Commentary: Uncomfortable and conspicuous socio-economic threats surround St Lucia’s instability

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Melanius Alphonse is a management and development consultant, a long-standing senior correspondent and a contributing columnist to Caribbean News Now. His areas of focus include political, economic and global security developments, and on the latest news and opinion. His philanthropic interests include advocating for community development, social justice, economic freedom and equality. He contributes to special programming on Radio Free Iyanola, RFI 102.1FM and News Now Global analysis. He can be reached at melanius@newsnowglobal.com

By Melanius Alphonse

A misfit is a person whose behavior or attitude sets them apart from others in an uncomfortable conspicuous way. While some misfits are merely unconventional many others are branded as outsiders and are frequently met with skepticism and suspicion.

Aside from articulating what was perceived to be crazy ideas, until now, but to normal minds was (debt ceiling, VAT, security council, consultation on crime, the cooperative economy, green economy, socio and fiscal policy, etc.) simply stating progressive policy positions, pioneering new ways of thinking and operation, a few more arguments won’t hurt.

This is premised on government policies measures that do little to alleviate systemic problems of poverty, and of late the presumption to be “focused on Saint Lucia as a prime destination, a hub, for doing business in the Caribbean,” albeit that conspicuously attracts crooked investors, seemingly aided by an ill-defined administration crowded with collaborators.

This underscores government operating philosophy, family, friends and foreigners (FFF) business practices that seem more creative that some of the world’s biggest companies have created risks and threats toward Saint Lucia’s instability.

Consider this for a moment, and the apparent logic to political and economic challenges to fiscal reform, constitution reform, taxation and government policy initiatives and lack thereof. What’s more, the reality that strikes me is that it’s not about equality and balanced development but a more nuanced approach at distraction and diversion.

A study on adolescents of the critical 10-19 age group in Saint Lucia developed by the government of Saint Lucia and UNICEF, identified several concerns for this key demographic, which represents 16 percent of the country’s population.

“Poverty remains significant and although it decreased in the last decade, nearly 1 in 3 adolescents is still poor; that’s about 9,500 young people. In addition, data show that a third of adolescents are not in education, employment or training (NEET) and the great majority of those over the school age are unemployed.

“…Just 36 percent of students pass Caribbean Secondary Education Certificate (CSEC) and there is a substantial mismatch between the educational needs of employers and the qualifications of job seekers. Over 40 percent of job openings require post-secondary qualifications, which are held by less than 10 percent of those seeking work.

“Almost 60 percent of adolescents live with one biological parent (mostly mothers). This already high prevalence of single-parent families is increasing. A positive development is the reduction, by 30 percent, of the adolescent pregnancy rate in the last decade, although the figure is still relatively high. Two-thirds of young adolescents having experienced violent discipline in their home, more than half of it physical.”

These are not new and unknown, expect to be documented and brought to the forefront. And unlike times past, it is presumptuous that an action plan is applied, otherwise it’s just another exercise in futility.

Furthermore, statistics branded by the government shows that overall unemployment declined to 16.2 percent from 23 percent, and youth unemployment from 41 percent to 36 percent”. Besides, the government not having notable achievements over the past two and half years, this has been a highlight of the government report.

In terms of real numbers, it is insignificant to real measures in poverty alleviation and economic growth. And consequently, short-term stimulus policy is not breaking new ground and creating new jobs across the country to influence lives, lifting people out of poverty.

Irrespective of the phenomenon that is being propagated, there’s no new or growing economic momentum in the spending power of residents to boost consumption and increase market opportunities.

The strategy to short-term stimulus policies in all practical terms undermines long-term development and usually generate new risks including corrupt fiscal practices.

The International Monetary Fund (IMF) has advised that “addressing high structural unemployment requires enhancing education and professional training while attenuating labor market rigidities.”

Government has loosely stated that it aspires for double digit growth. While the projected target is ambitious, it is highly unrealistic in keeping with the current realities of increased number of people living in poverty, policy implementation and governance of a “middle-income country.”

In many respects, government has not made a dent in small and micro business financing and policy measures that favor Saint Lucian entrepreneurs, in order to be more adaptable and robust. Rather, in like manner to the prime minister’s independence message, there’s still a lot of work to be done.

