Bahamas – Right Track Or Wrong Track?

Where are we in the Bahamas with respect to the future? Are we on the right track or wrong track with how we are leading and managing our economy?
Is our current business model of tourism and finance driven by foreign entities with Bahamians benefiting by middleclass jobs, huge Government bureaucracy, construction and retailing the way of the future or do we need to take some drastic steps now to create a better future for the next generation?

My view is that the model that we have is not sustainable and generally is not in the best interest of the country (created by people who didn’t believe in the people of the Bahamas - Sir Stafford Sands Model).

Any country that does not control how it makes money and who it makes it with is at the mercy of external circumstances. According to Trevor Hamilton & Associates, the Bahamian economy is one of the most venerable in the world when it comes to external economic shocks. 911 was a perfect example. Flights and ships in and out of the United States were grounded for days. What if 912 happens (God forbids) and world commerce is disrupted for 4 weeks?

The point I want to make is that we need to start a dialogue in the Bahamas about three issues:

1. Our mindset and philosophy

How we see the world and each other?
We have a huge problem here. Our politicians and political parties are short on big ideas and none have a worldview beyond the Stafford Sands model that seems obvious to me. We have three basic ideas here: 1) Hope America continues to produce great leaders that will mange their economy and affairs well so that we can benefit from our proximity. 2) Control the masses and allow wealth and monopolies to concentrate in the hands of a small few. 3) Hope that foreign investors come with ideas, money and know-how.

2. Leadership

We have agreement that leadership at all levels in business and Government is sub-par (leadership study by Cox Institute – only 5% of the respondents thought that the people who led them were competent). Many are of the view that most leaders are short on ideas, long on command and control, and big on ‘profiling’. The standard here ought to be ‘show me’ your best ideas, track record and how you add value.

We need to develop a Bahamian philosophy of leadership, a Bahamian worldview and a Bahamian dialogue about what happens next in the Bahamas.

I don’t mind if Bahamians don’t believe in Bahamians. That’s a matter for us; what bothers me is that it’s a secret. Let’s get it out in the open and explore the mindset. We don’t believe in one another and we have a problem with people who look like us and who came from ‘over-the-hill’ like us being wealthy. A Bahamian bureaucrat or politician is unlikely to give a Bahamian a contract that will make him/her mega wealthy, especially when that bureaucrat or politician still has to work 9-5 and survive on a salary.

3. Our Economy

Fundamentally, we need to own our economy by developing a plan to have the jurisdiction owning the majority of the Hotels so that we control the ‘job-driver’ and foreign currency driver. The bottom line is that if you don’t control the drivers you control nothing but speeches.
Profits and equity are what count at the end of the day. Second, we need to have deep ownership of Banks again so that profit and equity stay in the Bahamas and encourage Bahamians to own small Banks, investment companies and Trust Companies. We ought to make it easy for Bahamian trust officers and investment professionals to go into business or form local alliances for themselves by creating guarantee funds similar to the United States’ Federal Deposit Insurance Scheme.

Our hidden wealth is in linking financial services and tourism at the ground level. We had 5 million visitors last year – we welcome more people in the Bahamas than the population of 29 American states. Imagine that. Only 21 states have a population above 5 million. Think about this; Louisiana where I went to school, the population is 4.5 million and the state has a $131 billion dollar economy. Imagine if we were only able to generate 10% of 131 billion; that would be 13 billion added to our economy. (U.S. Bureau of Economic Analysis).

The Way Forward

1. Develop our mindset, philosophy and worldview. Leadership and ideas will grow our economy.

2. Produce better leaders who can think beyond the obvious; who do more than profile and who actually add value

3. Link tourism and banking around the total value of the visitor. Up sell new products like Bahamian Bank Accounts, real estate, investment accounts, time-share, loans, credit cards, wealth management etc.

