Address To Caribbean Association Of Bankers - 11 November 2015

Thanks for inviting me to address such an august gathering. It is indeed an honour. I note the theme of your conference- “The financial services industry at cross roads: where to from here”. Far be it for me to try to answer that question. I am certainly not as qualified to do so as you are. I will however borrow your theme and consider its application in the wider perspective of the development of the region generally. Or perhaps the theme of my address could be- “the region in a roundabout: how to get off”. In this I am

mindful that the success of your industry is dependent on economic growth.

Permit me to use the prerogative of the host country by beginning with some remarks on St. Kitts and Nevis. This country has always been at the forefront of regional integration. It has provided strong leadership in many areas including finance and the law. The country's first national hero The Right Excellent Sir Robert Bradshaw was the Minister of Finance of the sadly defunct West Indies Federation. Sir Cecil Jacobs was the first Governor of the Eastern Caribbean Central Bank. The Treaty of Basseterre

appropriately gave birth to the OECS. Basseterre provides the home of the ECCB. Our country has provided three of the eight Chief Justices of the Eastern Caribbean Supreme Court. The current President of the CCJ, Sir Dennis Byron, is a national of St. Kitts and Nevis. And forgive me if I stray a

bit and mention that we produced a world 100 metres champion in Kim Collins who is still close to age 40 doing our country proud in athletics.

St. Kitts and Nevis has more listed companies per capita than any other Caribbean country and over 8000 mainly local shareholders of these companies- not bad for a population of 46,000. SKN has done well in terms of the mobilization and attraction of financial capital. Foreign direct investment in our country has been impressive and here I am not speaking of passport sales alone. A key institution among the public companies of which I have spoken is St. Kitts-Nevis-Anguilla National Bank an

institution of which our people are justly proud. The bank has developed in just over 40 years from what was called a “penny” bank into the largest indigenous bank in the OECS. By its diverse shareholding and significant depositor and borrowing customer base the bank has contributed enormously to the financial growth of the country. It has also attracted the diaspora which is an important market for

financial services. The success of the bank instilled confidence in the promoters of Bank of Nevis another significant indigenous bank.

Substantial credit for the success and impressive growth of SKNANB must go to Sir Edmund Lawrence well known to you all and to whom I am pleased to pay tribute today. Sir Edmund’s foresight and expertise have benefited not only the financial services sector but the country as a whole.

Despite its relative success in developing its financial capital, SKN remains on the roundabout in terms of the development of the political and social capital required for truly sustainable development. I believe the same applies to other regional countries. Our visitors will know better than I do if and the extent to which the same applies to your country.

In exploring this theme permit me to refer to the economic development achieved by Singapore a country of similar size and political history to those of our region. That country became independent around the same time as most Caribbean countries became independent or self governing. I mention Signapore by way of reference and not by way of comparison because there can be no comparison between the average of close to seven per cent growth achieved by Singapore over the past 40 years and the stuttering growth of regional countries over the same period. Some of the main features of the Singapore model are strong productivity and work ethic, strong social discipline, efficient government and public service, a business friendly environment, zero tolerance for corruption and an education system geared to its objectives. Most of these have been touted from time to time throughout our region as features desirable for our development.

Critics of Singapore often berate that country for its autocratic government and suppression of fundamental rights. While this criticism is to an extent justified we have no moral authority to make the criticism because our governance systems are equally autocratic. Our constitutions have made our regional countries what the late Professor Simeon McIntosh of Grenada referred to as “elective

dictatorships”. Sir Fred Phillips also of blessed memory born in St. Vincent and who was the first Governor of St. Kitts-Nevis-Anguilla when it achieved Associated Statehood in 1967 described the position in these terms.

“We must never forget that in small communities such as Caribbean States, it is easy for the Prime Minister wielding an all pervasive influence, to manipulate almost everything and everybody, especially since, in most territories, he (or she) is the appointing authority in respect of almost every person on every board operating in the public domain”.

The difference between Singapore and our countries is that Lee Quan Yew exercised his vast powers for the effective economic development of Singapore and was able to persuade his people to buy into that.

Another deficiency in political capital from which we suffer is the lack of real long term planning. Economic development has been consistently tied, in practice even if otherwise spouted, to the political cycle. Sustainable economic development should not be tied to a five year cycle. This has nevertheless been the norm in large measure because of the divisiveness of our politics and the extent to which it is personality rather than issue based. Nowhere is that worse than here in St. Kitts and Nevis. We have just

gone through what I call in my book the 26 month election which brought out the worst features of the political tribalism from which we suffer.

