Artist's drawing of the proposed Arnos Vale city
Ormiston "Ken" Boyea's economic difficulties are a stark and painful reminder of the empty promises made by the Unity Labour Party (ULP) and its leader, the Honourable Dr Ralph E. Gonsalves, prime minister of St Vincent and the Grenadines (SVG), regarding Argyle International Airport (AIA) and the proposed new "city" of Arnos Vale to be built on the grave of a buried E. T. Joshua International Airport.
First, a little background information is needed to contextualize the emptiness of the Arnos Vale "city" promise.
The creation and expansion of specialised economic zones -- which is really what the "city" of Arnos Vale represents rather than a typical Caribbean city like Kingstown with lots of private dwellings, business places, government offices, schools, churches, etc. all mixed together -- is a product of several factors, the most important of which are population growth and economic expansion, whether internal or external.
SVG has had barely any population growth for the past 25 years and negative or only modest economic growth for several years.
Our population has remained static for many years because of a declining birth rate (due to various family planning techniques and the HIV/AIDS scare that encouraged the widespread use of condoms) and mass emigration, a phenomenon that has been going on almost uninterrupted since the abolition of slavery in 1838. This government, like others before it, encourages both fewer birth numbers and the exodus of our "surplus" (some would say "disposable") people (numbers
. The assumptions are that fewer people means fewer mouths to feed, fewer schools to build, and fewer social services to provide and that when our people go overseas they tend to send money home to support their family and friends while helping to counter our enormous foreign balance of payment deficits.
These policies are partly counter-intuitive and partly subject to intense public-policy debate. All First World nations want their populations to keep growing via births and immigration, based on the argument that more people means more consumers, which means more producers, both of which mean more wealth production, which also means more tax revenue and more economic growth. At least that is what standard economic theory and actual experience usually say about rising population numbers in rich countries.
In Third World countries like our own, the sheer lack of developmental opportunities, regardless of population size or growth, justifies a low birth rate and high emigration rate policy. For example, a population explosion in SVG resulting from lower rates of infant mortality and a longer life expectancy, both a product of improved medical care and enhanced disease treatment but in the absence of birth control efforts, would put pressure on local resources, especially getting enough to eat from small plots of arable land, to support the burgeoning population.
As in other countries, the result would be mass rural-urban migration to an already crowded Kingstown, where most new arrivals would barely eke out a hand-to-mouth living. Of course, all this presupposes the absence of endogenous natural resource, industrial, commercial, or service potential that could readily absorb a fast growing population.
With this demographic and developmental background in mind, who is going to support commercial activity by buying all the goods and services available at the new city at Arnos Vale? Certainly not the existing citizens of the country, who have trouble enough paying for the goods and services offered by established businesses in Kingstown and elsewhere. A different demographic from the one living on our mainland will have to come into play, namely foreign visitors.
According to the prime minister:
"... the [63 acres of] lands at Arnos Vale, if properly planned and supported, could be used for a cruise line boarding point or a tourism ferry port and perhaps a sea front boardwalk and a marina.
“The options also include high quality shopping mall facilities -- similar to Rodney Bay, St Lucia -- and other retail development concepts and multiplex cinemas.
“The lands could also be used for good quality government offices and/or a modern new hospital, high value apartments and condominium, a major quality hotel, and parking facilities.
“What I am talking about here is not farfetched ... " (http://www.iwnsvg.com/2011/11/09/pm-details-approach-to-arnos-vale-development/).
Each of these possibilities, except perhaps the "parking facilities," is more than farfetched.
A "cruise line boarding point or a tourism ferry port" would be wasteful and unnecessary, given our very low existing cruise ship and ferry numbers.
A "sea front boardwalk" at windswept Greathead Bay, by itself, would generate no revenue.
A "marina" would be a uneconomical since most yachters bypass the mainland on the way to the Grenadines or elsewhere.
"High quality shopping mall facilities" require high income shoppers, which require thousands of new tourists arriving at Argyle International Airport looking for duty-free goods (a necessary sales policy to generate business revenue which would adversely affect government revenue), a highly questionable outcome as I and others keep arguing.
As for "multiplex cinemas," these would only be attractive to our "stagnant" resident population, not to visitors looking for hot sun and white-sand beaches.
"Good quality government offices and/or a modern new hospital" would only put more pressure on existing government resources, not facilities that would be income generating. (What we actually need are good quality government workers and a wholesale cleaning up, modernization, and regular provision of drugs, supplies, and equipment at the existing Milton Cato facility in Kingstown.)
