements rather than concentrates the overall Social Security portfolio, with appropriate diversification safeguards.
Conclusion: Opportunity Through Excellence
The Social Security Scheme has a duty to protect contributors’ funds. But it also has an opportunity to build long-term wealth and domestic economic resilience. The proposed Jolly Beach investment can serve both ends—but only with institutional-grade governance, professional management, and comprehensive risk management.The evidence from global pension fund practice is clear: real estate can provide essential diversification, inflation protection, and attractive risk-adjusted returns when professionally managed within appropriate risk frameworks. The challenge for Antigua and Barbuda is not whether to invest in real estate, but whether to do so with the same professional standards and risk management practices that have made pension fund real estate investments successful worldwide. The stakes are too high for anything less than excellence. Contributors’ retirement security and the nation’s economic development both depend on getting this right.
Prof. C. Justin Robinson, a Vincentian and UWI graduate, holds a BSc in Management Studies, MSc in Finance and Econometrics, and PhD in Finance. With over 20 years at UWI, he has served in various leadership roles, including Dean and Pro Vice Chancellor, Board for Undergraduate Studies. A Professor of Corporate Finance with extensive research publications, he is actively involved in regional financial institutions and is currently the Principal of The UWI Five Islands Campus in Antigua and Barbuda.
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Professor Robinson, I read your well reasoned and thoughtful piece and still have much concerns. I simply do not oppose things just for opposing sake. I have no political affiliation and I approach everything with an open mind. I have been one of the strongest advocate for transparency and accountability in government which has been sadly for years. Fundermentally I am not against the investment of Social Security funds. I am against this particular portfolio knowing fully well how these hotels are run and the lack of transparency and independence that will likely take place. We have a history of how we do things here and I am just worried that we might be approaching another “gamble and wager” of Social Security funds with no real answerability and I maintain my stance.
I am particularly intrigued with your comments that there must be professional hotel management in place in order to ensure success. You further went on to say that Jolly Beach MUST be operated by an international Hotel Management Company with proven Caribbean experience, measurable performance in metrics and alignment with pension investment objectives. I hold my belly when I read this. You concluded that the stakes are too high for anything less than excellence. Said you “contributors retirement Security and the nations economic development both depend on getting it right.” I agree wholeheartedly but it’s our history and past that worries me and provides little hope.
@Audley Phillip July 24, 2025 At 3:41 pm
I won’t call you a liar, because so far you have only voice your criticism of any and everything the PM did. If you have no problem with the investment but how you believe it would be run, then why not say that. Because the PM did say it will be run by a management firm and a seperate investment committe will oversee the investment. But even when that was said you still have concern. Well I too had concern which I voiced and when the PM came back withi his response and gave 100% guarantees that the government will see to it that the investment is secured at all times. It therefore becomming a win win situation for Social Security. WEhat other arguments can one have then. And furthermore the PM is not taking a dime out of Social Security, he will raise money and make the investment on behalf of Social Security. And even that seems to be changed now. If you listened to Maurice Merchant yesterday morning he said the government will give Social Security the Finished product. Therfore he is coming back to my earlier suggestion to make the invesytment through NAMCO and then when the hotel is operating hand over the shares to Social Secutiry. By then he can wipe off the entire $300million Bond that Social Security hold from the government. And if they wait until Calvin Ayre has build his Nikki Beach Club the value of Jolly Beach will be even higher and they may have a surplus or only give Social Security half or three quarter of the shares in order to liquidate the bond. You see it was good that you guys protested. It gave the PM more time to think about the entire deal. I personly still believe the entire Jolly Beach property needs to be broken down and a Five Star hotel built from scratch. The rooms just do not cut it. I tried staying there in the past. Sleeping in the room was enough. Taking a shower was awful. And many investors that looked at the place came to the same conclusion. But as Fernandez says it is good for tourists that sit at the back of the plane. But then he should see that they are sitting on prime beach front property.
You need a five star club in that property nothing less.
Professor, thank you for your well reasoned opinion. I always welcome your point of view. I hope the critics and the haters will not label you as an ABLP mouth piece. But by now you know how partisan our people are. Many didn’t wanted UWI to establish a University here, but the very same persons are now teaching there and their children are going to that very same university. The is the hypocritical side of them I cannot stand. And they will never come and say they were wrong. And so they do with everyuthing. When years from now Jolly Beach will be proven to be a very lucrative investment they will not come back to the public and repent. Global Port they march against and today we have seen the benefits of the Cruise Tourism under the management of Global Port. We are even being paid a higher head tax than before GPH came on the scene. I would like for you and the university to educate our people economically by holding more public economic forums with especially the young people who are at UWI Five Island. We need to see what they are all about. If they have the ability to think for themselves and will not be dumb down by others.