“Things Do Not Have To Be So!” by Victor F. Banks

But this week I believe that I can take you back to the past to get a glimpse of the kind of leadership we had in the period before 2006 when the AUF Government held the reigns of Government during a similar period of recession. An image of that period is encapsulated in a presentation I was invited to make by personal invitation of the Lieutenant Governor of St. Eustatius (Statia) at their first Economic Outlook Conference in June 2006. Our invitation was to highlight the “Anguillian Experience” which was considered a “best practice” in the region. I divided my presentation in three sections, namely, The Early Years; The Crossroads; and The Path Towards Sustainable Development. I have only included the last section in this article. The entire speech will be placed on my FaceBook. My presentation in part was as follows:

“As I looked through the topics for discussion at your conference I noted a number of initiatives which coincide with those which Anguilla undertook in the last five years. For example, a golf course project to enhance our tourism product; an expanded airport facility to provide more flexibility of access to our destination; discussions on seaport development to facilitate trade and passenger movements; the strengthening of the partnership between the public and the private sector. I also noted that the entire concept of this conference is coincident with our National Biennial Conference. The theme of which for last year was the “Empowerment of a People”. Indeed this is what development is all about and I am therefore moved to give some expression in this part of the presentation about my comments at that conference as a window into what drives the Anguilla Experience.

In my focus I took the term “Anguillians” to mean both government and citizens. In this context, there are specific economic roles for both ordinary citizens and those charged with governance in the quest for sustainable economic development. And furthermore, since my area of focus relates to the general theme for this conference, sustainable economic development must be interpreted to mean development in which the people are significant stakeholders. In other words people who are empowered.

If we were to be retrospective and revert to those times of traditional society; where every family had its own piece of land; tended its own livestock, cultivated its own crops and so on — we could reasonably ask the question: Could we consider them to have been empowered? Apart from the fact that there was no indigenous government, no adult suffrage, and no representative democracy — did the inhabitants have a real sense of empowerment based on such a level of self-sufficiency? Or similarly, should we consider the fact that there was an absence of direct foreign investment on a large scale, an indicator of a high level of local participation and ownership — in a word empowerment?

Obviously, in terms of the modernization of the economy, new technologies and the concomitant changes in lifestyle — there are new realities which define what constitutes empowerment and eventually perhaps — sustainable economic development. These new realities include the fact that we have entered a new phase of national development which includes less reliance on external funding sources for the provision of social and infrastructural services, more autonomy in the governance processes, increases in employment opportunities, a higher standard of living and increased expectations in the society generally.

Let me point to at least six critical economic roles which Anguillians — that is Government and citizens — had to play as agents of sustainable economic development.

Firstly, it was critically important that the Government of Anguilla made the decision to restore fiscal stability to Anguilla. The conditions that existed in 2002 were not conducive to the creation of an environment, which would build investor confidence. Furthermore, it was imperative that a deliberate program was implemented to ensure that revenues generated were sufficient to meet the expenditure requirements necessary to meet the costs of the essential services provided to the community. This economic role played by Government in restoring fiscal stability through appropriate measures was a clear signal to the private sector, the administering power and the donor community that Anguilla was serious about creating a stable environment for sustainable development. Fiscal stability was therefore a critical economic role, which the Anguillians had to play.

Secondly, in order to build a solid platform for development there was need to make investment in physical infrastructure and utility services. For Anguilla to attract development — local and foreign investors must feel confident that appropriate physical infrastructure and services exist. In other words, the public sector investment program must be relevant to the needs of the business community as well as the needs of citizens who are employed in those businesses. In the case of Anguilla, in 2004 the expansion of the airport was a critical decision that had to be made for the survival of the Tourism Sector. The crafting of a relevant public sector investment program was a critical economic role that had to be played by Anguillians as agents of sustainable economic development.

Thirdly, citizens of Anguilla, if they wish to participate financially in the islands business opportunities, or enhance their personal skills, must learn the basic principles of prudent financial management. It is a critical economic role that Anguillians have to play. They must position themselves through sound financial management practices to be able to accumulate savings to address personal development issues as well as capital for investment opportunities which may arise. The opportunity for wealth creation through such investments has already been established. Prudent financial management is therefore a critical economic role which Anguillians must play in the developmental process.

Fourthly, as I said earlier, certain conditions conducive to entrepreneurship and investment in local ventures have existed in Anguilla for a long time. Anguillians have played a critical economic role in supporting indigenous financial institutions. Such support has not only been in the form of savings deposits, fixed deposits and credit card services but also in the purchase of available shares. As Anguilla continues to grow and develop — shareholders in these institutions will experience a sense of empowerment — indeed many already have. Supporting indigenous financial institutions is a critical economic role which Anguillians have to play as agents of sustainable economic development.

A fifth consideration for Anguillians in the quest for sustainable development must be support for national investment in social and health insurance systems. The decision to establish a social security system in Anguilla twenty-five years ago was the single most important contribution to social stability and justice. It is a critical economic role which government played to ensure the security of its people in their seniority or in the event that they should become physically incapacitated and unable to work for a living. The decision to now move on to national health insurance further signals the awareness of Government that sustainable development demands a system of efficient health services that is fully financed. Again this is a critical economic role that must be played by government in creating the conditions for sustainable development and which our citizens must support by their compliance.

