EDITORIAL – Reasoning over family silver
Once again, like some recurring decimal, the question of the sale to overseas interests of a landmark corporate entity has raised its head.
The offer of the Canadian company Emera to shareholders of the Barbados Light & Power Holdings Limited has intensified the debate that started up again recently when there was an offer from Republic Bank of Trinidad and Tobago to acquire more shares in the Barbados National Bank. Critics of these proposals have been making their voices heard on the call-in programmes, and now the Republic offer is off the table for the time being.
Charges of selling the family silver have been made, somewhat unfairly, since even before the current discussion, both companies had substantial foreign shareholding, and it is greater control, by acquiring more of the shares, that is the main issue.
It is just as well therefore that reason, and not the raw emotion often expressed in these debates, be brought to bear on the discussion. Every Barbadian would no doubt wish to see our major corporations owned and controlled by local investors. That is a desirable goal, but short of nationalizing these entities, it is difficult to know where the money is going to come from to achieve this objective.
Our country is a young nation only barely a generation away from the kind of poverty that mandated a hand-to-mouth existence for the majority of our people. Education has provided desirable and socially cohesive upward mobility, but the acquisition of wealth, which would allow for investment of the kind that would generate enough capital for broad-based ownership of our landmark companies, is at least another generation off.
In fact, the creation of the Barbados National Bank and the Insurance Corporation of Barbados by the Tom Adams administration in the early 1970s was a successful attempt to create an indigenous stake in the financial industry for our democracy, which was then barely more than a decade old. It was a step that recognized the role of the state where private capital, even collectively gathered, was not available for socially desirable objectives.
So while it may be desirable and indicative of a sense of patriotism to want to hold onto the household names in local corporate sector, realism may dictate otherwise. In any case, even if we generated enough local capital, substantial foreign currency accumulation is vitally necessary for the proper capital development of our country.
It is for this reason that our Governments encourage foreign direct investment in projects such as Four Seasons, which will earn us foreign exchange and generate employment down the years, even if some of us criticize, very often not constructively, the sale of lands to foreign interests.
The plain truth is that we cannot survive without earning foreign exchange to buy the goods and services we need to maintain our high standard of living; and a small developing economy like ours cannot generate enough foreign exchange earnings from its export activities to fund our developmental needs.
We must therefore develop a sense of balance in these public debates.
No one would recommend that we allow foreign capital to overrun and demean our national psyche; but reality dictates that we pursue policies which will attract foreign investment, and that we should welcome such investment when it promotes our national objectives.
Local enterprises should also be encouraged to acquire interests in overseas companies wherever possible, as an additional means of earning foreign exchange.
At the same time, we should so regulate our business environment, especially where our monopoly utilities are concerned, that investors can earn a fair return on investment while consumer interests are balanced fairly in an open and transparent regulatory process.
The burden of the debate should focus more on appropriate regulation because we must of necessity welcome foreign investment.