The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Bahamians were yesterday urged to reject a "lifestyle of consumerism", with a top accountant questioning how many persons are actually "struggling to make ends meet".

Gowon Bowe, the Bahamas Institute of Chartered Accountants (BICA) president, commenting on the Central Bank Financial Literacy Survey 2018, which found that nearly 50 per cent of Bahamians are struggling to achieve this, told Tribune Business: "A lot of persons look at their circumstances and simply say they are struggling to make ends meet.

"What do they mean by not making ends meet? When you look deeper into their circumstances, however, there are some truly experiencing that, and others really just suffering from poor financial planning. Those same individuals have a $700 iPhone, a $200 pair of sneakers or are going to the hair and nail salon on a regular basis and using monies for what I would call superficial elements. That is a lack of understanding of financial circumstances."

The survey, conducted on 1,000 Bahamian adults by the Public Domain research firm, found that while many Bahamian households knew what to do for financial self-sufficiency, they were finding it "challenging to execute their plans".

Those earning less than $30,000 per year faced the most difficulty in meeting "all their financial demands", with 44 per cent of households in the medium income bracket of $30,000-$60,000 also reporting similar struggles. Even 35 per cent of those earning greater than $60,000 reported trouble in "making ends meet".

"When income was insufficient to cover household expenses, 40 per cent of respondents saw reducing spending as the solution to covering their expenditures, followed by working a second/third job (17 per cent), and borrowing money from family and friends (ten per cent). Each of the other means of coping [including payday lenders and numbers winnings] garnered less than ten per cent of responses," the Central Bank said.

Mr Bowe, though, added: "The whole point of the survey and the initiatives thereafter is to focus attention on how do persons take the reins of their own financial circumstances. That doesn't mean that by doing these things it becomes a good financial circumstance, but what it does say is that for one, persons start living within their means, and two, to make sure that you are setting out the priorities in the right way and, thirdly, using the information you have available to you to make sure that you are getting the best opportunities as a consumer in our current environment."

The BICA president said the Bahamas' high gross national income per capita and GDP per capita were likely "distorted" by high income earners and sectors such as financial services. "If you look at a population size of 400,000, and I have some very high earners in that number and the majority are low earners, the GDP per capita is distorted," he explained.

"Due to the fact that it is such a small population base, outliers will have a much greater impact on the average. This isn't the median, this is the mean, meaning if you counted every single person's income and took the median; that average would be a lot lower."

Mr Bowe added: "What has happened is they have taken the GDP of the country, which includes financial services institutions which have a significant amount of GDP productivity, as well as our tourism product, which is also looking at a significant amount of the higher income tourists coming here.

"The actual productive activity in the country is very high, and the trickle down effect is not as significant, meaning the profits and the monies earned on the higher earning segment of the economy are represented by less persons, and the average trickle down and average income of the average person is a lot lower."