Is the English Speaking Caribbean in a Different World?
The Heads of Government within the OECS and the Private Sector will meet on the 11th of October, 2002 just days away. The OECS Secretariat sponsored a meeting of the OECS Private Sector, preparatory to the high level consultation between the OECS Authority and the Private Sector on 27-28 September, 2002.
The OECS Private Sector will be given a unique opportunity to present their case touching on every aspect of industry and to seek a collaborative approach with their governments at the regional, subregional and individual country level.
My concern is that while the developed world do what they have to do for their productive sectors, we in this part of the world are restricted by all types of agreements. The developed world make the rules and break them at will or do I say amend them.
There is another aspect that needs some attention and that is assistance for specific sectors outside of the agricultural sector where hard cash is put in from time to time, while the other sectors such as manufacturing, services and trading are not treated the same, except for concessions. Concessions can only be realised from successful operations. Successful operations need adequate financing, so in real terms, few benefit.
While on the one hand governments are assisting each other to bail out of financial hard times, in some cases they are at the point of bankruptcy, the Private Sector which is expected to contribute to the national economy is left to suffer and die.
We have been exposed to a number of initiatives that are yet to work for the indigious Entrepreneur. Everything we do must have a history. The company must have a track record and it must be viable. These two situations are mostly possible with matured businesses which are also experiencing problems in many instances.
In today's world the business starts off with borrowed capital which puts it immediately under pressure. A very important aspect is that whereas in times past businesses operated by the book where 331/3-50% was normal and in some cases as much as 100% mark up, at least the latter existed in the USA, today it is quite different. Then, there is the problem of the money laundering issue.
This example should emphasise the pricing strategy which is currently applicable. An item costing $100.00, conventionally we would apply 40%, it will sell for $140.00 but instead with the new business culture, business persons will make a conscious approach to accept a profit of $5.00 per unit and run with the ball. The other consideration is that the supply sources have moved from US, Canada and Europe to the Far East and wherever else in the world that goods are competitively priced. Bulk buying by syndicates does improve competitiveness as products are shipped to a central point and distributed to satellite businesses globally.
I do not for one moment accept that our indigenous business people do not have the ability to respond to this competition but it is all a matter of money.
In recent times with the constant decline in the world economies, the matter of money has become more crucial. There was a point in time when Banks were encouraging all progressive business persons to borrow until they choke. It was free for all. Suddenly, things changed with the decline in banana prices and intense competition experienced by the manufacturing sector and further intensified by the sourcing of cheap goods, thus putting pressure on local retailers through a deliberate pricing structure that reduces markups. Things have changed drastically. Where are those Banks now?
It is time for the governments of the region to step in and seek to establish some mechanism for individuals and business persons to allow them breathing space to re-organize their businesses. In the developed world there are such mechanism as Chapter 11 and others.
The Private Sector is in dire need for refinancing assistance and cash flow. Development finance is also needed which will give them an opportunity to get the initial bridging finance to put their project on a footing to get the necessary level of funding. There are persons with prime land for residential and tourism development but do not have the initial funding to put the project on the market. In other instances, business persons in the services sector needs further financing. In many cases business persons have found their niches after exhausting their initial finances and the only way that the project can proceed is by further injection of capital.
The whole approach to dealing with Bank finances needs to be revisited and the laws impacting on the relationship between lender and borrower needs immediate intervention by Government. It has been observed that initial failures in business provides a basis for success in future enterprises. Persons who have failed in business are stigmatised. Insolvency removes one's right to vote. Legislation to correct these problems is urgently needed.
The Entrepreneur must be encouraged to be the best at what he/she does. It must be bourne in mind that failures in businesses do not always mean mismanagement, but change of market conditions do cause disaster. As in flying, it is not always the pilot error but weather also plays a part in disaster.
The question of money and indebtedness needs to be visited. I call for a Conference on Indebtedness seeking to find answers to dealing with the problem legally and mentally, and a second Conference for Banking Solutions to the current state of indebtedness.
I believe that the problem of indebtedness could be dealt with creatively and has to be a collaborative effort between the Government and the Banks.
I have discussed this proposal of organizing the two Conferences with the Management Committee of SLISBA. The organization is willing to host the Conferences.
These are interesting times and necessitates the full co-operation between the public and private sectors. We eagerly await the results of the Basterre High Level Meeting. In the meantime, I am hopeful that the problem of money will be given high priority on the meeting's agenda.
Keep the faith! God is in Charge!
October 5, 2002