4. Deepen the ‘It’s Better In The Bahamas Brand’ to mean ‘Best Little Country In The World’ where you can come for a vacation, transact business, gamble, learn and live

5. Create a local and international marketing machine to attract tourist and sell them once they get here by understanding and studying the United States and world tourist markets. Know more than anyone else in the world about how our visitors think and what they really want

6. Seek to create local millionaires and multimillionaires. The measurement should be the amount of millionaires we are creating versus the amount of jobs we create. America creates 1 million millionaires every year, that’s more than 19,000 a week (shortcuts.com)

7. Reduce Government by 25%. Any Government that takes $1 billion out of a $4.5 billion dollar economy is ruining that economy with an ineffective sector. I don’t know of any Government anywhere in the world that is efficient or effective.

Regards,
Lester R. Cox, MA, LL.M
Consultant
www.stepupexperience.com

Excellent piece, Lester, and I wholeheartedly concur with it, except I don't agree with point 6 under "The Way Forward". I believe using the number millionaires as the criteria to measure success would be misleading and shallow, especially when we realize that such a goal can be achieved in different ways, many of which can be harmful to our country as a whole. Actually, the USA, though a strong economy, is in may respects a dying nation in that they are losing their moral compass. They are being held hostage by activist, tyrannical judges who run their courts and nation. To the fore of my mind is the recent court sanctioned starving to death of Terry Schiavo and the USA Supreme Court's upholding of a ruling that made unconstitutional the Idaho law that required the notification of the parents of minor girls seeking an abortion. So no matter how many millionaires they produce, these other more weighty factors must be considered when measuring their "success" as a nation.

That said, I believe if we do all the other things right as you have indicated, the economic results (like producing millionaires) will be just that...results, like cause and effect. We need to focus on the causes and not the effects. Point 6 relates to effects. We should focus on producing goods and services to serve many, many people well, and as I have said, the results will follow.

I also encourage you to publish this piece in the three local daily newspapers.

Lester, I know what you are saying is doable, however, in order to achieve it, we will have to make some other drastic changes to produce better citizens, like overhauling our educational and penal/justice systems among others, and electing different kinds of leaders from those we have elected in the past.

Last point: I think you are spot on, but what you are proposing is long term and most politicians (especially ours) don't see beyond 4 or 5 years. But who knows...you might convert some!

You are absolutely right with respect to point 6. People like you always remind me of the the bigger picture. Thanks!

Lester, I agree with most of what you say.

However, I believe that you miss two major points. The first one, is that we as a country do not have the resources to take control of the hotels and tourism industry in our country. We as a nation, just do not have the money. That is why the Prime Minister and government is wooing foreign money.

The second point, is that I feel that you have missed the key -- economic diversification. You are right when you say that the Stafford Sands model is wrong. However, tourism is a pillar of that model.

Let's diversify the economy, make our own economic drivers, and be rid of the 'indenturism' that tourism imposes on Bahamians.

Thanks for your response.

This is exactly why I think this dialogue is critical. We talk about not having resources like not having resources is the problem, the problem is not the resources, the real problem is we don't have the dreams or the leadership skills to take control of the hotels. If we had the real deep down inside the skin belief in tourism like the Kerzners for instance, we would find the resources. I didn't have the resources when I went to law school either. My school fee was $24,000 a year but I had the belief that I could find it and I did. We don't understand the next side of tourism which is the business side and that's why we don't own the hotels. We own what we understand, the JOBS.

By the way, according to the Central Bank Digest, Feb 2005, we have B$4,146,839,000 sitting in the local banks. That's enough to buy Atlantis 4 times.

As to your second point, our economy is already diversify, tourism and banking are more than enough for this small population. We need to understand the business side of tourism and banking so that we can maximize them. Switzerland with 6 million people has a similar economy to ours, banking, tourism and chemicals.

Regards,
Lester R. Cox, MA, LL.M
Consultant

I think that most of the things the article addressed is already being done. I think the government is on the right tract with putting a major project on each island. What this does is bring simultaneous development to the entire country at the expense of foreigners. In a fews years our GDP will double over night. It is not fair to suggest that the only thing we will get is jobs. We will get the development of a nation. The only tradegy is if it ends with jobs. Only the people of the nation can determine where it ends. In order the deepen the economic empowerment of the nation here are my suggestions:

1. Every project that requires a Head of Agreement must also have local PARTNERS. From now on every investor should have to seek local partners before they even prepare thier business plans.

