As mentioned above, Gross Domestic Product (GDP) recorded positive growth for the period January to September when compared to the same period in 2009.  It can be noted that GDP growth in the 3^rd quarter was rather sluggish.   This was attributable to a decline in output in the productive sectors of the economy.   The sectors of the economy that are the main source of employment in the private sector all recorded significant decline in output.  This was the case for the agriculture, hunting and forestry, fishing, manufacturing and construction sectors.   The decline in these areas clearly underpins the high level of unemployment and under-employment being experienced by many Belizeans.  Such is the case for both skilled and unskilled workers.   Thus, the reality is that economic growth has not translated into an improvement in the livelihoods of the ordinary man and woman.   In this climate of low levels of growth and limited policy direction from Government, the setbacks in 2010 were enormous.  For most Belizeans the losses were greatest for those who had to lose their assets, such as businesses, real estate and homes; not to mention the cost of lives.

A look back at 2010 saw the many challenges Belizeans were faced with.  In the 1^st quarter of the year, government released the preliminary findings of the national poverty assessment report for 2009.   This revealed that 43% of all households are poor, with a further 14% vulnerable to poverty.  This reality revealed that 57% of all Belizeans are either poor or susceptible to becoming poor.  Government’s policy response has been dismal to address this critical and deteriorating state of the society.   Pro-poor policy and social initiatives only saw a pilot cash transfer program for food items.   Such a limited response in Belize City surely did not address the needs of Belizeans country-wide.

The 2^nd quarter in April 2010 Belizeans were hit with a budget for FY 2010/2011 that saw a harsh increase in GST to 12.5%.   The verbosity and wonton disregard, with which the presentation was made, made it quite obvious that the UDP Government continues to have no apathy for the wellbeing of Belizeans.   Throughout the year Belizeans have been paying more and continued to sink slowly into the mires of poverty.  Throughout the contraction in consumer spending, the unemployment toll kept increasing with businesses going under receivership or simply being forced to closed their doors due to lack of business and supportive government policy.   Long standing family owned businesses that have stood the test of time and made noteworthy contributions to Belize’s development were forced to close.  Some companies that died in 2010 or are clinging on life support are: Fresh Catch Ltd, Fabros’ Glass Shop, Wood Depot, Crocland Adventures, and National Transport along with many other small businesses.

As the year progressed, while businesses were floundering the level of violent crimes and attack on ordinary Belizeans continued unabated.   As at December 2010 the death toll now stand at 126 murders, this record of bloodshed will sure to go down in the annals of Belize’s history as the most deadly year.   The losses and tears shed were beyond imagination.   Young lives were cut short, innocent children died at the hands of indiscriminate violent attacks; fathers, brothers and sons of Belizean soil were lost; all leaving behind fatherless children and single mothers as primary bread winners.   The dead toll also saw young women being victims to all levels of crime including murder.   Government’s response to this deteriorating situation was Operation Jaguar, one without any teeth and sustained efforts at enforcing law and order and restoring confidence.

By the 3^rd quarter of 2010 Belizeans and Government were rudely awakened by Hurricane Richard that careened across the country leaving nothing but loss and destruction in its path.  What Richard revealed was the fact that the poor and vulnerable households were mostly affected and lacked the means and wherewithal to recovery from the lost of their most basis and important asset; their homes.   PM Barrow and Government’s response was pathetic and showed little apathy and consideration for the well being and recovery of affected Belizeans.   As the end of the year draws near the level of support from Government in rebuilding homes and providing much needed supplies to families remain slow in coming.

In concluding, Belizeans saw Government’s performance and record for 2010 reflecting their lack of commitment to the people of Belize and to ensuring that lives were enhanced.   Instead, we saw an economic crisis affecting the citrus and sugar industries and the Corozal Free Zone; with Government only addressing the situations as a means of last resort instead of taking the lead to prevent the crisis situations.   Infrastructure development throughout the country saw little being achieved, with road improvement in the north slow in implementation and the Kendal Bridge that links the south still not being replaced.  Other major challenges saw Government turn a blind eye to illegal immigration with a proposed amnesty program as a pseudo policy response.

