In a context of continued declining economic conditions, accompanied by a general feeling that the economy is flatlining; a rudderless ship sailing towards an impending iceberg, Budget 2017-2018 must be more than an accounting exercise.
It needs to provide hope and possibilities beyond austerity and belt-tightening, beyond expenditure cuts and revenue shortfalls. The Minister of Finance needs to be creatively innovative in the way he uses this operational tool to show a potential pathway to renewed prosperity.
Let’s be realistic to where we are. Revenues from mainstay sector energy has fallen by over 70 per cent and other sectors (manufacturing, traditional tourism) are underperforming. The result: shortages of State funds to support recurrent and development needs. Foreign exchange inflows are insufficient to meet the demands of a nation with a high propensity to import and where productive sectors are net users of this scarce commodity.
Little doubt that it is overvalued. Public sector debt is increasing exponentially, assets (State companies, Heritage and Stabilisation Fund) dwindling and unemployment worsening. Transfer payments, whether “artificial” employment, fuel, GATE or baby milk, are on the chopping block. Crime is out of control. Taxes are on the rise. No articulation of strategies to break the cycle save Sandals and Venezuelan gas. God help us!
From where will the recovery, the jobs, the foreign exchange, the safety come? It can only come from an aggressive attempt at economic diversification. Nuff talk, time to set targets and get the job done. Not everything will succeed, that’s the nature of risk taking in business.
The challenge before us is how do we support and/or seed new growth clusters of economic production. It is a business growth imperative that we face. But if we are robust in our analysis, evidence-based in our approach, deliberate and accountable in execution, the chances of success are high.
Traditional sectors must be overhauled and repositioned in emerging competitive niches, the private sector must venture outside its “trading” comfort zone to take on the risk of real entrepreneurship in value-adding propositions using indigenous resources in which the country boasts comparative advantage that can be leveraged into competitive advantage.
The financial sector must step up to the plate in these times of need. Declare a little less profit for the sake of allocating a few of your millions in “obscene” surplus to sustainable job creation.
And, it can’t be just on a firm by firm basis. Yes, this too is important and I commend the “Planting Seeds” initiative as I’m happy to hear the CEO of Massy say that after having exhausted attempts to squeeze foreign currency from the tight hands of the Central Bank Governor to continue its importation of cars and food etc, he is looking inwards to how his conglomerate can earn more foreign exchange.
At last we might be breaking the “conglomerate by distribution” hegemony. I am hopeful. Though long overdue, this is a welcome statement. But more than isolated business development, sustainable diversification of an economy’s productive base necessitates the growth of economic clusters.
We need to grow innovative ecosystems of economic clusters comprising critical masses of firms, suppliers and supporting institutions and policies producing in the same sectors to a point where there is active internal competition while at the same time strategic collaboration to allow for the derivation of collective economies of scale impacting on improved productivity and competitiveness.
This is no easy task and there are no quick fixes, but it is doable. Moreover, we must not equate economic diversification with replacement of oil and gas. No, it is about supplementing this now fledging sector, which even in its declining days remain significant to our collective well-being.
The reality is, it can no longer carry the burden of us all alone. And so, agriculture, manufacture, tourism must step up to the plate. Not that any of you will earn the volumes of the master, but you can generate the foreign exchange you need, you can move production up the value chain and increase domestic value capture, you can generate sustainable, higher quality jobs than the Government’s CEPEP and OJT. I listen to the chambers and Manufacturers Association clamouring for the release of more foreign exchange in disbelief. Why aren’t they articulating strategies for earning this now scarce resource? This is indeed a trying time. Mr Minister, we are not a people averse to sacrifice, but we are a people in desperate need of hope, leadership, inspiration and vision to a better time.
I am deep in conviction that if we stop only speaking the right things but start doing the right things, prosperity will come. But we need a leader’s true north to take us to that place. Will it come from Budget 2018. The jury is out.