Disclaimer: The views and opinions expressed by this author are their own and do not represent the official position of Barbados Today.
through Ralph jemmott
The Brass push pins Friday October 9, 2020 program focused on equities, equities and the forced acquisition of minority shares by majority shareholders. Dr Leroy McClean posed the most critical question in the discussion.
He asked what all the talk about âeconomic empowermentâ was about, if local minority investors could so easily and frequently be bought out by foreign majority shareholders?
Barbadians were accused of not investing when a former government decided to privatize the Barbados National Bank (BNB) and the Insurance Corporation of Barbados (ICB).
The shares were made available to the public, but the controlling stakes were eventually acquired by the Republic Bank of Trinidad and Tobago and the Bermuda interests respectively.
In 1991, the late Tony Johnson published a pamphlet entitled Towards Economic Democracy: The Role of the Barbados Stock Exchange.
In the preface to this text, Dr Neville Duncan said that Dr Hilary Beckles “popularized the notion of ‘economic democracy’ in Barbados”.
The Stock Exchange would be, in Duncan’s words, a “peaceful means” for “shareholder expansion in an environment of deregulation and privatization.”
The persistent acquisition of locally owned minority shares by majority foreign entities certainly cannot be compatible with anything called âeconomic empowermentâ.
I have always suspected that terms such as “economic democracy” and “economic emancipation” were slogans, slogans intended to deceive the poor black man.
We understand the concept of political democracy, one man, one voice. But there is no economic democracy in a regime based on the capitalist mode of production. Per capita income is not about equity, and levels of income distribution can be broad or narrow.
Large as in Latin America, the “Mansions and the Shanties” or narrow as in Scandinavia. But would the difference amount to something that could realistically be described as being economically democratic?
A lady called to say that she had bought shares in local companies four times for repurchase by foreign majority shareholders. The crux of the matter is that more often than not the foreign entity, having acquired full ownership, later sells its shares to other foreign companies, sometimes below the prevailing rate on the local stock exchange. In a recent case, the shares were trading on the Barbados Stock Exchange at $ Bds. 3.00 per share were offered at $ 1.78 Bds.
Interestingly, Doug Skeete of the Association of Corporate Shareholders admitted that majority shareholders don’t always like minority shareholders who come to annual general meetings and ask embarrassing questions.
The question is; embarrassing for whom? He also said that minority shareholders are too often unaware of the inner workings of companies in which they have only a limited stake. None of these factors seem to make Barbadians buy stocks.
Between 1976 and 1986 Prime Minister Tom Adams pursued a policy of what I once called “economic nationalism”. It was about a broader vision of capital and corporate ownership, of national and increased state ownership of businesses, what the Social Democrats called “seizing the peaks of the economy.” .
This was largely reversed by the Owen Arthur regime between 1994 and 2008. Historians will always debate the wisdom of this reversal.
There is the economic question of whether Barbados is better served by foreign companies through access to more capital for expansion, better management, better marketing, etc.
Then there are those who think the country would be better served by owning some sort of National Development Bank and a government-run insurance company.
There is also the moving question of a sense of national pride in indigenous property, as Dennis Johnson said, the joy of seeing “Barbados” on a building or, more importantly, as Chris Sobers often notes. , the pride of heritage, knowing that there are assets that can be passed on to our children and grandchildren as a precious heirloom.
Mr Arthur would later claim that he wanted to create in Barbados “a new entrepreneurial culture and a new entrepreneurial class”.
It is difficult to see how this could be achieved if there are massive takeovers of local businesses which are then run by foreign elites whose primary interest would be to maximize profits and repatriate much of it to local governments. foreign shareholders. Certainly, corporate profitability should contribute significantly to the well-being of a country.
The key word there, being âsignificantlyââ¦. not just in terms of job creation, as important as that may be in countries like Barbados where there is a
Beyond the relentless rhetoric, I don’t think there is much evidence of a substantial and broad entrepreneurial venture. On some days no shares are traded on the Barbados Stock Exchange. There was a time when Barbados could boast of having around 30 companies listed on the local stock exchange. Today there are only around 18, as many of them have been taken off the BSE list.
Buyers lose interest when companies are repeatedly bought out, especially when there are doubts about the future direction of the acquired companies.
Most Barbadians are generally poorly educated in financial matters, and the recent events of Trade Confirmers, CLICO, and the losses on Government Paper have exacerbated Barbadians’ natural tendency towards risk aversion and suspicion of capital accumulation between businesses. foreign hands.
Ralph Jemmott is a respected retired educator.