NOT ALL BLACK AND WHITE: Can the private sector deliver prosperity?
FOR DECADES, says the IDB in its March 2017 quarterly review, Private Sector Development in the Caribbean, Barbados, The Bahamas and Jamaica have all had weak economic growth, and this has been made worse by the lingering effects of the 2008 global financial crisis.
And while current projections for these countries suggest that things are improving, the growth rates are still low. Meanwhile, says the report, the commodity producers – Guyana, Suriname and Trinidad and Tobago –“in general performed stronger and benefitted until recently from high commodity prices”.
The recent fall in commodity prices around the world have “exposed over-reliance on commodities,” admits the IDB. Overall, it says, growth in the region is projected to accelerate on average “but growth rates remain low and there are considerable risks to those projections”.
Could a revitalised private sector come to the rescue and spur the region, Barbados included, to reach those “vast, sunlit uplands of prosperity” (to borrow once again, with apologies, my favourite W. Churchill phrase)?
The IDB’s report is not so sure: Even as we find ourselves coping with “deep-rooted structural problems,” we have in our midst “a lacklustre private sector,” it notes.
So, asks a special section of this regular quarterly from one of the main institutions we look to for development finance: “Can the Caribbean private sector be the impetus for a turnaround in the region’s growth performance?”
I got the impression that the IDB was having a hard time saying an unqualified “yes.” It was more like a “maybe, if you do a whole lot of things,” which I know we are not going to do. At least not the Dolittlers. But let’s take a brief look at the reasoning for the bank’s cautious position.
While private sector investment, of course, is what we need to grow our economies, “in the Caribbean, however, the data shows that private investment both as a percentage of GDP and total investment has been systematically lower than in comparative countries,” says the report.
This state of affairs continues despite all that political rhetoric about how the p.s. is going to be the “engine of growth” – have you read our political manifestos? – and that its development is central to the region.
The IDB report says – and this is a new one for me – that “Caribbean firms perform relatively poorly when compared to firms in the rest of small economies”.
Their “metrics” show that sales and employment growth of firms in the region are “on average” below similar-sized economies elsewhere in the world (no countries mentioned). On top of that, says the IDB, “total factor productivity,” which is said to be a measure of efficiency, is also lower.
You may be wondering why.
Caribbean business owners and managers face many challenges, answers the report, but chief among them are these three main challenges: First, an “inadequately educated” workforce; second, access to finance; and third, concerns about crime and security.
“What to do?” asks the report, and then tells us.
The Caribbean needs a “pro-business environment.” Okay, sounds great to me, but what does that actually mean? Well, basically, says the report, we have to turn the Caribbean’s private sector into a “dynamic, employment-generating and innovative driver of economic growth.” Right.
Patrick Hoyos is a journalist and publisher specialising in business. Email: [email protected]