I think there is an issue that many people in Anguilla think about from time to time, but I am not sure how many people have actually taken the time out to analyse it.
In many small islands – including Anguilla – we tend to see governments wanting to control the economy as opposed to enabling the economy.
Oftentimes, the behaviour that our politicians model when they are elected to office is the behaviour that they had seen other politicians adopt while in office. And so, our elected officials don’t step back and ask the question: “What role does government play in an economy, and what should be my role as an elected representative”? Regrettably, many of our politicians, today, believe that their role is to control the economy and to control people’s lives by making every decision about every aspect of the functioning of the country.
The truth is, with regard to the economy of the country, the role of government is to merely facilitate and enable the private sector to function, because the engine of any economy is the private sector.
Government, in and of itself, does not generate revenue. Government does not expand the economy. Government does not do business. It is important that this is understood, because oftentimes, we see politicians wanting to get in the way of, and wanting to get ahead of the business sector when, in fact, government should take a cue from the business sector and provide services to businesses that do business.
In the case of island tourism, for example, you might hear politicians and Ministers of government say things like: “This hotel is expanding and doing such and such; we are working with the hotels to do such and such”, etc. Truth is, decisionmakers for the owners of the hotel see an opportunity, and they approach government about it. They want government to help or enable them to bring the opportunity to fruition. They need government’s support to have it happen.
So, politicians are not the ones who “do it”; but yet, when election time comes around, politicians and government officials say: “We did a golf course; we did this project; we built that hotel.” In reality, all they did was to agree or not agree on requests made to them by someone who saw a business opportunity. In effect, they merely had the opportunity to accept or reject the requests.
Recognising a potential business opportunity, the investor may ask government for incentives and concessions, and government will either agree with the requests or it won’t. Regardless, government’s decisions should not be based on anything emotional. They should be based on things that would benefit the people of the island in the short term and in the long term. Therefore, government will need to ensure that the terms or conditions of any concession are met.
Let’s analyse the Airport Expansion Project, for example. Someone is going to make a commercial decision about an investment, and if he/she has the means of servicing the loan for the project, it might be granted. If some commercial entity decides to give assistance, that too, will come with conditions. So, there are some benefits that people will derive.
We might recognise that the role of governments in the economies of the First World – North America and Europe, for example, seems merely to create an environment in which private sector industries can thrive. Those governments do not and cannot engage in micromanaging the economies of their countries. Instead, they tend to analyse many sectors within the economies. They might say that they would like a certain sector to perform a little differently, and call in key leaders to have a conversation with them to understand what they are doing, and determine what the government can do through policy decisions to enable those sectors to do better.
What we also recognise in Anguilla is that government tends to decide how it wants the economy to function, and so it makes rules, regulations and laws because it wants to have things done a certain way. But that eventually leads to disaster and most small businesses simply give up.
Where are the incentives for private sector businesses? Where is the climate of respect and facilitation for private sector development? The reason why the First World is ‘the First World’ is because its governments recognise early that the private sectors drive the economy and that government can only create the environment for them to thrive.
An investor in any economy is motivated by the opportunity to get a return on an investment. Oftentimes, in pursuit of this, the investor will go to the government with a well-developed plan and lay out the areas that seem challenging or difficult to accomplish without government’s intervention. The investor seeks government’s assistance in providing the climate in which he/she thinks the business can survive and thrive.
There was much talk within our government about getting the fishing and farming sectors in Anguilla going. But, can government, really do it? Is it government’s role, even? Government might be most helpful in trying to understand the needs of the fisherfolk and farmers, and in finding ways to deliver on those needs so that the folks can see the impediments removed and government can create a climate in which the folks can get on with the fishing and farming.
While we may think that we have a fishing industry in Anguilla, we really don’t. What we do have are a few fisherfolk who do their own thing ad hocly. Fisherfolk might want to pursue a specific venture, but they find some aspects about it to be burdensome. What they need is the enablement so that they can really be professional fisherfolk. They need the assurance that they have a willing environment that will support them as they take these major plunges. They might appeal to government for certain incentives and concessions like tax relief or removal of duties on certain products that would enable them to get the venture started.
If we want to have a fishing sector that will really work for us in Anguilla, the government will need to put forward some major incentives to enable it to happen. Government would need to have a meaningful discussion with this sector and, after having done so, put the incentives and enablers out there to help the sector to work.
If ten fisherfolk came together and formed a company, and approached the government with a sound business plan – including a proper organisational structure, tight management, proof of marketing, etc – the government could find a guaranteed source of funding backed by another entity.
Again, the fundamental question is: Is government’s role to ‘control’ the economy or to ‘enable’ the economy? Is government facilitating the development and expansion of the private sector so we can have a sustainable year-round economy? Today, Anguilla’s economy is one that is informal and irregular, unpredictable and ad hoc, with no steady flow of monies to do anything.
The ferry service is an example of how government’s overreach in the operation of private sector business hampers productivity and growth. ANGLEC is another area where government trying to reach into the operating of private sector entities only leads to inefficiency and near collapse of private sectors in the economy.
There is a need for government to consider stepping back and recognise its important role in the economy – incentivising, enabling, facilitating. Outside of that, the government should allow the private sector to do its thing, and recognise that it is the market place that will drive efficiency – not government policy, dictation or control.
Let the market place decide who will and will not survive. Meanwhile, the government should continue to be supportive, ensuring that the enablers are in place, and the facilitation is in place, so that the private sector can get on with growing and expanding Anguilla’s economy.
— Contributed —
