Private Sector Leadership

Some persons in the political directorate are apparently aware of this reality as steps are being taken to involve the private sector in the decision-making processes. More importantly, the government of Prime Minister Perry Christie appreciates that the state lacks the capacity to manage important aspects of public service in the country. This is why turning over management of the Nassau International Airport and the Prince George Dock to private sector organization is not only desirable but also necessary.

Bahamians don’t have to look very far for a model of private sector leadership in the development of the economy. What the Grand Bahama Port Authority has achieved in Freeport is a case study for governments around the world of orderly development and efficient public service once the private sector is given latitude by a national government.

State-encouraged and regulated capitalist enterprises of all sizes must play a major role in our economy. The Islands of The Bahamas will thrive with an active private sector (both local and foreign) together with the state, all managing macroeconomic and development policies and promoting anti-poverty and employment-generated programmes.

It must be appreciated that The Bahamas is a vastly changed society from the colonial era when the government was involved in the provision of all services from the production of ice to the delivery of services in the hospitality industry with a stake in the then Royal Victoria Hotel on East Street. Today, it is clear to all that the government must divest itself of many enterprises (in some cases ownership and management).

Experiences rather than ideology or economic theory has shown that a private sector, free-market economy is more capable of growth than other forms of economic activity.

Economists have often suggested that the privatization and divestment of state-owned enterprises and public utilities should be accompanied by state retention of some equity and the offer of shares to employees.

However, private enterprises of all sizes must be encouraged by the state to become more efficient and internationally competitive. At the same time, the economy and the wider society cannot be left to be completely run by private enterprise. Some balance, good judgment and common sense must be exercised by the social partners.

Discussing critical economic issues of the Caribbean almost a decade ago, William G. Demas, a former head of the Caribbean Development Bank made these recommendations for private sector involvement in the economies of CARICOM countries:

Efficient, internationally competitive economic growth and structural change must be a prime policy goal, since in developing counties this is a necessary (though not sufficient) condition of social justice.

Free market and private enterprise must be given wide, but not unfettered, scope.

The state must encourage and facilitate the private sector particularly in respect of exporting goods and services and promoting efficient production for the home and regional markets.

More broadly, the state must intervene sometimes: giving incentives (particularly to foreign exchange-earning activities); providing some special tariff protection and cheap credit; operating national standards organizations to set standards for exports and imports and assistance to local firms; imposing countervailing duties and other barriers to prevent non-CARICOM countries exporting to us damaged or subsidized or dumped products (agricultural or manufactured).

The state must intensify its efforts to improve public-sector efficiency.

Extreme and rapid liberalization of imports of locally and regionally produced products must be avoided as much as possible. Liberalization of capital movements (particularly "hot money" inflows) and outflows must be avoided.

The state should work with the national, regional and extra-regional private sectors to promote production aimed primarily at the extra-regional export market.

The state must not deter productivity in the medium-size and large-scale private sector. It must also encourage both the establishment and the expansion of small-scale enterprises including self-employment.

The state should encourage the establishment of human resources development programmes in education training, agricultural technology and manufacture.

Informatics and telecommunications should be promoted by the state as well as the organized local and regional private sector through programmes of general education and specialized training which will have their results in the medium and long term.

The state should draw up well-targeted programmes to reduce unemployment and poverty. During periods of severe stabilization adjustment programmes, it must set up a safety-net for the poor and the underprivileged. This is an important aspect of social justice.

In order to promote internationally competitive economic growth combined with social justice, prices and incomes policies within the framework of social partnership in all CARICOM countries must be introduced as a matter of urgency.

The state may have to be involved in joint ventures with local, regional and foreign private firms for minerals extraction, telecommunications and public utilities. In cases of divestment the employees must be offered shares in the enterprise. Some may view a "management contract" with an extra-regional firm as an alternative to divestment. The danger here is that the firm undertaking the management will not be facing any risk, so management contracts should always be combined with some ownership of shares by the management firm.

When public utilities are being privatized, the state should establish regulatory commissions with teeth. A fair trading commission is also required to keep price movements of basic commodities under surveillance, particularly when price controls and subsidies have been lifted.

The state should work alongside the local and regional private sectors and academia and support the adaptation of imported technology and local and regional research and development activities. But targets here must be realistic. We cannot become high-tech societies overnight.

The state and the Central Bank should always move quickly to regain macroeconomic stability as soon as the economic data indicate danger signals. But this is not a once-for-all objective. Stabilization must be continuously sought in specific reaction to external and internal "shock". If the stabilization measures are too timid or not quick enough, traumatic and socially destabilizing measures may have to be taken later.

Over time both macroeconomic and national and sectoral development policies and programmes in industry, agriculture, tourism and non-tourism services must be harmonized, as far as feasible, in the context of the creation of a CARICOM single market and economic union. The industrial policy proposals now being discussed in parliament in Jamaica could serve as a useful basis for other CARICOM countries, mutatis mutandis.

Economic growth and development must protect, and restore the environment.

Economic development in the context of greater self-reliance must come internally from both above and below and externally from diversified patterns of extra-regional exports of goods and services.

The social partners should vigorously seek to increase domestic savings by the public sector, the private sector and the household (or personal) sector.

There must be widespread participation in economic activities and in national decision-making based on the principle of social partnership.

Trade unions should pay more attention to: the stabilization of employment levels within the enterprises of their membership; employment generation in other enterprises and sectors; and concentration on securing higher wages and other benefits from the enterprises in which their members are employed.

A rounded view of social justice calls not only for the satisfaction of economic and social rights of individuals and groups within the country, but also for the proper discharge of obligation to society and to the state. This must be explicitly spelt out in any national or regional charters of social rights, which should be termed charters of social rights and obligations.