The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The preference shown by ‘risk takers’ for leaving capital in the bank, earning minimal returns, “says a lot about the state of the Bahamian economy”, an auto dealer believes.

Ben Albury, Bahamas Bus and Truck’s general manager, told Tribune Business that the ‘low interest rate’ environment impacting bank deposits would normally force Bahamian entrepreneurs to invest in new or existing businesses.

He argued, though, that with private sector and investor confidence at an exceptionally low ebb, ‘risk takers’ and those with access to capital preferred to leave it safe in the bank.

“Typically, the average business person prefers to put their money out there in some sort of investment, business, generating a 10-20 per cent return on their money,” Mr Albury said.

“But when people prefer to keep their money in the bank, that says a lot about where we are in terms of the state of the economy.

“Historically, business people sitting on capita would be trying to get creative and invest it, finding a higher rate of return, but right now there is no confidence because of the state of the economy.”

Mr Albury’s views echo those of Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, who earlier this week urged entrepreneurs and ‘risk takers’ to do more if the Bahamas is to shake off its economic malaise.

He called on them to step forward and prove they truly “believe in the Bahamas” by breaking out of the “risk averse” mindset, pointing out that with almost $1.5 billion in excess liquidity in the commercial banking system, access to capital was no problem for those who qualify.

Sir Franklyn said the Bahamas’ lack of economic growth, Moody’s threat of a credit rating downgrade to potential ‘junk’ status, and investors’ ‘risk averse’ appetites were “not unrelated”.

“Moody’s wants to see growth; everyone wants to see growth,” he explained. “To generate growth, you need risk takers, and the risk takers cannot forever be foreign investors.

“Look at the level of liquidity in the system to fund deals. We just need the risk takers. Moody’s doesn’t need to downgrade the Bahamas now. But all of us in this country need the economic risk takers to do more.

“Believe in the Bahamas. That’s not a political statement in this context. Believe in the Bahamas. Believe in yourself by investing in your country. The capital is here; we’ve got to use it.”

Mr Albury, meanwhile, said crime was impacting investor perceptions of the Bahamas both locally and internationally, pointing to house break-ins and boat thefts that were affecting Abaco.

And with the $3.5 billion Baha Mar impasse now in its 13th month, the Bahamas Bus and Truck general manager said this country was faced with potentially 12 per cent of its gross domestic product (GDP) “rotting away”.

“It’s not very encouraging because I don’t see anything happening,” Mr Albury said of the Bahamas’ economic climate. “We keep hearing good things on Baha Mar are coming, and not to be worried about it, but every day that passes by people become more concerned.

“Baha Mar is deteriorating. That is projected to be 12 per cent of GDP, and sitting there rotting. Unemployment is through the roof. I’m a little bit depressed at this time.”

Mr Albury said that when auto sales were down, parts and service revenues for dealers typically picked up, as persons sought to keep their existing vehicles on the road.

“Right now, people aren’t even servicing their vehicles,” he added. “We’ve seen a decline in that area as well.”

With auto purchasers still finding it difficult to obtain bank financing, Mr Albury said his main sales source were high income earners who were largely able to “write a cheque” for themselves.

“That’s not a pretty strong demographic,” he told Tribune Business. “We’re selling vehicles largely in the $50,000-$80,000 range, but before our bread and butter was selling to the middle and lower middle classes.

“Now, it seems every sale is to someone who can come in here and write a cheque. We have a strong line of used vehicles, a strong line of commercial vehicles, and high end vehicles.

“In my opinion, we have the market range of vehicles to match my competitors, but the business just isn’t there.”