To support economic development, it is vital to stimulate the development of a robust domestic market and ongoing urbanization with new types of business models, new industries and even immigration to meet means of production, skill set and growth ratios.

Policymakers continue to encounter serious deficiency to improve the business environment for the private economy, and to specify related industries that are worthy of special attention, beyond the general terminology of tourism. In addition, the sector is not competitively neutral, providing equal opportunity to local and foreign entrepreneurs, but rather, prone to special privileges from the political establishment that help elect crony governments.

While Saint Lucia needs to guard against debt and associated risk factors, policy actions must address fiscal and external vulnerabilities.

On aspects of financial services, targeted capital and liquidity support to small and micro business, including tax deduction and exemption to incentivise employment generation must be encouraged to improve competitiveness and sustainable growth.

State-owned capital and assets have an obligation to improve management methods and structure, and where it necessities the interest of the public good to be preserved, it is judicious that government invest in private enterprises and small and micro enterprises and/or offer direct financing.

The banking and insurance sector must also continue to support the development of the real economy, the development of small and micro businesses (SMEs).

The establishment of SME loan guarantees for environmental development of green and ocean economy (the restoration of river and ecosystems) and clean energy development, requires unlocking the development of innovative enterprises toward stable economic development and a national development plan.

This would also address the high costs of energy, insufficient rural infrastructure, address high structural unemployment, promote balanced development and improve standard of living.

On October 1, 2012, I proposed that Saint Lucia is in serious need of a debt ceiling, which will limit the amount of money that this government and all future governments can borrow. In 2019, debt ceiling implementation in Barbados leaves Saint Lucia out in the cold.

Moreover, government has not seen the need to right-size the public services and divest sophisticated skills, policy and decision-making toward the private sector to maintain economic growth. There is also the need to cut general expenses by 15 percent including diplomatic missions, thus returning that expense to targeted health care, education and poverty alleviation.

In pursuit of development, these measures can assist toward fiscal sustainability, ensure stable economic growth, employment and enable structural adjustments.

The simplification of administration, government procedures and approvals require greater efficiency to reduce undue burdens on doing business. Therefore, reducing cost factors and servicing entrepreneurs and enterprises equally when it comes to market access, information and improve processes is a good first step.

In the light of this, e-government is a must to streamline administration, optimize government services and underscore the need to reduce the high costs of doing business, and to improve public sector efficiency.

Science and technology, research and development facilitation are crucial for sustainable economic development that transform high quality innovation to drive next generation infrastructure.

Equally, to keep up with growth, supportive policies will require high-quality products and efficient services, including the development of capital markets, regional equity, private equity markets and venture capital funds. Again, there’s work to be done, this time in the securities sector to build a strong capital market.

On Jan 28, 2019, the IMF concluded the 2018 discussion on the common policies of the Eastern Caribbean Currency Union (ECCU) in the context of the article IV consultations with member countries states.

“The region is gradually recovering following the catastrophic impact of Hurricanes Irma and Maria in 2017. Tourist inflows are slowly picking up in hurricane-struck countries and have remained strong elsewhere. Conditions remain favorable to growth, but risks are increasing. The fiscal position has deteriorated, reflecting lower inflows from citizenship-by-investment programs and larger reconstruction and current spending, and the ECCU debt target of 60 percent of GDP by 2030 remains elusive for most countries.

“Despite important progress on financial sector reform, persistent weaknesses and emerging risks weigh on growth prospects and may give rise to fiscal liabilities. External imbalances remain large, highlighting lack of competitiveness and the impact of natural disasters.”

Saint Lucia can barely replace old technology and infrastructure with 21st century technology for next-generation industry. Commercial, institutional and the residential construction industry are grossly inadequate to fuel the much talk about “consumption-driven economy” to fuel consumer goods and services. And, the laws of commerce must be brought to main stream, doing international market business in real time.

To address these challenges, practical measure need to be streamlined to curtail critical risk on national debt, education and poverty, infrastructure and access to capital markets; and service delivery must provide real support and facilitate solutions.

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