As all Belizeans look back at the year that was, the glaring deterioration of our society and the pillars of our democracy continue unimpeded.   As we look forward with anticipation to the coming year, the hope is that 2011 will be a better year for all.   The expectation is that Government will take its constitutional duty to address the many challenges facing Belizeans so as to provide the quality of leadership that is required to transform our lives.   My wish for 2011 is that every Belizean throughout this wonderful land recognizes their true potential in being able to meaningfully contribute to the sustainable development of Belize.

Send comments to GwynethNah@gmail.com

The Belize sugar industry is the oldest manufacturing industry in Belize that predates independence.  Sugar manufacturing as a central pillar to the Belizean economy and its contribution to Gross Domestic Product (GDP) has been challenged over the decades due to both internal and exogenous pressures on this particular sector.  The socio-economic importance of the sugar industry to Belize extends far beyond the Corozal and Orange Walk districts were sugarcane is cultivated.  Despite various challenges that this industry has faced over the past decade, it continues to add value by way of contributing an average of 4% to GDP and 14% to total exports; its contribution to total agricultural exports averages 33%.  Over the years, the number of cane farmers has ranged from 8,000 to 4,000 who are the bedrock of this industry, which translates into over 40,000 persons being dependent on this industry.

The Belize Sugar Industries Ltd (BSI) is the sole manufacturer of sugar as prescribed in the Sugar Industry Act of 2001.  This mill has the capacity to mill 1.2M tons of sugarcane annually.  This throughput is dependent on weather patterns and quality of sugarcane received for milling.  Therefore, the Belize sugar industry unlike most sugar producing countries in the region, is majority privately owned with Government’s investment being limited solely to its 9% share in BSI.  It is thus evident, that the industry is not dependent on financing from Government, but nonetheless the Government has the unenviable role of regulating the industry.  The antagonistic relationship between cane farmers and BSI has resulted in Government’s intervention through the Sugar Industry Control Board to play havoc on the industry that ought to be able to regulate itself, for the most part  To more effectively dispense its duty as regulator for the industry, the Government may consider divesting of its interest in BSI and passing such benefit to cane farmers.  For only when farmers are part owners of the milling plant can some change be engendered in their relationship.

There are some important areas of development within this industry that requires the attention of all stakeholders to secure the long term viability and survival of this important industry.  This writer will call attention to some salient issues affecting the industry.

International Trade and Market Access

Belize as a member of the African, Caribbean and Pacific (ACP) group of states has traditionally benefited from preferential market access into the UK initially and then transcended to the European Union (EU) under the Sugar Protocol.  Sugar exports which were previously limited to a quota allocation, now enjoys quota-free access into the EU.  This benefit however came with a down-side.  This primary market for Belize’s sugar came under significant threat in 2000 when a challenge was mounted at the World Trade Organization (WTO) to the preferential arrangement afforded to the ACP states.  This resulted in the EU being mandated to reform its Common Agricultural Policy to become WTO compatible.  The reform measures undertaken resulted in a 36% price cut that was spread over 4 years from 2006.  In the creation and negotiation of Economic Partnership Agreements (EPA’s) between the various ACP regions and the EU, the benefits of the Sugar Protocol were subsumed under this new trading arrangement.

For the Caribbean, the reform measures resulted in several countries exiting sugar production, but for Belize its capacity for competitive participation in the EU market poises it to continue being a major exporting industry.  In 2010 of 87,000 tons of sugar that was produced, some 82% was sold to the EU market.  With the benefit of duty free and quota free access into this major market, it is incumbent for the sugar industry to strive for increased sugar production.  This can only take place if serious attention at reform is placed on the sector.  With an estimated 60,000 acres of land under sugarcane production, yields can be improved way beyond the current 12 tons sugarcane to 1 ton sugar currently being realized.

Since 2008 after initiation of discussions by BSI, Belize’s sugar exports were certified by Fairtrade.  This certification was done for the Belize Sugar Cane Farmers Association that is noted as the sugarcane producers.  This certification resulted in a premium being received of US$60 per ton of sugar sold to the EU.  The BSCFA is the direct beneficiary of these payments; however evidence of the benefit being flowed down-stream to farmers has been vague.  From 2008 to 2010 it is estimated that the BSCFA has received in excess of $25M in Fairtrade premiums.  The management deficiency that is evident with the BSCFA leaves much room for speculation as to how these funds were utilized to reform the field sector.  There must be some arrangement that allows for the transparent utilization of these funds to the benefit of the entire industry but specifically the field sector.

