By Fay Simmons
Tribune Business Reporter
The Bahamas must unlock the $3bn-plus excess liquidity in its commercial banking system to drive greater economic growth and investment activity, a senior banker has warned.
Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told the Rotary Club of West Nassau that there is no shortage of available cash funding for infrastructure development and other projects but Bahamians are failing to exploit this because they are too risk averse.
“We do have... significant excess liquidity in the system as it stands, over $3.1bn, and that’s something that we need to ask ourselves: Why? Why a person is holding it. The reality is, persons are now risk averse to the point where they’re happy to have money sitting on deposit in the banks than they are having it circulated in the economy, and that’s the question the Government has to address,” said Mr Bowe.
“It doesn’t mean necessarily picking up government debt securities, but if persons are willing to invest in infrastructure, persons are willing to invest in businesses, if persons are willing to invest in companies seeking financing, then we have economic progress. But literally, today, people are content with simply having their funds sit in the banking system - over $3bn in excess reserves, meaning more than what you need.”
Mr Bowe said that if Bahamians became more confident in the financial system they would not be as hesitant to invest their savings, and financial institutions such as banks can make interest rate adjustments for projects that stimulate economic growth.
“We have excess liquidity in the banking system. If we can encourage persons to have confidence and trust in the economy in which they live, to invest and deploy their funds into productive activity.... And whilst we have headroom with interest rates to do something, we do not adjust interest rates for consumption, but for stimulating economic growth,” he added.
Mr Bowe said that, due to the absence of a formal National Development Plan enshrined in law, Bahamians are not aware of investment opportunities and lack a clear road map on how their investments will grow in the future and what incentives will be given.
“When we talk about there not being opportunities, I lay that at the feet of the Government, because in the absence of a National Development Plan, how do you know what sectors to invest in. If I know the Government’s plan for the next 25 years is this, and they’re going to put in tax incentives, they’re going to put their own investment behind it, they’re going out to attract persons in these sectors, etc, me, as a businessman or an investor, have greater confidence to put money behind it,” said Mr Bowe.
“We hear them often say it’s a wonderful time to be a business entrepreneur because of all this activity, but I don’t know where the business opportunities are coming from, and if government knows, why are they not selling them?”
Mr Bowe said increasing the level of investment by Bahamians is a “balancing act” between ensuring the population is financially literate and the Government providing adequate information to encourage individuals to invest.
“You go to school to learn, but you learn in order to get yourself a competent job or job that allows you to earn wages. You really should be earning wages to enable you to save. You should actually be saving so that enables you to invest, and you’re actually investing to actually provide security and safety for your own well-being, and not around future generations behind you. We often miss several of those components of this and focus on earn and spend. We don’t hear earn, save, invest and then have security in the future,” said Mr Bowe.
Comments
Porcupine 2 months, 1 week ago
Mr. Bowe,
Business and investment is based on trust. Yes? If one looks closely at the Bahamian government and our nation as a whole one sees a veritable lack of trust and an abundance of dishonesty. A sane person, with a lifetime of experience would never take risks with their money in The Bahamas. This is simple due diligence. Bankers get far too much credit for their role in any economy. Bankers produce nothing, Finance and banking fees take far too much money out of any economy. Anyone who has studied these issues understands that the whole banking system in the west today was designed and implemented under dishonest and coercive political conditions.
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” ― Henry Ford
The daily papers in this country exhibit clearly the reasons why reasonable people do not invest here. Our government officials are ignorant, petty, uneducated and vindictive. Our process to open a business, a bank account or anything else in this country is Pay to Play and utterly inefficient. Worse, Nobody seems to care. If someone, say for instance a Prime Minister, did care, how come it is still in shambles? Mr. Bowe, according to the World Bank Ease of Doing Business reports, how is The Bahamas doing? It is one thing to recognize that we have excess liquidity in our nation, it is truly another to suggest that this country is business friendly, honest, and willing to assist those who would like to improve their condition. Time and again, our government officials prove that they a short term political operatives who seek to squeeze out more and more for their selfish little selves, by hook or crook. Until we improve our national business ethics and radically change our national moral code, it is a good bet to hold your money closely.
Porcupine 2 months, 1 week ago
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." -Woodrow Wilson
sheeprunner12 2 months, 1 week ago
Who has $3 billion in 242 banks?????
Did Gowon Bowe say that????
If most Bahamians don't have $1000 on their bank accounts, who really has this money stashed in our local banks???
Maybe it is people like Bowe and his PEP friends.
ExposedU2C 2 months, 1 week ago
This twit speaks out of both sides of his mouth. When it suits him he complains that his bank's very distorted balance sheet is attributable to Bahamians being too risk averse. Then to another audience he complains that his bank cannot find enough creditworthy long-term borrowers and long-term investments to help soak up the massive amounts of liquidity sitting on both sides of his bank's distorted balance sheet. Yup, this is one banker who lends new meaning to plenty of hot air double-speak.
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