Our Readers' Opinions
February 7, 2014
The private sector

ECCB’s Governor Venner not long ago remarked that governments in the OECS were overstretched and the private sector needs to do more. It must become more formal and produce more for export.{{more}}

Over the years, governments in SVG have in fact tried to promote this type of private sector. They have done so through: incentive legislation for both hotels and industries; provision of land, factory shells and even soft loans. They went so far as to buy a hotel and restaurant (Cobblestone) and rented them to the private sector. They established a supermarket and bank which were subsequently sold to private interests. They developed an agro-processing unit at Lauders and sought to put it in private hands. Governments have also run courses and set up the Agro-Lab to foster the development of entrepreneurs. There have been numerous land reforms aimed at developing a sturdy peasantry.

It has all not worked nearly as well as hoped or Governor Venner would not now have had to make these remarks. Several factors help to explain why the private sector has failed to do more.

Traditionally, we have regarded business as what you do when you cannot do anything else. Even successful business people have wanted their sons to enter the professions. Fortunately, at least two sons, Ken Boyea and Errol Layne, got their professions and also developed the businesses.

The small size of our domestic market often means many businesses have to export. But exporting requires volume, overseas contacts and the capacity to take risk. So well recognized was this problem in the agricultural sector that Government in earlier years bulked up the stuff, took the risk and made the overseas contacts. They set up three statutory boards, Arrowroot, Banana and Marketing which did it all. It is heartening to see people like Andrew Hadley and Hugh Stewart setting up private companies to do what the boards once did.

After deducting the children and old people from a total population of a mere 100, 000, we are left with a small labour force. We have, however, relied too heavily on the public sector (civil service, teachers and police) to provide jobs for this labour force. We have to realize that you need a flourishing private sector to pay the taxes to fund the public sector’s recurring expenditure. Begging and borrowing are not viable alternatives. .

Emigration, too, has adversely affected the development of our private sector. It has long been observed that in a country like ours where emigration is almost a way of life it tends to take out a lot of the enterprising people. Indeed, emigration is often an entrepreneurial act. The term braindrain was coined to describe the phenomenon. Two illustrations will suffice. Kerston Coombs graduated, returned here, got no job and migrated to Trinidad where he played a big part in setting up their methanol industry.

At the Grammar School I taught a John Nanton, rival of Dr Ellsworth Charles for that year’s one island ‘schol’ and himself the son of an island scholar, Newton Nanton. When he said he was going to Canada to study I asked if he would return. He laughed and said even if he got the then budget of SVG as income it would still not be very much money. As for probable entrepreneurial as distinct from his academic ability, I need only say his auntie was the formidable Clara (Mrs Edwin D) Layne.

Finally, company formation has not been very popular in SVG. Yet worldwide company formation has done much to develop the private sector. Its specific advantage is that it enables a lot of people with a small amount of money to pool their resources and amass the equity needed to start the business. Also if the company fails your liability for its debts is limited to the amount of shares you have taken up. They cannot come for your house. In SVG most companies are family businesses incorporated not so much to pool resources as to minimize tax.

The very newspaper, in which this article appears, is a significant exception. A group of people pooled resources to merely produce the paper. Later they raised some more capital among themselves and borrowed a whole lot more to buy a property. Next they increased the number of shareholders and bought a printery.

With the coming of the international airport, Government is trying to form public/private partnerships to undertake various projects. The ‘Seachlight’ model would have to be vastly scaled up. To achieve this, people of all political persuasions would have to be involved. We may even have to ask some of our Mustique friends to help us with their business acumen. Realistically, given the deep political division in our society and heavy indebtedness of the Government to the private sector it will be difficult to achieve this in the immediate future.