EU Financial Assistance

In 2006 industry stakeholders along with the initiative of the People’s United Party Government of the day, saw the importance of solidifying the long term sustainability of the sugar industry.  This was accomplished in tandem with the EU’s own commitment to securing Belize’s future market access.  A Country Adaptation Strategy for the Sugar Industry 2006 – 2015 was prepared and outlined the various levels of strategic intervention required to increase the competitiveness of the sugar industry.  The strategy that was presented focused on the following areas:

• To increase efficiency in sugarcane production, processing and transportation;
• Diversification within the sugar sector to create more value-added activities and increase industry revenue;
• To support agricultural diversification in the Orange Walk and Corozal districts;
• To provide socio-economic intervention by way of micro-enterprise development as alternative livelihood strategies;
• To provide appropriate policy interventions required at the national level.

The total budget line that is attached to this strategy is $280M.  Phase I of this program saw the allocation of $123M the majority of which was earmarked for infrastructure development of road networks in the north.  To date the current UDP Government has been unable to implement and adequately execute the projected works.  This delay can be attributed to limited capacity resident within Government to manage the projects.  Most recently the series of contracts that were announced for commencement of road works in the northern districts has not been implemented.  Such is the case for phase 2 Lot A of the road rehabilitation project under the EU Accompanying Measures for Sugar.  A further $20.5M has been allocated for field rehabilitation and ought to go directly to farmers, with the funds being channeled through micro-finance institutions such as credit unions along with the DFC.  Farmers continue to be in need of low cost financing to invest in their fields and improve their husbandry practices.  Government has a responsibility to guarantee the timely draw-down of these much needed monies.

Policy Reform

The most critical aspect of the sugar industry that has gotten minimal attention has been the development and implementation of policies to improve competitiveness within the industry.  In 1998 the then Government saw the need to review the legislation in conjunction with all stakeholders to allow for meaningful reforms to meet the challenges of the changing trading landscape.  Now in 2010 the time is once again ripe for a review of the legislation to allow for greater reduction in Government’s intervention, which over the past years has been more mischievous than beneficial to the industry.  With cane farmers recognizing the need to operate in a more economically viable fashion, the BSCFA has come under significant attach due to poor management and this has resulted in creation of new associations.  The unconstitutionality of the Sugar Industry Act was challenged with the court mandating the required amendments by Government.  A few areas that require attention in a revised legislation are:

• The economic relationship between BSI and cane farmers to be government by commercial contracts and abolition of the current payment arrangement for sugar sales.
• Reform of how cane farmers are organized
• The role of the Sugar Industry Control Board should reflect less Government participation and greater ownership by the investors in the industry.

It is strikingly obvious to all Belizeans that since 2008 the level of attention the current Government has placed on this industry has been negligible.  This is despite a national UDP convention being held in Orange Walk and the farmers protest that resulted in one death, Government continue to turn a blind eye to a sector so important.  It had to take BSI’s financiers protracted position on their access to credit to bring Government and PM Barrow’s attention to sugar.  After great delay and badgering the required $10M to start the 2010/11 crop was approved; disbursement of which remains delayed.  The Government has a constitutional obligation to provide the required policy intervention that will guarantee the long term sustainable development of the sugar industry.  If action is not taken with haste, this current administration can be held accountable for the demise of a most important industry in Belize.  The call is made loud and clear that Government must take this responsibility seriously and act now before it is too late, for without a vision our people are sure to perish.

Comments welcome at GwynethNah@gmail.com

The National Emergency Management Organization (NEMO) which is charged with the responsibility of disaster preparedness and response provided the required warnings but to many seem to have failed in identifying how people residing in vulnerable areas would have been affected.  Therefore, when Hurricane Richard made landfall Sunday, those who were most severely affected were the poor.  As Richard careened through the middle of the country heading westward, it wreaked havoc in its path until it crossed the western border.