2. Within three years after the project is launched, shares must be issued to employees at a discounted rate and with a payment plan.

3. That must be followed by issuing local stocks or BDR to the Bahamian public.

4. There must be Bahamian top management training that is monitored by the Immigration Department. Even though that is called for in current Heads of Agreement, no one follow up on it because the general notion is that the investor should be able to hire who he sees fit. After Alan Leadman left Atlantis, there is no reason why a Bahamian should not have replace him after being here almost ten years with his $500,000 salary.

5. There must be more groups formed to combine their capital the way the Sunshine Boys did. It is strange that twenty years later and we do not have many more groups that follow in their foot steps.

For this country to grow and develop it is up to the people and not the government to make it happen. The government suppose to provide and infrastracture and environment for development but it is up to us to do the rest.

Good luck with that one, the bottomline is what is the local bringing to the table? The fact that he/she/they are Bahamian? Nb: Contrary to popular belief investors don't come to the Bahamas to grow our economy or develop Bahamians. They come to make money. The trick is: how do we help people make money? That's where the value is.

Bahamas – Right Track Or Wrong Track?

Where are we in the Bahamas with respect to the future? Are we on the right track or wrong track with how we are leading and managing our economy?
Is our current business model of tourism and finance driven by foreign entities with Bahamians benefiting by middleclass jobs, huge Government bureaucracy, construction and retailing the way of the future or do we need to take some drastic steps now to create a better future for the next generation?

My view is that the model that we have is not sustainable and generally is not in the best interest of the country (created by people who didn’t believe in the people of the Bahamas - Sir Stafford Sands Model).

Any country that does not control how it makes money and who it makes it with is at the mercy of external circumstances. According to Trevor Hamilton & Associates, the Bahamian economy is one of the most venerable in the world when it comes to external economic shocks. 911 was a perfect example. Flights and ships in and out of the United States were grounded for days. What if 912 happens (God forbids) and world commerce is disrupted for 4 weeks?

The point I want to make is that we need to start a dialogue in the Bahamas about three issues:

1. Our mindset and philosophy

How we see the world and each other?
We have a huge problem here. Our politicians and political parties are short on big ideas and none have a worldview beyond the Stafford Sands model that seems obvious to me. We have three basic ideas here: 1) Hope America continues to produce great leaders that will mange their economy and affairs well so that we can benefit from our proximity. 2) Control the masses and allow wealth and monopolies to concentrate in the hands of a small few. 3) Hope that foreign investors come with ideas, money and know-how.

2. Leadership

We have agreement that leadership at all levels in business and Government is sub-par (leadership study by Cox Institute – only 5% of the respondents thought that the people who led them were competent). Many are of the view that most leaders are short on ideas, long on command and control, and big on ‘profiling’. The standard here ought to be ‘show me’ your best ideas, track record and how you add value.

We need to develop a Bahamian philosophy of leadership, a Bahamian worldview and a Bahamian dialogue about what happens next in the Bahamas.

I don’t mind if Bahamians don’t believe in Bahamians. That’s a matter for us; what bothers me is that it’s a secret. Let’s get it out in the open and explore the mindset. We don’t believe in one another and we have a problem with people who look like us and who came from ‘over-the-hill’ like us being wealthy. A Bahamian bureaucrat or politician is unlikely to give a Bahamian a contract that will make him/her mega wealthy, especially when that bureaucrat or politician still has to work 9-5 and survive on a salary.

3. Our Economy

Fundamentally, we need to own our economy by developing a plan to have the jurisdiction owning the majority of the Hotels so that we control the ‘job-driver’ and foreign currency driver. The bottom line is that if you don’t control the drivers you control nothing but speeches.
Profits and equity are what count at the end of the day. Second, we need to have deep ownership of Banks again so that profit and equity stay in the Bahamas and encourage Bahamians to own small Banks, investment companies and Trust Companies. We ought to make it easy for Bahamian trust officers and investment professionals to go into business or form local alliances for themselves by creating guarantee funds similar to the United States’ Federal Deposit Insurance Scheme.