One of the many negative effects of the excessively partisan politics is that our people have developed a culture of entitlements. That in turn badly affects productivity and social order. Governments have promoted that culture for political gain preferring for obvious reasons to give handouts rather than hands up.

While all that has been happening an inordinate number of Chinese have crept or been allowed in and have entrenched themselves not only in the retail food and restaurant sectors but in an increasing way in services. There is of course a positive in this that our people see first hand what

productivity means.

We have a four and a half day week in construction the cost of inefficiencies in which are assessed at over 20 per cent, an enormous cost to the country.

Independence and improvements in housing, education, infrastructure and other living conditions have not been accompanied by an improvement in the social structure. The decline in discipline and in attitudes generally have impacted negatively on economic development and will continue to do so. Some of the influences in the change of culture are externally driven such as cable television but

whatever the causes the decline in security and social stability and the increase in gang violence threaten our economic development to a very worrisome degree.

With our usual Caribbean creativity we have fashioned our own political, economic and social models. We have in our politics taken to new levels the divide and rule principle bequeathed to us by the British. Elections are free and fair but should be won at all costs. The winner take all principle is literally applied. We see from time to time the “God on our side” syndrome so well expressed by the folk singer Bob

Dylan in his song of that name. I saw a government programme here referred to a few years ago as a blessing. The inference was clear. Free speech means freedom to abuse and drag people down to the lowest common denominator. Trickle down economics means handouts controlled by politicians.

We have put our spin on the consumer society - more consumption (and Kentucky Fried Chicken) less work. We have focused the competition associated with the free enterprise system into competition to benefit from the public purse. We use the tools offered by the technology of the Computer Age as substitute parents and as much for disseminating pornography as for learning. A West Indies

cricketer has felt the wrath of the law for his awful abuse of technology. That will continue so long as our societies do not put their foot down. I note that a campaign issue has arisen in St. Vincent in that regard.

We have as societies to deal with the different mentality which we have allowed our children to develop. The narcissism, the nonchalance, money craving, violent tendencies and the lack of pride particularly in our young men pose serious challenges. Our cricketers reflect those qualities. Maybe it will be a good thing that women are dominating our societies in most professions and businesses but interestingly not in politics. Are they too smart to go there? This is a global phenomenon but we have to address it in the context of our culture.

We are also faced with the reputation of our countries internationally. The name of St. Kitts and Nevis was smeared by the feeding frenzy in the sale of passports by the last government. It is not easy to clean up this type of mess. It affects us when we travel. We were and may even still be in the eyes of the world a pariah nation. We are yet to hear from our new government whether they know which foreigners

were appointed as Consuls of our country and/or given diplomatic passports. I have to assume they do not know. I see St. Lucia are in the news in similar regard.

Our governments all say they are business and investor friendly but this lip service does not reflect in practice. Many people despise it but the World Bank Doing Business Guide is a reality accepted across the world as showing where we stand in the ease of doing business. St. Kitts and Nevis has fallen 54 places from 70 in 2009 to 124 in 2016. In the category of ease of getting title to property we rank 170 out

of 189 countries. And this in a country which does not have the traditional personal income tax and generates a large portion of its revenue from transfer taxes of 12 per cent of the price of freehold property.

And here are where the other regional countries stand in that ranking in the 2016 report based on assessments of 189 countries at 15th June 2015:

• Jamaica: 64

• St.Lucia: 77

• TandT: 88

• Dominica: 91

• Antigua: 104

• Bahamas: 106

• St.Vincent: 111

• Barbados: 119

• Belize: 120

• SKN: 124

• Grenada: 135

• Guyana: 137

By the way Singapore has been first in the ranking in all but one year of the last decade.

We are yet to re-gear our education system to the service oriented economies that we have become. The system is over focused on results in the traditional exams leaving behind a large segment of the student population and thereby contributing to the growth of delinquency and disorder.

And then there is corruption, the silent destroyer. Mr. Jim Yong Kim, the President of the World Bank, put it this way in December 2013: “Let us not mince words. In the developing world, corruption is Public Enemy #1”.

You could not find a more poignant but realistic description of the problem than in this paragraph from the inauguration address of President Carmona of Trinidad and Tobago in 2013:

“For many, many years the ship called the Republic of Trinidad and Tobago has left its safe moorings of integrity, accountability, responsibility, transparency and inclusiveness. We are good at sound bites and labeling. We can be excellent wordsmiths. The cynics, they howl in the wilderness. But if we are to establish a better, more progressive, more humane society, real change must be invoked.”

