The Bahamas is going through a difficult period causing people to talk about what went wrong and what should be done. A good case in point is an article \uff9320 Years of Lending Show Banks Holding Bahamas Back\uff94 by Catherine Kelly in the \uff93Dollars & Sense\uff94 column of the April 7th Punch. <\/p>\n
\nShe contends that \uff96<\/p>\n
\n\uffb7 The Banks are the problem since they have been feeding \uff93the masses a steady diet of fast consumer loans instead of bodybuilding business loans\uff94 for the past 20 years. \uff93No wonder Barbados and the Caymans are kicking our butt in financial services, and Mexico, Cuba and the Dominican Republic are leaving our tourism industry in the dust\uff94\uff85and \uff93thirty years after Independence, Bahamians remain enslaved to foreign masters\uff94\uff85she means \uff93foreign investors\uff94. <\/p>\n
\n\uffb7 The evidence is that the loan portfolios of commercial banks in 2002 have a preponderance of consumer loans (72% including mortgages) versus business loans (25%). In 1982 the relationship was 47 per cent versus 43%. <\/p>\n
\n\uffb7 The solution is for the Government to increase the down payment requirements of consumer loans and decrease the duty exemption at the border. And\uff85\uff93if the Bahamas doesn\uff92t get in shape, we\uff92ll get left out of the race.\uff94<\/p>\n
\nThe author\uff92s reasoning seems faulty and incomplete as an explanation for the present slowdown. <\/p>\n
\nFor instance, with the benefit of perfect hindsight the financial services problem is the direct result of the Government\uff92s hasty and poorly crafted response in December 2000 to the OECD attack on the offshore tax havens. One cannot blame the commercial banks for this.<\/p>\n
\nBahamas tourism does seem to be on a decline versus other destinations. This is associated with the high operating costs and lower rates of return experienced in the Bahamas. In a situation of high costs and low returns, entrepreneurs, venture capital and banking loans will naturally flow to other opportunities where returns are more attractive. One should not blame the commercial banks for this. <\/p>\n
\nA more complete analysis of tourism growth, operating costs, rates of return and solutions will be made available by the tourism industry shortly.<\/p>\n
\nThe $2.2 billion invested in Bahamian hotels in the 1990s created the Atlantis mega resort, the refurbishment of hotel rooms and a 6% expansion of the total installed rooms in the Bahamas. The latter was anemic compared to the Dominican Republic, Cuba, Cancun and Las Vegas where the growth ranged from 17% to 77%. <\/p>\n
\nNevertheless, this investment in the Bahamas did establish Atlantis as a premium destination and did power the country to the 1990s prosperity. And\uff85the people participated in this prosperity; the lower 60% of Bahamian households took a bigger share (up 31%) of the bigger economic pie. This contrasts sharply with the prior decade when that share actually dropped. <\/p>\n
\nThe improvement in income levels in the late 1990s hardly qualifies as \uff93enslavement\uff94; it sounds more like \uff93economic empowerment\uff94. <\/p>\n
\nFurthermore, it suggests that consumers became an improved lending risk. One should rejoice in this rather than castigate the lenders and borrowers. <\/p>\n
\nHopefully Catherine Kelly will push her analysis further and not be so ready to jump to anti-banking and foreign enslavement conclusions.<\/p>\n
\nNassau Institute
\n05\/03\/2003<\/p>\n","protected":false},"excerpt":{"rendered":"
The Nassau Institute responds to comments by Ms. Catherine Kelly in her weekly Punch column “Dollars & Sense.”<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_10223285771444175_51037792744":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[],"tags":[],"class_list":["post-242013","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/posts\/242013","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/comments?post=242013"}],"version-history":[{"count":0,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/posts\/242013\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/media?parent=242013"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/categories?post=242013"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bahamasb2b.com\/news\/wp-json\/wp\/v2\/tags?post=242013"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}