Our hidden wealth is in linking financial services and tourism at the ground level. We had 5 million visitors last year – we welcome more people in the Bahamas than the population of 29 American states. Imagine that. Only 21 states have a population above 5 million. Think about this; Louisiana where I went to school, the population is 4.5 million and the state has a $131 billion dollar economy. Imagine if we were only able to generate 10% of 131 billion; that would be 13 billion added to our economy. (U.S. Bureau of Economic Analysis).

The Way Forward

1. Develop our mindset, philosophy and worldview. Leadership and ideas will grow our economy.

2. Produce better leaders who can think beyond the obvious; who do more than profile and who actually add value

3. Link tourism and banking around the total value of the visitor. Up sell new products like Bahamian Bank Accounts, real estate, investment accounts, time-share, loans, credit cards, wealth management etc.

4. Deepen the ‘It’s Better In The Bahamas Brand’ to mean ‘Best Little Country In The World’ where you can come for a vacation, transact business, gamble, learn and live

5. Create a local and international marketing machine to attract tourist and sell them once they get here by understanding and studying the United States and world tourist markets. Know more than anyone else in the world about how our visitors think and what they really want

6. Seek to create local millionaires and multimillionaires. The measurement should be the amount of millionaires we are creating versus the amount of jobs we create. America creates 1 million millionaires every year, that’s more than 19,000 a week (shortcuts.com)

7. Reduce Government by 25%. Any Government that takes $1 billion out of a $4.5 billion dollar economy is ruining that economy with an ineffective sector. I don’t know of any Government anywhere in the world that is efficient or effective.

Regards,
Lester R. Cox, MA, LL.M
Consultant
www.stepupexperience.com



You have made some sense in this article, however your focus for boosting and catapulting this Bahamian Economy into that of 1st World was only on that of Tourism and Banking. We need to start broadening our Economic resources, and putting a greater reliance on other industries like agrciulture. The tourist market as profitable as it has been for this economy, does not have a strong anchor of consistency and continuity, as it is too reliant on the state of the US economy, which has taken some serious dips in the past few years since 9/11 and Iraq. As well our product is not unique to the region, that of sun, sand , and sea. Head further South, and you may not be able to make a clear distinction of the Caribbean destinations. In other words we should not throw all of our beans into one pot.

What do you think about the new Cable Beach re-development plans?

One word, awesome.

The Government and especially the Prime Minister ought to be commended. PM Ingraham had his Atlantis and now PM Christie has his Baha Mar.

The project on paper looks like it will put New Providence on the map and bring a first class marina on the Island. It looks as though this project will rival Atlantis and that could only be good news for us. Imagine two billion dollar developments within walking distance of each other. I am really excited about the spin-offs that can happen combining banking and tourism. We have another opportunity to do something big for Bahamians by identifying how many local millionaires we can create. The project looks to employ 5,000 Bahamians full time. I want to see 50 new millionaires as a result of this. I will be pressing my friends in the Government to target 50 millionaires as well. The future looks good. I hope that Bahamian investors take note.

I want to see 50 new millionaires as a result of this. I will be pressing my friends in the Government to target 50 millionaires as well.

To target 50 millionaires? Explain please!

I think that it is great that you are a booster of the Bahamas, and you certainly have set high goals (as to the 50 Bahamian millionaires). I have taken tertiary courses in Economics (London School of Economics) and I'm sorry, but I can't share your vision.

First of all, our banking system is all wrong to create millionaires. Bahamians do not have access to venture capital or domestic merchant banking (there was a venture capital fund announced by Carey, but it is of the micro-cap variety). Secondly, with the currency restrictions on Bahamians by the Central Bank (need approval for foreign accounts, and their are controls on hard currency leaving the country), it will be tough to generate the capital flow to make millionaires from scratch. The only Bahamians who will be getting rich, are those who have access to private capital.

And have you been paying attention to the tourism numbers. Read the Bank Report for February on their website. Although tourism numbers are up, the actual amount of air arrivals is down, for a variety of reasons. Minister Peet can talk all he wants about airlift, but the sad fact is that air arrivals are where the real money is, and they are declining. And tourism will take a further hit in December when the US Customs and Immigrations will require passports and/or secure documents from all of its American citizens returning from neighbouring countries like the Bahamas, Mexico and Canada. This move alone is expected to drop tourism. Less than 70% of Americans have passports. If there is a 30% drop in American tourism because of these laws, we are in trouble.