I dare any of you to say that corruption has not reared its ugly head in your country. But do you have Campaign Finance legislation and Integrity in Public Life legislation and Freedom of Information legislation? Do you have a modern and professional Civil Service? Do you have procurement legislation regulating the award of government contracts? And if you do are the laws enforced and are there

effective mechanisms for so doing.

Does your Auditor General have the power and budget to properly exercise his or her oversight function and to access forensic accounting and investigative specialists? Does your Parliament effectively monitor the operation of government corporations and statutory bodies? Do your people even

care?

Perhaps it is time to take a serious look at following the Singapore model and increasing the remuneration of our political leaders in order to reduce the temptation for supplemental earnings.

It takes two to tango and corruption is often initiated from persons in the private sector. Bankers have a key role to play in detecting and reporting evidence of corruption as well as in using your influence within the private sector to deter it.

I cannot leave the general topic without a word on Caricom whose purposes include the strengthening of the regional economies. Caricom has been largely ineffectual and in the view of many rivals WICB for the title of most dysfunctional regional organization. One thing is sure and that is that Caricom will not be disbanded. How many of you remember the book Time for Action generated out of the West Indian

Commission for Advancing the Goals of the Treaty of Chaguaramas established by Caricom in 1989 under the patronage of Dame Nita Barrow and headed by Sir Shridath Ramphal with Sir Allister McIntyre as Vice Chairman. The recommendations of that distinguished commission, presented after wide consultation in the region and with the diaspora, were many and good but largely ignored. I remind

you what Sir Shridath in his address to the Heads of Caricom when presenting the report of the commission. He said:

“.... but it is a symptom of what ails our regional processes that the most pervasive mood we have encountered among West Indian people is disbelief that anything – anything serious, anything effective, anything lasting, anything fundamentally different, anything that can anchor ambition in a West Indian future – will come out of our efforts and yours. They have grown enured to high flown declarations, they have grown cynical about bureaucratic delays, they have grown disdainful of the instinct to protect small

areas of turf leaving the wide West Indian pasture fallow. They will not be surprised if in this time for action you do not act, if at this moment of decision you differ and defer.”

It will be worth your while to read the book if you have not already done so.

How then do we get off the roundabout. I do not pretend to have all the answers. But I am sure that they include a quantum change in many cultural norms. They include also a greater role for civil society in our countries. That includes special interests organisations like yours. As bankers you occupy very pivotal and influential positions in society and you have an excellent vantage point from which to observe

it. You should therefore focus not only on matters directly relevant to your industry but on the broader picture. A country is only as strong as its civil society. And that is all the truer in elective dictatorships like ours. Civil society is often too complacent and reluctant to speak out. Our politicians are too often given a free pass. We do not use the access we have to them to offer direct constructive criticism. We are too often afraid to speak truth to power. We prefer to focus on our personal agendas and those of our

organizations.

You readily spend time and money on insuring your properties and business. You spend large sums on human resource training. In my respectful opinion it is just as important to insure your investment by promoting the development of the political and social capital of your country.

When influential organisations keep silent in the face of obvious abuses of power they get tarnished with the same brush as those responsible for the abuse. When the leaders of civil society say and do nothing to address the glaring problems in our society the people cynically think that we

like it so because we are doing well.

Where your organization is constrained from acting there are other avenues available to your members to make a difference. Chambers of Commerce are an option. An obvious role is in improving the performance of your countries in the Doing Business Guide. There can be nothing improper in commercial organisations contributing to funding research to that end. In 2009 the World Bank itself

presented solutions to the SKN Government. Our plummeting ranking since then shows clearly that the recipe was ignored. We should be finding those solutions ourselves not relying on outsiders to do it for us. That will go some of the way in improving the public service. Depoliticisation of the public service will also help.

We should likewise address the deficiencies in our education systems and lobby for improvements. We have collectively as civil society to address the issue of parenting and the role of society in the upbringing of our children.

There is a greater role for regional bodies. Caricom should get off its backside and play that role. We should tell our leaders to end the Chalkdust syndrome so well expressed in his calypso “All we are is just sea water and sand”. One suggestion that I have made in my book is that the OECS should establish a regulatory body to supervise the implementation of Integrity in Public Life legislation, taking

the local conflicts out of the picture or at least reducing them. The politicians have established regulatory regimes for banking and securities to protect the public. We should insist that they do the same for themselves.

Another avenue for your participation is in the local chapters of international bodies like Transparency

International which provide support and assistance at the local level.

I am sure that, in your far greater wisdom than mine, you can come up with many other ideas and initiatives in this regard. I hope however that I have given you some food for thought.