By D. Markie Spring
For two elections now the Argyle international airport has been used as a prerequisite for votes!
Each year voters and taxpayers alike have been promised a completed and fully operated international airport. To us, this is a never ending promise, which seemed distant – like a ship being driven by weak tail winds from the horizon.
The author of a number of published works, D. Markie Spring was born in St Vincent and the Grenadines and now resides in Providenciales in the Turks and Caicos Islands. He has an MBA from the University of Leicester, England, and a BA from Saint Mary's University, Canada
Development of infrastructure is most important; however, an infrastructure should not go unplanned or left idle. Moreover, constructing an international airport is not the same as constructing a private house. When investments are made in building a private home, solely, the household is affected. Conversely, investing in a national project like the Argyle International Airport, certainly affects the entire nation.
Therefore, an investment of this magnitude should not be undertaken without an adequate financial plan, which involves the allocation of assets and liabilities, time value of money, working capital, risk management and the rate of return.
In fact, at the commencement of this important project the government had minimal funds, and did not even consider the capital structure and the debt to equity ratio; neither did the government take into consideration the weighted average cost of capital (WACC) – not examining the average costs of these sources of finance: debt or equity.
Additionally, the government’s failure to consider the net present value (NPV) of its investment or disclose its marketing strategies, have prompted Vincentians to ask many pertinent questions relative to the viability of this investment and, today, taxpayers are still investigating the profitability of this project. This is a vital question to raise, since the government has used the harsh global financial times as an excuse for SVG’s daunting economic environment.
However, this is not all!
The capital budgeting phenomenon is not being determined either; therefore, it is unknown whether this new project is worth pursuing. Additionally, some taxpayers are still of the opinion that the government should pursue other long-term ventures, or whether it is more feasible to extend ET Joshua Airport or the airport on Canouan Island, open a help desk at Hewanorra International Airport in St Lucia than constructing an entirely new airport at Argyle. This is an important factor, since the lifetime of cash inflows and outflows of a perspective investment are analyzed in an effort to determine whether the generated returns achieve an adequate target benchmark.
Similarly, it is important to acquire other infrastructure, such as roads, fire and safety, security, health care and hotel accommodations before an international airport can function effectively. After a careful assessment of the condition of infrastructure in SVG, the government is open to many challenges including increasing crimes, liability, loss of reputation and isolation.
Not surprising, the completion date has been postponed on many occasions – suggesting, from inception, the Argyle project has no real management or leadership!
Despite all this, I support the Argyle project, considering its potential for economic development. For me, all is not lost, as proper planning for financing the remainder of the project is still possible and it profitability can be reached through well thought out extensive marketing strategies. The infrastructure is not a short-term investment, but one I believe, would bring long-term benefit to St Vincent and the Grenadines once managed property.
To date, and with empirical evidence, this project has failed financially and from a management perspective. I believe this is so because the decision to build the airport and, more so, the financing strategy were centralized; decisions concentrated at the top, and only made by a few individuals.
From a political viewpoint, however, I am of the opinion that all these setbacks have damaged the leader’s credibility and reputation of the governing party, especially the multiple postponements of the completion date – creating doubts in the minds of the people whether the government is competent and capable of getting the job done. In this capacity, I am predicting that the governing party could lose enormous votes in the next general election.
As we speak, the completion date has been pushed forward, yet another time to midyear – 2015. Hence, the prime minister would be unwise to call elections after midyear 2015 as it is unlikely that the airport would be completed then. His best strategy is to call elections before August 2015 with a view that people would believe that this new date for the airport completion is reachable.
Having said this, I am sure that the airport strategy for votes has been played out; hence, it is advisable that the PM develop a new strategy; however, I am assuming that this would be extremely difficult making reference to the PM’s poor performance.
Here, a better strategy might be to distract his constituency by using the Georgetown sea defence strategy – a seemingly empty promise that most people have already analyzed and deemed unattainable.
I reiterate, the Argyle International Airport investment is an important project and all Vincentians should welcome it, as this project has enormous long-term benefits for economic sustainability. However, much work is left to be done and should be pursued by different governing bodies.
2015 general elections -- vote wisely!