“I THINK FOREIGN EXCHANGE”

“Work hard and become a leader; be lazy and become a slave” – Proverbs 12:24

The Barbados Entrepreneurship Foundation’s (BEF) vision is “Barbados – The #1 Entrepreneurial Hub in the World by 2020”.  BEF promotes the concept that Entrepreneurship needs to be supported by mentorship, money and a user-friendly enabling environment.

Everyone has a vision but the secret, in converting this vision to reality, is for each of us to work hard. Ask ourselves “what have we done in the last 24 hours to support this vision?”  To the extent that we have been diligent, leaders will emerge and we shall be one step farther ahead along the path of sustainable success. To the extent that we have been lazy, we have only ourselves to blame.

I had the privilege of a meeting with Hon. Denis Kellman Minister of Industry, Small Business and Rural Development and his Permanent Secretary, Ms. Ruth Blackman, only days after they recently assumed responsibility and management for this new portfolio. This Ministry is inextricably linked to entrepreneurship and the purpose of my visit was to share the visions of BIM ventures (Shepherding and Venture Capital), which currently is the focus of my day to day activity, and the BEF vision (Entrepreneurship and the entire enabling environment).  We agreed that these institutions should work closely with the Ministry in the interest of sustainable development in Barbados and recognised the existence of other portfolios such as Finance & Economic Development, Commerce and International Business which also straddle entrepreneurial activity.

Our wide ranging discussion extended over visions, constraints and solutions but my primary “take away” from the meeting was the Minister’s statement “I think Foreign Exchange”. I interpreted this to mean that he recognised the importance of focusing on Forex reserves, above almost everything else, in a small state and emerging nation such as Barbados. Unless Barbados, at any given time, has foreign exchange reserves way in excess of the Forex needed to buy its imports in the short term, the nation is “dead in the water”. We therefore need to nurture “DNA of an Elephant” enterprises, which are focussed on exports (earning Forex) or import substitution (saving Forex), as the drivers of our economy towards a sustainable future.

We often talk about increasing the size of the economic cake or growing our economy but we are more casual about the composition of the growth of the economy.  Strategy #1 would be to focus on construction, commerce or even production for local consumption for each of which we might be very successful, however each of these enterprise sets is a consumer of foreign exchange. The success may be measured in terms of new local assets or in the accumulation of Barbados dollars but one seldom routinely checks to determine what the cost has been in terms of a depletion of our foreign reserves.

Strategy #2 is to focus on import substitution, agricultural exports, tourism expansion, financial services, high tech manufacturing and the creative industries, which is the mandate of the BIM Ventures project.  The success of Strategy #’s 1 and 2 together could mean the acquisition of new local assets and the accumulation of financial wealth in Barbados dollar terms as well as the enhancement of our foreign reserves.

There is the stark reality that no matter how strong an individual’s local bank account might be in Barbados dollars, this does not help the individual one iota in paying for imported goods unless Barbados’ foreign reserves are strong and the Central Bank of Barbados is cooperative.  Of course, if that individual is an exporter then there may be the opportunity to be able to pay for imported goods, if sanctioned by the Central Bank. But not many of us are exporters.

The country must therefore give priority to Strategy #2, to which I think the Minister was referring when he made the statement “I think Foreign Exchange”.  Let us hope that he finds many kindred spirits among his Cabinet colleagues as the strategy for growth in Barbados emerges leading up to the next general election.

It would be interesting to review the economic argument which led to the decision to invest significant sums in mounting the Rihanna LOUD concert in Barbados last Friday night. Let me say upfront that I believe the benefits on the local scene are many, not the least of which is a political benefit. Please note that one, of course, does not need to have a Barbados concert to sign a deal with Rihanna to market Barbados.

It would be even more interesting to see the analysis of the actual money spent as compared with the receipts including the composition of the breakdown of the expenditure/receipts in Barbados and US dollars. Then the question that must be answered is “what was the net effect on the Forex reserves after the concert, as a result of the investment?”

The basic “I think Foreign Exchange” argument is such that it can be introduced at primary school. The collective benefit by the time these students get to the age where they become fully fledged entrepreneurs will be tremendous.

Finally, Strategy #2 should include the concept of investment in building the Forex reserves or more loosely “buying Forex”.  The BIM Ventures model is designed to do thus that but it depends on its Venture Capital fund being adequately funded.  Strategy #2’s priority should be to ensure that the environment is in place to stimulate interest in funding the Barbados Entrepreneurs’ Venture Capital fund.