The address was delivered to the Employers Federation on Thursday September 25, on the occasion of their annual general meeting at the Grenada Chamber of Industry and Commerce conference room.
Thank you ladies and gentlemen for giving me the opportunity to share a few thoughts with you. For me it is indeed a pleasure and more so at a time when our country is at the cross roads and do need every opportunity to re-examine its priorities and chart the way forward.
In its fifty-second (52) year of existence I believe that it is important for the Federation as it were to take stock and determine the way forward for the next fifty years or so. Within the last ten years strategic planning became a buzz word as it was always important to chart a course and so have goals and objectives to achieve.
It is necessary to analyse the theme before commenting on its applicability to the challenges which are prevalent in today’s world. These challenges are many as the world is still gripped in the longest and most severe economic down turn since World War II.
The economy of the United States on which so many countries depend is still sputtering along. In fact in an IMF report published in June they have indicated that the US economy will grow by 2% for the current year and that unemployment will continue to remain a problem until 2018.
The consumerism which was so prevalent in the last ten or so years has declined and the demands for goods is relatively low. It has often been said that the glory days may never return as the populace endeavours to realign its priorities.
The growth in the Asian countries continue to be anemic and therefore unable to do what was at one time expected to be the guiding light. In the midst of all this turmoil there is only a glimmer of hope as one year closes and the dawn of the new year draws closer.
The more developed countries seem unable to deal effectively with the problem and so small states in the Caribbean with open economies and almost total dependence on the happenings in the larger economies is incapable of turning things around.
Apart from Guyana with its deposits of gold and Trinidad and Tobago with its carbon deposits there is little or no natural resources in the other islands and therefore the downturn is greatest in the tourism dependent counties. Notwithstanding the efforts of Caribbean leaders there is little or nothing that can be done to reverse the current trend.
A five year or three plan unless properly thought out and executed would not be sufficient to bring about the changes that are so necessary in the current circumstances. (The wheels of Government grind slowly). It is beyond doubt that it cannot be business as usual as stringent measures must be taken to effect the changes that are so relevant and necessary.
The question then is – does the will exist to make those changes? As difficult as the corrective measures may be there is little doubt that unless there are fundamental changes the degradation would continue unabated. The political will must exist; the redirection of the economy into more productive measures is a necessary perquisite.
As important as infrastructural developments are the reality is that they do not provide sustainable jobs which are so critical. In fact in time these projects soon become albatrosses because of the expense in maintaining them.
Political leaders are therefore faced with a daunting task and must think as it were outside the box. There is great dependence on the action of politicians.
Governments too must send the message that the welfare state cannot continue as available resources are getting less and less. The hand-out syndrome is coming to an end and therefore those who are dependent on it must find alternatives. The taking of measures that would ensure reelection at the forthcoming polls would be of no effect as the cycle would continue.
Employees must understand that the order of the day must be greater productivity lest the jobs on which they depend would be a thing of the past.
Employers too must face the stark reality of greater investment in modern and up-to-date equipment in order to give the tools for increased productivity.
Employees must see themselves as partners in the business and should do whatever is necessary to ensure the success of the enterprise with which they are associated. It cannot be just merely going through the motions and being clock watchers.
Entrepreneurship is a powerful driver of economic growth and job creation: it creates new companies and jobs, opens up new markets, and nurtures new skills and capabilities.
Entrepreneurship makes economies more competitive and innovate and is crucial in the development of jobs especially self-employment. Commercialising new ideas improves productivity and creates wealth.
For example Grenada has for almost one hundred years relied on the export of unprocessed cocoa and nutmeg to markets in Europe and to a lesser extent North America. Notwithstanding the prices that would have been obtained a shift to processing and conversion to value added products would have led to greater benefits to the country. It is that type of redirection that would yield benefits. It is the kind of lead that employers should have taken to ensure that they reap benefits. The taking of risks is a necessary prerequisite to private sector development as without that kind of thrust stagnation would follow.
A generation has been lost as we did not give them the tools to ensure continuity and success. The entrepreneurial spirit was not nurtured in that generation and therefore a redirection is a must if we have to grow and develop.
Entrepreneurial education is important in the redirection of growth strategies. A recent survey in Europe indicated that young people who benefit from entrepreneurial learning develop business knowledge and essential skills and attitudes including creativity, initiative, tenacity, teamwork, understanding of risk and a sense of responsibility.
This is the entrepreneurial mindset that helps entrepreneurs transform ideas into action and also significantly increases employability. The advent of ICT gives us an opportunity to harness hidden talent and to find a niche that would serve us well in the future.
I therefore challenge all employers to take that bold step as without the relevant action we will all perish.
I would now like to focus on the second part of the theme. As a proponent of capitalism and the free market economy I wish to emphasise that the main focus of any employer is the realisation of profit from his enterprise as without return on capital none of the other aspects of a business would be realised.
I wish to sound a word of caution however as within the last few years the profits of most businesses is either non-existent or diminishing. Financial institutions, with their better management and quasi-monopoly have been for a number of years the leaders in the realisation of profits. However this situation has changed significantly over the last couple of years. The majority of the banks for example have all reported losses over the last twelve months.
Although this is not generally from the bank’s core business but is symptomatic of the risks that these institutions now face. Lending to Governments and Government controlled entities is no longer the way to go. In fact Government backed securities are quickly becoming an unacceptable form of guarantee.
Profits would enable expansion and the utilisation of resources for growth and development. Armed with a profit therefore the other aspect of the theme “fostering development of good governance” then becomes virtually automatic.
What does good governance entail?
1. Corporate Governance is the system by which companies are directed and controlled. Boards of Directors are responsible for the governance of their companies while the shareholders’ role is to appoint directors and to satisfy themselves that an appropriate governance structure is in place.
2. Governance of course covers a wide range of issues and disciplines from company secretarial and legal through to business strategy, executive and non-executive management and investor relations to accounting and information systems and remuneration. The company becomes more attractive to investors if it is governed in a manner that enhances shareholder value.
3. Shareholders must always feel that they can trust management and that there is transparency in operations and accountability.
4. The ability to meet the demands of employees. I am not here speaking about increased wages but the importance of being able to pay workers commensurate with the work they perform is a key factor in the enhancement of a business. In so doing productivity would be high and therefore the profit motive would be enhanced.
5. Employees must feel a part of the business and therefore take ownership therein. It is far better to have satisfied well paid employees than to have disgruntled workers who are merely going through the motions.
6. The seeking out of new markets is a great way to develop one’s business. The islands of the Caribbean are limited both by size and location. Manufacturing as necessary as it is faces numerous risks because of the size of the market in any of the islands. Compare a manufacturing enterprise in the United States for example with one in Grenada or St. Lucia. The Grenada market is only 100,000 persons with limited income and therefore restricted consumption. The United States with a population in excess of 300 million and the ability to drive from one place to the next at relatively low costs possesses an advantage that cannot be matched in the Caribbean.
7. Above all the leadership must be strong and capable of making decisions that redound to the long term benefit of the institution.
8. To achieve growth one must also focus on creating ongoing irresistible value for customers and operational agility that allows for responsiveness to ever changing market and customer needs.
I therefore wish to entreat all of you here today to critically examine the options that we face. The need for redirection is not later but immediate as it is only in so doing can the economy move forward. It is often said that time lost cannot be regained. Let us therefore resolve to put our shoulders to the wheel and to collectively resolve to move forward.