Thursday, June 7, 2012

Decades after the implementation of the Bahamianization policy and faced with a globalized world that promotes free enterprise and trade, The Bahamas still finds itself in an economic enigma ...whereby its people appear to be regressing rather than progressing

A revived social contract: Bahamians First

By Arinthia S. Komolafe

“Bahamians First”, the campaign slogan adopted by the newly-elected Progressive Liberal Party (PLP), is a pledge by the PLP to put the interests of Bahamians above all others in The Bahamas. It is also a call to Bahamians to believe in The Bahamas and consequently themselves. A post-election analysis seems to confirm that the message resonated among the Bahamian people, resulting in a landslide victory for the PLP on May 7, 2012.

The Bahamianization policy

The concept denoted by the slogan represents a social contract with the Bahamian people – a revived one and arguably an updated version of the Bahamianization policy penned by the Lynden Pindling administration during the 70s. The Bahamianization policy seems to have been misinterpreted since its inception and throughout the years. Arguably, the policy has benefitted a vast majority and been abused by a few. While many believed that the policy promotes “Bahamians only”, the intent when construed properly was always to put “Bahamians First”. In a nutshell, Bahamianization sought to foster economic prosperity and independence through greater participation in business, finance and commerce by Bahamians, the protection of Bahamian assets for the benefit of Bahamians, whether through land or sustenance of state-owned enterprises and a more strict policy regarding the granting of Bahamian citizenship.

It is fair to suggest that at the time of its creation, the policy was implemented through a series of initiatives that promoted among other things encouraging the attainment of managerial positions in the tourism and financial services sectors, creation of opportunities for Bahamians to obtain tertiary education and the expansion of the housing program to provide home ownership opportunities for more Bahamians. Additionally, work permits were only granted in areas where there were no suitably qualified Bahamians and/or in instances that Bahamians were unwilling to undertake certain jobs.

Consequences of Bahamianization

Critics of the Bahamianization policy assert that the Pindling administration ran a socialist type government that was primarily opposed to the free market economy. For the most part and prior to the implementation of the policy, Bahamians were unable to afford participation in the economic structure of The Bahamas due to poverty, poor education or lack of skills among other things. Consequently, the government ran state-owned enterprises for decades – even at deficit levels and continued subsidizing the same from year to year. The government remained by far the largest employer for decades, while the tourism and financial services sectors provided the second and third highest rates of employment respectively.

Bahamians First in reality

Decades after the implementation of the Bahamianization policy and faced with a globalized world that promotes free enterprise and trade, The Bahamas still finds itself in an economic enigma whereby its people appear to be regressing rather than progressing. While it was a major feat yesterday for Bahamians to attain managerial status in the tourism and financial services sector, today such accomplishments are generally common although there is much ground to be covered in other sectors of the economy. It is disheartening however, that about three decades after the implementation of the Bahamianization policy, we have yet to accomplish substantial feats of economic ownership, particularly within the dominant twin pillar industries of tourism and financial services.

The reality is that successive governments through their fiscal and economic policies have failed to put “Bahamians First”. By these governments’ very actions, the foreign investor has been given priority over and above Bahamians owing to heavy reliance on foreign direct investment while the majority of Bahamians have been forced to take the crumbs. In essence, more jobs (which are arguably unsustainable due to their cyclical and/or fragile nature in the two main nationals industries) have been created rather than opportunities for increased ownership.

Bahamians First: Fiscal policy

The tax system in our country has been in place for years. While our politicians concede that the system of taxation is regressive and inequitable, successive administrations have made insignificant movement toward implementation of a progressive form of taxation. Many have gone as far as committing to no income tax which is arguably the most progressive and equitable form of taxation. It is noteworthy to state that we are far behind our regional counterparts who have long since implemented multiple progressive tax structures. Our failure to do so, obviously panders to special interest groups both domestic and foreign who are comfortable with the status quo and prefer to pay neither income nor corporate tax. The pledge we must remember is Bahamians First.

Bahamians First: Banking sector

The entry barriers within the banking sector exclude the majority of Bahamians from the ownership of banks. These barriers include capital requirements which are not tiered enough to allow average Bahamians to establish small banks with limitations on deposits and/or their operations. The commercial banking sector has predominantly been governed by three Canadian banks and in recent decades Bahamian owned and state-owned entities. It is therefore not surprising that having enjoyed the patronage of Bahamians; the former have repatriated billions of dollars in profits outside of our shores over the years. These entities are not to blame as they are in business to make profits. However, successive governments have not created an economic environment that allows more Bahamians to enjoy the same levels of success. The government’s failure to facilitate the establishment of a Credit Bureau, Consumer Protection Agency and foreclosure laws have further allowed Bahamians to be exploited by the system.

Bahamians First: Home ownership and entrepreneurship

The cost of real estate in The Bahamians makes it difficult for quite a number of Bahamians to qualify for a home either because they are underpaid, unemployed or lack the necessary skills to attain a higher paying job. The small to medium sized enterprise sector, which is the engine of an economy, is challenged and growing at a slow pace due to what is seen as neglect by successive governments. The financial crisis, global economic downturn and ill-advised policies of the former administration have no doubt dealt a major setback to this vital sector. These factors coupled with the high cost of energy and other overhead costs have resulted in business closures and challenged the Bahamian entrepreneurial spirit.

Honoring the contract

A government that is truly about “Bahamians First” will address these inequities that have persisted and lingered within our society for far too long. It seems fair to suggest that Bahamians will continue to vote successive administrations out of office following one term of governance until it finds one that will finally speak their language and truly place “Bahamians First”. The task of this Christie administration is to implement policies that will start and end with the average Bahamian in mind. The Christie administration must honor its part of the contract to maintain the confidence of the people.

Arinthia S. Komolafe is an attorney-at-law. Comments can be directed at:

Jun 07, 2012