“On the first day of every week, each one of you should set aside a sum of money in keeping with his income, saving it up, so that when I come no collections will have to be made” – 1 Corinthians 16:2
The savings principle in the above text has far reaching benefits in accumulating funds for investment.
In order for Barbados to address the needs of the populace and reduce the remaining pockets of poverty, it is mandatory that the economy should expand in a sustainable manner. The expansion of the economy implies not only greater foreign exchange earnings obtained from trading in the global marketplace and more jobs and jobs of a more technical nature thus increasing intellectual capital; but also, greater social maturity so as to be able to face the cross-cultural communication challenges in the world, greater emotional intelligence – i.e. the ability to perceive, assess and positively influence one’s own and other people’s emotions – a greater appreciation of the finer things in life, a greater concern for our fellow human beings and greater awareness in terms of the protection of our physical environment.
The savings principle applies from the cradle to the grave. It might initially be employed by parents on behalf of infants and small, primary school children who have access to pocket money, teenagers with revenue earning hobbies, adults in the work force, pensioners, sou sous, meeting turns, credit unions, businesses, financial institutions and governments.
Hernando DeSoto, a Peruvian economist, wrote a book called “The Mystery of Capital”, in which he pointed out that the collective savings in a sample of developing countries, where he was conducting a research assignment, were significant, even though scattered around in diverse small amounts. Indeed, he observed that they were estimated to be greater than the total donor aid given to those countries since the second World War.
The trigger to this economic expansion rests in the fire power of an investment culture – we must invest wisely if we want to obtain good return on investment and enjoy the resultant benefits of expansion. The investment culture is predicated on a savings culture. The investment concept can be introduced as early as primary school but, unfortunately, this is not as pervasive as it should be. The first type of investment instrument to which I was introduced by my parents was the savings account. It was not until much later in life that I was introduced to real estate as an investment which, in this part of the world, can be a cornerstone for security for the rest of your life. It may be, indeed, be an integral part of your pension plan.
The point de Soto was making is that the investment power of each individual unit of saving did not have the aggregated investment power of the whole. The chance of expansion is, therefore, inhibited not so much by the total amount of money available, as by the amount of money accessible and by the structure which provides access to these pockets of savings.
Over the past weeks there has been discussion on issues such as West Indies cricket, Kensington Oval and Barbados Shipping & Trading Co. Ltd. (BS&T). Each of these is important in its own right to the successful expansion of Barbados.
Many countries made heavy investments to improve the quality of the stadia in the Caribbean for the ICC Cricket World Cup 2007. It may be argued that, collectively, this was overdone since we now have nine excellent cricket stadia to serve a population of 6 million people, whereas, in the UK, you probably have seven test match grounds to serve a population of 60 million. Out of the Heads of Government conference, it was announced that they would get involved in the restructuring of West Indies cricket, but I have not seen anything too revolutionary coming out in the press up to the time of writing this article. I was looking forward to some far-reaching institutional changes commensurate with the magnitude of the stadium investment.
The Barbados Government has certainly invested heavily in the new stadium at Kensington Oval and the promised legacy benefits are expected to contribute to the expansion of the economy in terms of sporting and cultural activities which might be staged at the Oval. The governance of this new asset is currently being sorted out.
Recently two Trinidadian companies have attempted to infiltrate the BS&T, the largest group of companies in Barbados, in an effort to expand more efficiently in the Caribbean. This has had the effect of charging a normally conservative investment climate in Barbados with a degree of energy seldom witnessed before in order to keep the ownership of this potential national asset at home. The thought of the largest group of companies being controlled from outside sovereign space is quite unpalatable to some Barbadians and to the political directorate of Barbados. A concomitant view is that Barbados should be looking to export its intellectual capital and expand its economy in the global market.
The development of a more aggressive savings and investment culture might indeed be beneficial to the development of our own corporate base to the extent that the export of intellectual capital might be given high priority.