The last critical role, which I will touch upon in this presentation in pursuance of sustainable economic development is – proper regulation. While regulation may not be at once regarded as an economic role it certainly facilitates the process of sound economic development. In this context, one must be aware of the importance of an appropriate regulatory framework crafted to ensure that we all live in a community characterized by order, peace and security. Such regulation could be for financial transactions as well as for the safety, security and the good order of the community. To put it another way, it would be useless to empower a people without an appropriate framework to facilitate good governance.

If it were possible to be exhaustive in listing critical economic roles which governments and its citizens would have to play as agents of sustainable economic development I would still miss the mark in terms defining the “empowerment of a people.” Empowerment can be an extremely subjective term especially in the context of cultural differences, socialization and expectations. What we need to determine is the development vision for the island — and identify the optimal forms of participation and expression that constitute empowerment in the particular island context.
What has Anguilla been able to achieve by following these principles? First of all since 1979 there has been agreement across political lines that the best way to achieve the early vision of 1967 — that is, “not to be a nation of waiters and busboys” — is to develop a tourism industry based on the upper end of the market. Or as we say, “low volume high value”. Every successive government has considered this policy “sacred cow”. As a result Anguilla, with limited room capacity, has been able to distinguish itself as a premiere tourist destination with occupancy rates which are relatively inelastic to the vagaries of the world economy. This thinking also guided our decisions in terms of choice of the kind of investors we encourage to Anguilla.

Rather than investors coming to Anguilla and telling us what they want to do, we have developed a methodology and a system which enables us to negotiate with the developer for what we want and then enshrine those decisions in a Memorandum of Agreement which binds both the Government and the Investor to those terms. The outcome of all the initiatives in both the private and the public sector outlined earlier — has heightened investor confidence and led to the decision by Government, in October last year, to place a moratorium on major foreign tourism accommodation investment for thirty months after November 1st, 2005. It is highly likely that that moratorium could be extended for another two years. We are now doing the math on that decision.

Government has always been keen to point out to foreign investors the distinction between the maximization of returns and the optimization of returns from a project. Maximization of returns focuses principally on financial returns. Optimization of returns, on the other hand, is more qualitative and speaks to an approach which takes into consideration social, economic, political, environmental as well as financial factors and seeks to derive an outcome which is mutually beneficial to all stakeholders. Without a doubt we emphasize that the Anguillian Government favors the “optimization of returns” approach.

In my Budget address for this year, under the theme “Managing the Challenges of Success”, I pointed out that whereas the economy grew by 3 % in real terms from 1999 to 2001, it grew by 17.7 % from 2002 to 2004. But I also explained that while economic recession brings with it the problems of rising unemployment and deteriorating fiscal balances, economic expansion can be equally challenging. For example there is the phenomenon which economists call “immiserating growth”, which means that rapid economic growth need not be accompanied by economic development and in fact can result in a net reduction in overall social wellbeing. A well-known situation in our sub region is the impact of too rapid expansion of the tourism industry in too short a period of time. It generates social disintegration and the emergence of dual societies characterized by the “haves and the have-nots” (largely immigrant), an increase in crime, environmental degradation and economic disenfranchisement of locals — a perfect example of “immiserating growth.”

So what am I saying to this important national conference about the Anguilla Experience? Firstly, that very early Anguillians decided what they considered the general vision for the country. Secondly, they had to come to grips with the constraints inherent in a colonial context and sought to maximize its benefits by focusing on the positive aspects of the relationship. And finally, to ensure that they fashion a strategic path towards an economy which is at the same time conducive to the empowerment of its people and sustainable in the context of the critical resources available for national development.

As I hinted at the outset, I now reiterate. The Anguillian Experience is a work in progress. Do not give us our final grade yet. And the Government and People of Statia would be well-advised to see our model more in the light of an empirical tool for your own modeling rather than a prescription for success — and even then success in quotes.

The Statia Experience over the less than twenty four hours that I have been here is nostalgic. The Challenges we now face in Anguilla are certainly not evident here from my observation. There is much to be said about not having to face such challenges. A Solid and Sustainable Economy can only be secured by putting in place an effective strategy to deal with these challenges. The opportunity you have in this conference is to learn from the development models of this sub region — many of which have been instructive to the Anguillian Experience — An experience on which you now have the opportunity to improve for the empowerment of the people of this “Golden Rock” — Statia.”

I believe that the historical context of our tenure and our image as a responsible Government with a well-thought out plan; the correct attitude to governance; good relationships with the British Government, the Private Sector and the sub-region; and the capacity to be self critical must be highlighted as an important difference between the present administration and the Anguilla United Front. That difference is an important ingredient of our success in the past and a “best practice” for similar successes in the challenges we face in this period. Things do not have to be so!

Victor F. Banks
Sachasses Estate