The Adrian Loveridge Column – The Banks, the Banks, the Baaaaaaaaanks!
Despite the apparent impasse between the current Government and our banks and financial institutions on the subject of terms for foreign debt repayment, it would be nothing short of silly for the heads of those banks to perpetuate the ongoing impression that they are not still open for private sector tourism investment and fiscal support.
When I broached this subject through the social media recently, a locally acknowledged economic pundit pointed out that banks are not in the ‘business of taking risks’. If this was vaguely comprehensible, someone would have to carefully explain to me that while at one time holding the second lowest credit rating status of any sovereign nation on the planet, those same banks extended further loans to the then administration and on clearly unsustainable interest rates and repayment periods.
As some investor confidence returns, it must be obvious even to the most sceptical bank director or senior manager that any acceleration in recovery is going to be driven by the private sector, as they are the only significant group of players who create new wealth.
Government have very limited options without further increasing, already what many consider crippling taxes, which have a direct negative consequence on either business owners or our already value-for- money challenged visitors.
Ultimately, every rational observer knows that the banks will eventually recover any or all the state indebtedness largely by recouping through increased customer fees, service charges and interest rates. At least one of them has already announced a second fee hike within thirteen months despite a notable reduction in service delivery.
The private sector can however fight back by using its trade associations to collectively negotiate down credit and debit card merchant transactional and processing charges to offset additional opportunistic service fee increases. Paying by cheque is another area that should be finally relegated to the dinosaur age, because of the costs involved and time delays in settlement to traders and retailers.
Meanwhile virtual or actual monopoly utility and other providers hold out against accepting payment by credit card online.
Highlighting this recently, a senior regional representative of MasterCard stated, that ‘the Caribbean currently had a very low penetration of electronic payments across the board and that there was scope to explore the 85 per cent of transactions now not done electronically’.
Our financial institutions could also extend their co-operation, with the tourism sector, by including the same concessions to the industry that some offer to wholesale clubs and food distribution entities, where currently up to 4 per cent cash back is given, when particular brand credit cards are used as payment. Even if this is extended to limited quieter times of the year!
September is a classic example, which for many in the sector, is one of the most challenging months of the year.