THE HOYOS FILE: Developing our digital economy
My idea for writing this column has always been to keep it light, to cut through the masses of economic information with a sharp pencil if not always a sharp wit, and thereby get to the heart of the matter with a few swift incisions.
Inspiration, thou are fled to brutish beasts.
Given the number of layoffs occurring all around us as our economy continues to feel the grip of recession despite reasonable hopes for some ease this year, I find it hard to press on tongue-in-cheek, and so, dear reader, this week things are looking brown as far as this column goes.
All around us we see examples of how the recession is affecting people’s daily lives.
Bajans are now so broke they can’t afford to change their cellphone every time a new, more expensive model comes out.
They are so broke they are having to keep last month’s ringtone for the forseeable future.
They are so broke some of them couldn’t even afford to hire a limo to attend the BMAs. Worse, some had to go in jeans.
They are so broke that they can only eat at fast food joints three times a week instead of six.
They are so broke that they are buying Audis instead of BMWs (oh, sorry, there was another reason for that).
But they are so broke that they can’t even afford the electricity to watch their pirated MCTV.
Well, thank God we have a digital economy. Now, if you think I am referring to writing computer code and exporting software to all parts of the globe, I am sorry to tell you that ship sailed a long time ago and Barbados was not on it.
Way back in the Doug Mellinger/PRT era when we could have fully embraced that new tech sector, we did not, because it would have meant radically reorganising how we train people in computer science and, well, that would just have been too hard.
Ironically, many of the Indians who were imported into Barbados by PRT took the opportunity to avail of our excellent training facilities in Microsoft certification, which then made them extremely employable in the software industry in the United States, to which they headed as soon as possible. Isn’t life full of surprises.
No, dear friends, by digital economy I am talking about the number of businesses you can count on the fingers of one hand without which vital sectors would not be so, well, vital anymore. In fact, they would be dead.
For example, take the Barbados financial sector. The six “onshore” banks operating here have a total of over $11 billion in assets. How many of those six control 70 per cent of those assets? Three.
The remainder of the domestic financial system includes 35 credit unions and 23 insurance companies. Those nearly three dozen credit unions have among them a total of over $1.3 billion in assets. How many of them do you think control 80 per cent, or about one billion dollars, of total assets? Just three.
And how many of those nearly two dozen insurance companies are really big? Five?
Barbados’ offshore sector includes 50 offshore banks whose combined assets in 2009 were US$39 billion. How many of them account for 70 per cent of the total assets? Four. – Source for financial data: IMF Barbados Country Report, December 2010.
Turning to the motor-vehicle sector, how many major dealerships do we have now? Two.
In media, how many major newspapers do we have? One. How many major radio station operators? Two. How many TV stations? One (by Government edict, unfortunately).
How many Facebook users?
In telecommunications, we have two major players. In the road construction and repair sector, we have two (take your pick about who the second largest would be).
In fast food, we have two.
Gives you a whole new slant on the free enterprise system, doesn’t it?
Luckily for us, most of these companies in the above sectors are well-run and reasonably efficient. Obviously some moreso than others. We therefore do enjoy a standard of service and a commitment to truth, honesty and plain dealing that is enviable when you consider what goes on in many other countries, some even more “advanced” than ours.
But the drawback in having so few players with such dominant market presences in key sectors is that it can make other would-be investors retreat from the market on the grounds that it would take too long to achieve the size needed for economy of scale and hence profitability.
This lack of new competitive blood can lead to prices that are higher than they should be as inefficiencies creep in along with good union agreements and a certain management complacency. All of which is good for the consumer in some ways (dependable if limited services) and not so good in others (response to problems and overall cost of living).
Of course, with the expected arrival of a pioneer Eskimo-country food retailer anytime now (for some reason the canoes are running late), all of that will change and we will move to a golden era of greater competition and hence lower prices, starting in the food sector.