"High value apartments and condominiums" would again appeal mainly to and be unaffordable by our comparatively low income no-growth existing populace while a "major quality hotel" would hardly attract any tourists since there is no beachfront at Arnos Vale.
If the proposed "city" at Arnos Vale is meant to be our version of St Lucia's delightful Rodney Bay marina, hotel, condominium, resort, indoor luxury mall, and restaurant area, it is the wrong sized-development at the wrong place -- the barren and rough sea area at Greathead Bay.
The site is simply too small, at about one-tenth the size of the Rodney Bay area, to contain more than a few of the facilities the prime minister has listed, unless all the adjoining land is expropriated -- the area alongside the runway occupied by squatters, the homes of hundreds of residents on the west side of the airport, the Arnos Vale Ground, and a lot of other nearby property -- adding tens of millions more to the huge and growing government debts we keep piling up month after month.
Building a Vincentian version of the privately-financed, built, owned, and operated Rodney Bay facilities at Arnos Vale would never even get off the ground, given our poor record of attracting private capital for even small mainland projects.
Everything that I have said so far should have been known to a shrewd, experienced, and well travelled businessman like Ken Boyea. So how did he go wrong?
In two senses he did not actually "go wrong" at all because many shrewder capitalists in high income countries, where it is much easier to make money than in lower middle-income countries like our own, go bust every day. Love it or hate it, capitalism produces many winners and many more losers. Like democracy, it is a terrible system, except for all the alternatives. Mr Boyea is just another statistic.
Second, in order to succeed as an entrepreneur, it is necessary to be willing to take risks (which is why most people avoid self-employment) and to think big. Ken Boyea was willing to do both based on the popular business axiom "grow or die." But grow or die also has to be carefully qualified by many other considerations: it certainly does not mean "build it and they will rent." Still, without curious, inventive, visionary, and risk-tolerant people like Ken Boyea, we would still be living in caves.
If he actually went wrong, it was not because he was "ahead of the curve" in investing at Arnos Vale, as he first claimed, and which the prime minister rightly disputes
. If he did anything wrong, it was to fall for the "sucker pitch" thrown at him by his cousin, the politician.
The first rule of business is -- or should be -- don't trust anything politicians say about big projects, especially their completion date. Everyone knows, or should know, that nothing governments do in these 2x4 countries is ever done on time.
Second, Mr Boyea, like most Vincentians, probably wanted to see an international airport built, whether the country needed one or not, and let pride and a false sense of nationalism get the better of him.
Third, for reasons unknown, he may actually have believed that a new "city" would be build at the burying ground of the existing Arnos Vale Airport, on the one hand, and that this "city" and the spin-offs from the tens of thousands of additional arrivals at AIA would fill his elegant building with high value tenants and his restaurants with lots of hungry customers, on the other.
Fourth, he likely allowed family affection and loyalty, plus a good dose of wishful thinking about the new "city" and AIA, to cloud his good business sense.
The Rodney Bay region in St Lucia
The least likely explanation is the one he has most recently given: businesspeople were unwilling to relocate their offices to Arnos Vale because most schools are in Kingstown. After all, Kingstown and Arnos Vale are only separated by a ten-minute drive in the opposite direction of weekday rush-hour traffic. More likely, prospective renters were put off by the high rents needed to finance Mr Boyea's mortgage or were perfectly happy to stay in their "rusty" quarters in the dilapidated city of Kingstown.
In short, the issue was not enough demand rather than too much supply -- which goes right back to the contentious issue that our population is growing too slowly to support economic development in the form of business expansion and upgrading.
Whatever his missteps, SVG needs lots more businessmen like Ken Boyea and lots fewer politicians like Ralph Gonsalves. Hopefully, Mr Boyea will rise again, bigger, better, and wiser.
This is the eighth in a series of 13 essays on the folly of the proposed Argyle International Airport.
The others may be found at:
Get ready for a November election in St Vincent and the Grenadines! But which November?
Lessons for Argyle International Airport from Canada's Montreal-Mirabel International Airport
Lessons for Argyle International Airport from the cruise ship industry
Lessons from Target Canada for Argyle International Airport in St Vincent
Lessons from Trinidad and Tobago for Argyle International Airport
The dark side of tourism: Lessons for Argyle Airport
Why Argyle won't fly: Lessons from Dominica