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Dr Newton

Monday, 25 July 2011 02:00

By Dr. Isaac Newton

Antigua St John's - The United Progressive Party (UPP) government of Antigua and Barbuda and the opposition Antigua Labour Party (ALP) has admirably joined forces to communicate confidence to the investors and depositors in one of the nation’s leading indigenous banks, the Antigua and Barbuda Investment Bank (ABI!).

This rare collaborative endeavour, far too isolated for healthy democracy, is a foretaste of what common good initiatives could look like, if partisan politics pays homage to national and regional ideals. Let me congratulate PM Baldwin Spencer and Finance Minister Harold Lovell for trying hard to squelch rising fears.

I recognised the two-pronged response from the ALP to the ABI Bank’s woes.

Whereas Chairman Gaston Brown rightly rallied national support by espousing the financial merits of the bank’s restoration, as undertaken by the Eastern Caribbean Central Bank (ECCB), Opposition Leader Lester Bird, in his weekly address to the nation, emphasized how the UPP government contributed to the bank’s current challenges. Bird predicted that “major defaults with complete loss of confidence in the country’s creditworthiness,” will continue to occur.

But the optimistic thread running through political leaders’ call for maturity and patience is undeniable. The only question seems to be whether such optimism has magical qualities.  Hope and everyday experience are on the side of those who say that realism and optimism are partners, if success is to be carved from bitter circumstances.

On any scale of civic mindedness, it would have taken incredible courage to ignore the government’s economic credibility stance, disguised under the inspiring notion of national development.  Economic recovery has no room for costly delays or virtuous denials. Cruel facts are needed to infuse the blood of hope into our financial veins.

Intervention

After receiving the green light from the Monetary Council, and in studied consultation with the Government of Antigua and Barbuda, Governor of the ECCB Sir Dwight Venner felt that it was both timely and prudent to rescue ABI Bank. In his brief account of what has been done and why, he offered the following analysis for his intervention:

“The continuing impact of the global recession

   
The CLICO/BAICO issue

    
The rescue of the Bank of Antigua, and


The top priority assigned to financial stability in the Currency Union.”

All these are fiscally advisable reasons not to lay violent hands on a local bank that was once considered well managed. I suspect that as a brilliant and honest observer of the political landscape of the Caribbean region, Sir Dwight was careful not to give the impression that the bank was going into market blackout. ABI Bank's rebirth remains an unwritten blockbuster story, yet to be published in our sub-regional shrine known as the ECCB. 

Yet, a dangerously complicated story riddled with uncomfortable sensation still lingers. With welcoming insights on how toxic financial contagion works in the global market, the stability of the sub-region should not hang on the survival of any one banking player in the system.  Within the Organization of Eastern Caribbean States (OECS), the mere possibility of dissolving one or two banks is evoking unwarranted fears of market collapse to the tune of potential crisis. Either sensitivities are too fragile or the circumstances are too delicate.

I don’t undervalue the overall benefits of our sub-regional financial arrangements. But broader powers to penetrate the drawbacks of integration against practices dangerous to stable socio-political priorities cannot be left to chance.

Politics

That the Government of Antigua and Barbuda seems unwilling to re-examine its stewardship of the economy signals a tragic tale.  Antigua’s economy is running on empty. Too many stable local businesses are collapsing, migrating, or downsizing to bare bones.  The promise of good times is an overdue antidote to the fact that other players in the financial sector will disappear from the market altogether.  But bad times will not cede ground anytime soon.

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Governments are still the major protectors of the common good, and can’t be absolved from providing policies and initiatives that guarantee some tincture of collective security. The UPP has not demonstrated the same level of urgency and priority to repay millions of dollars in loans to ABI Bank as it has to the IMF.

Bear in mind that ABI Bank spearheaded the UPP’s strategic plan for fiscal flexibility and operational stability with a heavy mixture of loans and bonds. ABI Bank deserves some debt service attention from the government to ensure its survival.  But with Spencer being so insincere to implement practices that put indigenous talent and businesses first, chances are slim.  

Good Governance

I don’t think the high command of ABI Bank should be spared rigorous inspection for making decisions that perhaps were not sufficiently attentive to the gaps between risk management and future profit pools. ABI Bank should consider a forensic examination of its financial records with the transparency of findings available for public scrutiny.

With a mindset alert to a dynamic marketing environment, ABI Bank could embark on fundamental policy reforms. These could:  spark managerial focus on top-ranking internal initiatives; leverage corporate design and innovation to create new value for customers; inspire the government to repay its loans; refine leadership as a source of rebranding and competitive advantage; and develop organic and non-organic growth to outperform competitors. Speculation of shortcomings is useless.  Long-term corrective is best suited for evidence based data.

If there isn’t some burden of responsibility on banks and other financial institutions to exercise sound corporate governance, the market will fail. I expect prudence from leaders at all times, but especially during an international downturn where external shocks from regional economics and global financial trends can be staggering. Strategic decision-making is essential not only for efficiency, but for competitive success. It cannot fall prey to sweet temptations.  

My dad always instructed us to pay attention to the four sides of a coin: the head, the tail, the cutting edge, and the monetary value. I don’t think that the various official explanations of the root causes of Antigua and Barbuda’s latest financial saga quite add up. 

Just where the joints come together to lure our senses into confusing fantasy with reality, each of us should form our own picture of what to do to demand accountability from all sides.

Promises of good governance in the public and private sectors have become dead rhetoric. However, good governance won’t simply happen, even though PM Denzil Douglas, chairman of the Ministerial SubCommittee of the Monetary Council on Banking, has eloquently called for it. System-wide changes must be made.

Governments and financial gurus within the sub-region must begin to determine whether leadership, courage, and innovative energies are aligned with global opportunities to achieve financial success.  “These are urgent matters for the Electorate,” as astute blogger John French II frames it.  A passionate argument is not an act of the saints. Wise action is the key of progress.

Dr Isaac Newton is an International Leadership and Change Management Consultant and Political Adviser. He specializes in Government and Business Relations, and Sustainable Development Projects. Dr Newton works extensively, in West Africa, the Caribbean and Latin America and is a graduate of Oakwood College, Harvard, Princeton and Columbia. He has published several books on personal development and written many articles on economics, education, leadership, political, social, and faith based issues.

Dr. Isaac Newton is an International Leadership and Change Management Consultant and Political Adviser. He specializes in Government and Business Relations, and Sustainable Development Projects.

Dr. Newton works extensively, in West Africa, the Caribbean and Latin America and is a graduate of Oakwood College, Harvard, Princeton and Columbia. He has published several books on personal development and written many articles on economics, education, leadership, political, social, and faith based issues.

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