Arthur right about banks MBA/MBM

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Daily Nation (Barbados) - - The Courts -

FOR­MER PRIME MIN­IS­TER, and lead­ing econ­o­mist in Bar­ba­dos, Owen Arthur, is right. He said that com­mer­cial banks need to re­di­rect funds to fi­nance start-ups, in­no­va­tion and other in­vest­ments, in­stead of sat­is­fy­ing the need for the lat­est con­sumer elec­tron­ics.

The gen­eral role of com­mer­cial banks is to pro­vide fi­nan­cial ser­vices to the gen­eral pub­lic, busi­nesses and com­pa­nies en­sur­ing eco­nomic and so­cial sta­bil­ity, and sus­tain­able growth of the econ­omy. In this re­spect, “credit of cre­ation” is the most sig­nif­i­cant func­tion of com­mer­cial banks. Banks also pro­vide long-term credit to the Gov­ern­ment by in­vest­ing their funds in se­cu­ri­ties and short­term fi­nanc­ing by pur­chas­ing trea­sury bills.

Donna Welling­ton, pres­i­dent of the Bankers As­so­ci­a­tion of Bar­ba­dos, and chief ex­ec­u­tive of­fi­cer of First­caribbean In­ter­na­tional Bank, in­di­cated that com­mer­cial banks have “turned off the taps” and have not lent to the Gov­ern­ment since about 2013. Banks do not ap­pear in­ter­ested in work­ing with the Gov­ern­ment in these dif­fi­cult eco­nomic times, but I am sure will work with them in good times when their bot­tom lines show sig­nif­i­cant in­creases each year.

Welling­ton fur­ther stated that there were cor­po­ra­tions look­ing to do big things, but none of them would do any­thing un­til they knew what was go­ing on. Is it pos­si­ble that cor­po­ra­tions and other pri­vate sec­tor agen­cies ap­proached com­mer­cial banks seek­ing fi­nan­cial help to ad­vance their in­no­va­tions, start-ups and other in­vest­ments, but the same com­mer­cial banks de­clined their loan ap­pli­ca­tions, blam­ing the Gov­ern­ment for the cur­rent eco­nomic out­look, and not ac­cept­ing a pol­icy di­rec­tion as dic­tated by them?

Banks have to be care­ful to en­sure their role in the econ­omy is not rel­e­gated to that of a pres­sure group that op­poses the Gov­ern­ment on most is­sues, rather than play­ing a de­ci­sive role in the trade, in­dus­try and com­merce of this land. Yes, by all means, con­tinue to give Gov­ern­ment the best pos­si­ble ad­vice, recog­nis­ing that some of the rec­om­men­da­tions sub­mit­ted will not be ac­cepted while oth­ers will be taken on board. I rec­om­mend that you seek a sep­a­rate seat on the So­cial Part­ner­ship as a sep­a­rate and dis­tinct sub-set of the pri­vate sec­tor be­cause your views are very im­por­tant with re­spect to the over­all de­vel­op­ment of Bar­ba­dos.

Con­sumer goods

What about the com­mer­cial banks’ con­cen­tra­tion on for­eign­based con­sumer goods such as mo­tor ve­hi­cles and con­sumer elec­tron­ics? When banks fi­nance these type of non-pro­duc­tive trans­ac­tions re­quir­ing the use of for­eign ex­change, they are in fact con­tribut­ing to the de­ple­tion of our re­serves, which will have a dele­te­ri­ous im­pact with re­gards to the desta­bil­i­sa­tion of our econ­omy.

Banks have again missed the boat by not only act­ing as cus­to­di­ans of our wealth, but also as re­sources of our coun­try, which are nec­es­sary for our eco­nomic de­vel­op­ment. They hold 55 per cent of the do­mes­tic fi­nan­cial as­sets and at least $1.4 bil­lion in ex­cess liq­uid­ity, and may in fact be one of the main con­trib­u­tors to Bar­ba­dos’ slower growth to­wards full eco­nomic re­cov­ery. In­vest­ing money in pri­vate sec­tor en­ter­prises, which is re­ally the en­gine for growth in our econ­omy, is the nec­es­sary stim­u­lus that the coun­try needs at this time to en­sure sus­tain­able growth and de­vel­op­ment, and banks can do it.

It is noted that none of the com­mer­cial banks in Bar­ba­dos is in­dige­nous. I wish to rec­om­mend that Bar­ba­dos moves to­wards en­sur­ing that a prop­erly set up, man­aged and ac­ces­si­ble in­dige­nous com­mer­cial bank is re­stored. There is also the need to re-es­tab­lish the Bar­ba­dos De­vel­op­ment Bank that would fo­cus on small and medium sized en­ter­prises.

My fur­ther call is for Bar­ba­dian busi­nesses, and the whole na­tion, to sup­port such moves, if and when they come on stream.

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