SOCIAL SECURITY AND ECONOMIC GROWTH

BASIL SPRINGER COLUMN TO APPEAR IN THE BARBADOS ADVOCATE’S BUSINESS MONDAY ON 10 APRIL 2006

SOCIAL SECURITY AND ECONOMIC GROWTH

“Come, let us build ourselves a city, with a tower that reaches to the heavens, so that we may make a name for ourselves and not be scattered over the face of the whole earth” – Genesis 11: 4.

It was indeed, an honour for me to be invited to give the 26th anniversary lecture of the St. Lucia National Insurance Corporation last Thursday night. My topic was “The Interdependence of Social Security and Economic Growth”. My four supporting postulates were : (1)Economic Growth is a necessary prerequisite for Poverty Reduction and Socio-Economic Well-Being; (2) Successful Business Enterprises stimulate Economic Growth; (3) The Passion of an Entrepreneur coupled with the optimal combination of ‘Management’ and ‘Financial Investment’, appropriately shepherded, enhances the chances of Sustainable Business Success; and (4) ‘Effective Management’ is the Collateral that provides the Security for Seed Capital and Equity Investment.

In the context of Social Security Schemes, the collection and prudent investment of contributions by National Insurance Corporations is intended, not only to ensure that every national enjoys Social and Financial protection, but also to assist in the Economic Growth and Development of the Nation. In turn, Sustained Economic Growth increases the collection base of the contributions and strengthens the Corporation.

National Insurance Corporations were encouraged to invest in Enterprise Development, with ‘Effective Management’ as the collateral that mitigates the risk against failure. This will not only stimulate the Economic Growth and Development of the Nation but, in so doing, it will also boost the Image and Stability of National Insurance Corporations.

My aim was to show how CBET, through the application of The CBET Shepherding Model™, can be engaged in smart partnership with National Insurance Corporations to build a secure future for the people.

It was argued that the CBET model, as delineated by, the passion of an Entrepreneur coupled with the optimal combination of ‘Management’ and ‘Financial Investment’, enhances the chances of Sustainable Business Success.

CBET predicts that the traditional average failure rate of 80% can be converted into an average success rate of 80% by implementing the CBET shepherding model. ‘Effective Management’ is the Collateral that provides the Security for Seed Capital and Equity Investment so investors no longer have to focus exclusively on ‘hard’ collateral. This innovative investment thrust will be the stimulus for accelerated economic growth rates.

Over the last 4½ years CBET has developed a portfolio of 42 projects which are at different stages in the process from the preparation of the Business Opportunity Profile to Business Implementation. In addition, CBET is now getting several unsolicited enquiries per month from entrepreneurs with good ideas and is seeking to expand more aggressively.

CBET therefore facilitates the entrepreneur by inviting third party individuals or organisations with access to money to invest in one or more ways, either individually or as part of a syndicate with other organisations. There are five distinct ways to invest: (1)High Impact Growth Strategy Workshops; (2) Strategic Visioning Retreats; (3) Business Plan Preparation; (4) Seed Capital Funding; and (5) Phased Incremental Growth. The direct benefits range from discharging social responsibility through an attractive financial return on investment to enhancing deal flow and stimulating economic growth.

As a final thought on NIC investment, I advised that, over the last year, CBET has worked with Calidad Investment & Financial Services Inc., based in Barbados, as a strategic alliance financial partner, given the importance of the money node of the triad in the CBET Shepherding Model. In discussion with Jerry Blenman the Principal of Calidad, we think that we could add a measure of sophistication to NIC investment in the CBET model.

The NIS contributions are a long term quality of life investment. There is the need to generate a minimum return on these funds managed on the basic tenets of the funds maturity profiles aligned with population aging, mortality rates and the level of unemployment. There may therefore be a case for promoting the fund as a “balanced fund” which attends to holistic national development by creating fund segments for enterprise development by sector.

If we take into account the minimum requirements of the retiring workforce social security dependency levels (an NIC quality of life indicator) and the impact of invested funds in the various sectors on GDP growth, we may structure a balanced fund as a function of unemployment rates. Some mapping of historical, current and future NIC investments may be possible with the appropriate statistical analyses to monitor and control the quality of the investment.

I concluded by reiterating the case for a partnership between the St Lucia National Insurance Corporation and CBET. In this partnership, the NIC is being asked to take advantage of one or more of the investment opportunities available through the CBET model, where ‘Effective Management’ is the collateral that protects against the risk of failure of the business.

I proposed that the potential benefits to the NIC resulting from this investment are: (1) the discharging of social responsibility towards national development; (2) a contribution to increasing deal flow for investment and expansion which will augment the contribution base; (3) an attractive financial return on investment to boost the stability and expansion of the assets of the corporation; (4) an unemployment driven investment strategy by productive economic sector; and (5) a boost to the corporation’s Image.

(Dr. Basil Springer GCM is Change-Engine Consultant, Caribbean Business Enterprise Trust Inc. – www.cbet-inc.org)

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