Privatisation in The Bahamas

by Andrew Allen

In their rush to divest themselves of the burden of the public corporations, politicians of all stripes seem to have forgotten that what began the exercise in the first place is their collective failure to run any public body to an acceptable standard.

These days, the exercise seems to have taken on a logic of its very own, and the new, unquestioned consensus in favour of divestment has prompted politicians to take pride in their commitment to the idea of their own collective incompetence. Bradley Roberts is yet the latest Minister to join the chorus, berating his predecessors not for seeking to privatize BTC, but in failing to do it properly and completely.

But aside from the political farce, there are some truly pernicious effects of the apparent consensus that government cannot run anything properly.

Public sector policy now suffers from the creation of what economists call a “moral hazard”, where politicians barely bother to achieve private-sector-like results within public bodies, since the received wisdom provides both an excuse for public sector incompetence and the prospect of a convenient escape chute for when things really go wrong.

It has also had the harmful side-effect of demoralising large segments of the public service, which hears itself described as a write-off by its own political bosses when they are advancing the private vs. public consensus.

Of the important public utilities, BTC has already been “pruned” and “streamlined” in readiness for privatisation, while BEC and Bahamasair have been subjected to sometimes fitful improvement exercises, which smack more of a test run for privatisation than a genuine attempt at long-term improvement.

How nice it would have been (and how potentially different, and more constructive, the debate on the effectiveness of public services) if politicians had only gained their appetite for public sector reform and improvement decades ago - and not under the gun of privatisation.

LAND: THE FINAL SELL OFF

Land is the new front line in Bahamian politicians’ unconditional surrender of their duties to actively develop the country. Today, the attraction of large hotel and “resort community” brands to the most underdeveloped islands is supposed to pick up the long years of government slack and bring modernity (and repopulation) to those islands.

All of this would have been altogether more excusable had any government since the UBP made any attempt to develop, of its own initiative, some of the more developed islands, many of which have long had all of the ingredients for development apart from active government support.

Obvious choices would have been West End or Bimini、both of which are close enough to the Florida market to effectively pick up the spillover of an immense continental tourist industry. Both also feature attractive, picaresque local histories.

Predictably, both these communities, despite all their obvious advantages, sat neglected on the margins of the Bahamian tourist industry until heads of agreement were recently signed with foreign investors to develop branded resorts. Rather than kick itself for having failed to take its own initiative in the interests of Bahamians as businessmen, government then pats itself on the back at the prospect of yet more jobs, jobs, jobs.

These Bahamian communities offer a saddening comparison with Key West, where local and state support has produced a destination that is an attraction in and of itself (rather than just a host community for a branded resort). That Key West locals, or Conchs, are the foremost beneficiaries of their community’s tourist product is a simple, obvious consequence of their industry having been locally created in the truest sense.

The crucial word differentiating the South Floridian and Bahamian tourist industries is “integration”. Whether in South Beach or Key West, the former provides for far more business interaction between the tourist dollar and the local economy. Since local governments orient their business climate to the tourist economy in Florida, everything from town planning to policing are designed to maximise tourist spending in the hands of local businesses.

In the Bahamas where, incredibly, there is no local government in the most populated places, what meager integration exists is a mere spin off from often closed- door negotiations between central government politicians and foreign investors. Locally conceived centres of interaction between tourists and local businessmen (such as Arawak Cay) are a rare exception.

Today, government’s much vaunted “anchor project” development scheme for the Family Islands could also prove to be a move in the wrong direction if more is not done to actively create resort destinations and attractions that are locally conceived and free of dependence on foreign brands.

Unless local (government) initiative, rather than the profit motive of foreign investors, provides the impetus, what will result will not be genuinely successful Bahamian communities, but rather clusters of branded resorts appended by Bahamian employment colonies. Time will tell.