And finally, you point out countries like Switzerland. The reason why the Swiss can prosper is because they have a fully convertible hard currency. The Bahamas doesn't. Our monetary system consists of parity with the US dollar, and to do that the Central Bank must vigilantly maintain foreign reserves to keep the house of cards afloat. Our GDP isn't sufficient to maintain monetary parity with the dollar, so the Central Bank must jump through hoops to keep it that way. We can't afford dollars to flow out of this country, and the Central Bank maintains a Berlin Wall to regulate the flow. If there was free flow of currency (like there is in Switzerland, the US, Canada, etc), then the Bahamian economy would collapse because the outflow would be greater than the inflow.

So we can dream and be positive all we want, but until the monetary system changes, even if we did have a Bahamian Bill Gates, he would have to leave the country to get rich. And that is why there is a whole colony of Bahamian entrepreneurs in the Turks & Caicos.

Just my 2 cents.

Thanks for your response. Your 2 cents are more like $100.

The 50-person millionaire was just a figure I threw it out as a goal we could set. We set a goal to create 5,000 jobs, why not other goals?

Our banking system maybe all wrong and I agree (we have allowed others to set the agenda and we can become a little smarter) but we have many millionaires in this country already. I make two points about banking; the first one is that we need to generate equity on the offshore side instead of purely jobs. The offshore sector alone generates some 200+ million US$ (about 1,000 employed) in our economy through jobs and other expenses. Think about this; if an organization can pay US$ 200,000,000 they must be making more than that. I want to see some of the equity staying here as permanent US$. Second, we are not tapping into using the jurisdiction as a marketing hub. The domestic banks are fat and happy because of the economy we have. They have no interest in generating tourist base business. We can create an infrastructure so that smaller boutique banks and investment houses can flourish from the Bahamas serving the tourist, 2nd home and international investor markets. The way I figure it, the average client pays well over $2,000 a year in fee income. A typical banker with 200 clients could generate $400,000 a year in fee income. It will not take long time to create a couple millionaires that way. Additionally, personal banking is not capital intensive, it’s marketing and networking intensive.

Just a note of correction with respect to Switzerland, they make money because they provide an invaluable international banking service to the world. Having a convertible currency is sidebar to their success. I agree with you and so does the central bank that we need to balance inflows with outflows. Think about this though; if you have a solid open economy that’s based on fundamentals outflows and inflows will eventually meet. Look at the huge deficits the United States is running. Their partners like China, Europe and the rest of the world are financing it.

One word, awesome.

The Government and especially the Prime Minister ought to be commended. PM Ingraham had his Atlantis and now PM Christie has his Baha Mar.

The project on paper looks like it will put New Providence on the map and bring a first class marina on the Island. It looks as though this project will rival Atlantis and that could only be good news for us. Imagine two billion dollar developments within walking distance of each other. I am really excited about the spin-offs that can happen combining banking and tourism. We have another opportunity to do something big for Bahamians by identifying how many local millionaires we can create. The project looks to employ 5,000 Bahamians full time. I want to see 50 new millionaires as a result of this. I will be pressing my friends in the Government to target 50 millionaires as well. The future looks good. I hope that Bahamian investors take note.




well written article lester. but bahamians are responsible for creating their own wealth. i read an article the other day in one of the local newspaper,where it waas said that 65% of young bahamian males do not have a bank account. also, most bahamians have nothing saved.
if you expect to create wealth,then it behooves us to learn to commit to a savings plan albeit however small.most bahamians have a cell phone.while i dont negate its place of importance,find out how many of those same folks have good heath insurane which is equivalent to about 30.00 weekly.the
same amount that is probably spent on quick cell. also the point you raise about black bahamians not supporting each other while that statement does have some merit to it,i am still of the veiw that if you have a product the public need they will come to you.check bamboo shack.

I agree.