Where Does the Average Bajan Invest Today?

A member of the BU community posed the question to the blogmaster via private message – “Where does the average Bajan INVEST today- now?”.

There is a quick answer. There is a complex answer. The blogmaster is not qualified to address the complex answer, however, members of the BU family are free to fill the gap.

The question was influenced against the backdrop of government’s retrenchment exercise and should include private sector employees where similar retrenchment programs have been occurring in the post 2008 period.

Before the question posed can be answered it is important to understand how savings and investment differ. In simple terms individual savings is the difference between income earned – a salary – minus CONSUMPTION expenditure e.g. car, food, entertainment etc. To clarify, if the individual purchases an Aquaponics system (to produce food) we should define this as an INVESTMENT expenditure. The investment expenditure reduces household cost and creates a revenue opportunity.

The most recent Financial Stability Report page 20 produced by the Central Bank confirmed what we know, Barbadian individuals and other entities continue to save in the financial system. Some dismiss the high level of savings to Barbadians being risk averse others will counter by suggesting that we should consider other determinants. The blogmaster will leave this part of the debate to the BU intelligentsia except to say. Traditional investment opportunities are limited in Barbados and BLACK Barbadians especially have confused saving with the bank or credit union as an investment.

This blog is not meant to denigrate Barbadians. However, it is accurate to say that the financial IQ of Barbadians combined with a passive entrepreneurial disposition has defined our investment outlook. Some members of the BU family will point to how the education system has been designed in a post colonial period that has led to our state of mind.

To answer the question posed by the member (he is free to expose himself). Even in the so called ‘good times’ the investment market in Barbados can be accurately described as closed. Bear in mind the blogmaster does not consider individual savings in financial institutions as investment. Where are locals – those being displaced by government – able to invest money to generate meaningful income that is not illiguid? There is no active equity market. There is Fortress Fund and a couple other mutual funds that show moderate ROIs. You get the picture!

Earlier in the blog BLACK was capitalized for a reason. It was not meant to be an incendiary verbal, simply to differentiate how Blacks and minority groups approach investing in the same local market.   For years minority groups have established Pooled Investment Funds. In a simple definition, an opportunity is identified and a group of individuals come together based on a shared position to invest in the idea and agree to share the risk. The idea maybe to buy property to rent or flip, acquire an equity stake in an under capitalized business, transport an emerging business concept from offshore to local market … you get the picture. The more sophisticated investment is that a few pension funds managers act as loan sharks. Is this activity regulated? A blog for another day. However it must be said that all investments bear risk!

The upside to what is happening to displaced workers in Barbados it that it may serve to disrupt a passive state of mind. This is where the national conversation needs to be anchored instead of the old way thinking. It is time to change the thinking.

 

 

 

 

169 comments

  • Lawson,

    Not that there’s anything wrong with that.

    Like

  • Did George Payne bother to tell the US Ambassador just how corrupt himself, Dale Marshall and many of the BLP ministers/senators sitting in parliament are …he should……

    Like

  • SHOULD THE NAME OF ANYONE WHO BUYS LAND FROM A BRA AUCTION BE MADE PUBLIC ?

    NO NAME ORGANISATION using a front man made a good investment today.

    ” An unnamed organisation scooped up all three lots for almost half a million dollars, during the first of a series of planned land auctions by the Barbados Revenue Authority (BRA) which took place in Christ Church on Monday.”

    http://www.nationnews.com/nationnews/news/213407/dover-land-snapped

    Like

  • @Hants
    let’s begin at the beginning?
    First find where the auction notice and terms of the auction are posted on the BRA website.

    Like

  • @Hants
    One is almost tempted to ask is Wayne Ford a recognized auctioneer? That area is a desired piece of property and I’m not surprised that it was snapped up but I share your concern about the identity of the nameless/faceless person(s) behind the bid.

    BTW I didn’t delve into the FB page and was unable to see any terms or conditions of the sale but I would think that they would have been published in the newspapers ( someone could advise on that)

    Like

  • Since I do not subscribe to the Sunday Sun, at least you found the “notice of Auction”. I didn’t find auction terms? Do you just show up on the date at 2pm and bid?

    Like

  • Where was the NIS?

    Like

  • I am really wondering who bought that land. I don’t trust anything in this place nowadays.

    Like

  • @ Sargeant and NorthernObserver,

    Transparency is a bad word in Barbados.

    Like

  • ” Bartlett Morgan (hand raised) bids for it, ensuring the entity he represented bought all three lots.”

    Like

  • Mr Morgan is likely acting in an agent capacity, on behalf of a client. Yet, if that client is Cappo Industries, any information available on Cappo, may still not tell us who the buyer is.
    It is very common at auction’s of big ticket items to use an agent.

    Like

  • @NorthernObserver who wrote ” It is very common at auction’s of big ticket items to use an agent.”

    You are correct but I think there should be full disclosure when the BRA is selling property for non payment of taxes.

    Like

  • Why? The BRA’s job is to get the highest price they can, and to ensure that all those bidding have been duly prequalified, such that settlement of the auction terms will be made in full.

    Like

  • @ NorthernObserver,

    The BRA is a Government agency and unless there is a national security issue there should be transparency.

    The cynic in me thinks that there is a political reason in this case but I am probably wrong.

    Like

  • Being transparent at this juncture in our history is about creating equality by ensuring equitable distribution of wealth etc. building a worthy society is complex.

    Like

  • Did Gov’t get market value? The West Coast may be more valuable but that is still a prime piece of real estate I wonder how much was owing in arrears. Although Mr. Forde said there was no response to their numerous attempts to get hold of the persons responsible, I am left to speculate as to why the owner(s) wouldn’t attempt to sell it on their own to garner more of the value.

    When the taxes have been satisfied what happens to the remainder of the money? Does the Gov’t keep it in trust for the owner to claim or will they send in a cheque by registered mail to the last known address? In any case someone got a steal.

    Like

  • “IF” it works like elsewhere, the “collection costs” plus the taxes and interest, generally exceed anything garnered via auction, such that there is rarely a positive balance to any account. In fact, one of the reasons many jurisdictions resort to auction, is when they are reasonably sure, the monies owing exceed any auction estimate. And this frequently ignores any loans/liens held by others. Another reason why the auction terms are vital.

    Like

Join in the discussion, you never know how expressing your view may make a difference.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s