This is my first column of 2016, and so I thought I would tackle the burning issue of what were the biggest business stories of 2015, because you really can’t go wrong there.
All you have to do is cite a few that everybody would probably agree on, and then throw in a few more for fun. It’s like the weatherman: if he gets, say, two out of seven days of forecasts right, you think, hey, that guy really knows his stuff. I also don’t want to burden this column with all of those numbers and stats we journalists need to (or like to?) trot out to help us make our case. So my top stories will therefore be, shall we say, more thematic than specific.
Alright then, having lowered your expectations as much as I could, let start by repeating the top story which I already mentioned last week, and that is the fall in oil prices. Now, clearly that took no special skills to identify. And in fact, the falling price of oil has been the cause of one of my other top stories. To summarise my top theme, falling oil prices led to falling fuel prices at the pump and in the cylinders, and also lowered the rate of inflation to close to zero per cent. So consumers here got back something in their pockets which the Dolittle administration’s finance chief, Sir Tax-A-Lot, have never given them: a break.
Anyway, if you thought the takeover mania we had during 2015 would be, in the aggregate, my second top story, well, you would be….wrong. It is the fall of the economy of the Republic of Trinidad & Tobago (T&T). After the brief euphoria experienced by the dismissal of maybe the worst prime minister ever to head a T&T government (oh wait, I forgot about Chambers), a placeholder budget was delivered, whose most interesting part was that it left gaping holes in the revenue, holes which have widened with the movement of oil prices in decidedly the wrong direction for T&T.
After five quarters of shrinking GDP (aka “negative growth”) the truth can no longer be avoided: T&T was in recession. So what makes this qualify as a top story for the Barbados business scene? Well, T&T’s fiscal problems are so severe that Standard & Poor’s (S&P) has given their sovereign debt a negative outlook while retaining their current A/A-1 ratings.
Said S&P: “The change in outlook to negative from stable reflects an at least one in three chance that prolonged low energy prices and potentially poor GDP growth prospects could result in a steadily rising debt burden, leading to a downgrade in the next two years.” Already, though, Republic Bank has suffered a similar downgrade due to its exposure to the T&T economy. Said S&P: “The negative outlook [for Republic Bank] further reflects that a negative rating action on the sovereign over the next two years could prompt a similar rating action on the bank.”
There is another T&T bank here in Barbados. It is called First Citizens and it is wholly-owned by the government of T&T. We also have ANSA McAL and Massy Holdings here, with all of their subsidiaries, all formerly locally owned and deeply entrenched companies which were bought over by those companies over the past few decades. So if they also get downgraded (through no fault of their own as Sagicor Life did recently), then borrowing money would become more expensive, which could end up hitting the bottom line.
Thankfully, with major investments made in the Barbados economy by Cable & Wireless (C&W), Digicel, Sandals International, and via our international business sector in homes and companies, we are not as dependent as we once were on Trinidadian investment, but look out, this is, as they say, a developing story.
And finally, yes, my friends, all those mergers and acquisitions (M&A). Even Emera got into the act, trying to buy up the outstanding shares it didn’t own in the former Light & Power Holdings Ltd., now Emera Caribbean. In what must be the most uplifting part of all this M&A, some fairly sizeable shareholder (I’m guessing) said no. So Emera did not get over 90 per cent and therefore is unable to forcibly acquire the rest. Who was it? Enquiring minds may have to wait until the annual report.
I won’t bore you with a recap of the C&W Communications (CWC)and Banks Holdings Limited (BHL) sagas. Thankfully, they are over and done. CWC was a double takeover, all in the space of 12 months, while BHL, to use a horse racing analogy, was a race that did not require a photo finish.
With the corporate moves taking place as noted above last year, Barbados became even more than before a market grouped with other markets to achieve economies of scale, but owned by corporations which were busy “M&A-ing” other large companies themselves in their quest to achieve economies of scale on a global level.
The big decisions in the Barbados retail space are less and less being made by Trinidadian executives; they are being made by Irish, Brazilian, American, Canadian and Jamaican CEOs and chairmen, along with one or two from the former motherland. How times have changed in business, you might well say, as we start that long trudge up the propaganda hill to finally celebrate our 50th year of Independence, a whole 11 months from now.