What Richard has exposed is the vulnerability context that is germane to Belizean society and how poverty increases this vulnerability and risk to hazards.  This fact was so vividly evident in the majority of images beamed on the various news networks. Hurricane Richard among other things exposed and lay naked for the entire world to see the reality that as a society the government has neglected to adequately provide improvement of the livelihood context for the most vulnerable persons in the population. It is quite evident that there are far too many Belizeans who are at or below the poverty line and therefore very vulnerable.  Recent statistical figures revealed that as much as 43% of Belize’s total population is living in poverty.  This portion of the population resides in substandard housing and is subjected to conditions that no Belizean should be allowed to endure. They have limited resources to voluntarily evacuate whenever the need arises and are unable to stock hurricane supplies when required.  The country has been reminded of this reality in South-side Belize City, Hattieville, Gales Point Manatee, Freetown Sibun and other communities along the Western Highway and southern coast that were affected.

Poverty is a complex issue that is predetermined by the livelihood context of individuals; these include their personal, social, political, financial and human capital.  The role of government is to ensure that those assets are enhanced over time by way of practical interventions made through development programs. The realization that a meaningful pro-poor poverty alleviation strategy has not resulted in much improvement has come to the forefront. The CEO, Ministry of Human Development noted that in the aftermath of hurricane Richard “We have to factor this in now to the larger policy response to poverty alleviation because we already know that some of these cases will turn into welfare cases…” How an adequate response to the affected Belizeans will be factored in remains to be seen.

The Disaster Response and Preparedness Act, Chapter 145 of the Laws of Belize provides scope for the designation of special vulnerable areas and the creation of special area precautionary plan for special vulnerable areas.  To the best of my knowledge no such designation has been made for South-Side Belize City and other such special areas, despite the known realities of poverty and vulnerability of these constituencies.  The lack of attention to the plight of Belizean poor has come home to roost; so many families have been left homeless and are compelled to wait for disaster relief to be provided by government and agencies such as the Red Cross.  The manner in which supplies are being provided seem to be lagging and contingent on the completion of damage assessment in the affected areas.  The Prime Minster in his statement to the nation in the aftermath of Hurricane Richard provided an empty commitment to provide assistance to all persons affected, not knowing when and how funds would be sourced to meet this pressing need.  His apparent lack of concern and empathy for affected Belizeans is most glaring as it took him 10 days after the hurricane to visit affected persons in the Yabra area of Belize City.  For the PM of this nation to say “I didn’t see how I could visit one area and not visit the others and quite frankly there were too many areas to visit” is condescending to the Belizean people.

The level of organization and forward planning by Government in anticipation of any natural disaster seem woefully inadequate in being able to provide a timely response to meet the needs of affected households.  Belizeans are in need of the basic essentials to enable the restoration of some semblance of a dignified existence, essentials, such as food, clothing and adequate housing.  The response ought not to be a delayed response by Government, but one that takes account of how disasters displace and affect the poor who are the most vulnerable of the population.

PM Barrow should know that there exists the facility to access emergency funds immediately from the Caribbean Development Bank (CDB) in instances of such a disaster; so that the statement to help extended could have been made more meaningful.  Even the PM needs to be careful not to be seen to be playing politics with those affected and the help provided in times of disaster. The leader of the opposition was quick in stating his support to the Government in its effort to provide as a matter of great urgency for the needs of those affected by hurricane Richard.

Here are some concrete measures that could take immediate effect to ensure the safety and recovery to normalcy of the affected families:

• Government to provide housing through the use of wooden structures that meet hurricane standards under the national building codes.  Several companies would stand to benefit along-side providing much needed employment.  The $50M the Social Security Board has decided to invest in purchasing BTL shares should instead be invested to aid in the provision of housing built to adequate standards in these special areas.
• Food rations comprising basic items to meet nutritional requirements should be distributed en mass to the affect areas.  It is uncalled for to be subjecting already deprived residents from accessing such basic essential.
• Clean-up efforts that are required in affected communities should be accelerated to allow for temporary employment boost. The Ministry of Works equipment should be used in these areas to supplement private equipment to expedite these efforts and the KOLBE foundation should be involved in getting rehabilitated prisoners to give back to the community by working.

The aforementioned suggestions are only a few that could go a long way on the road to recovery for Belizeans that have been most affected by Hurricane Richard.  The urgency for Government to provide the required policy planning and implementation to reduce poverty in Belize is timely.   It is the poor population that is the most vulnerable in times of natural disasters, therefore if that segment of the population is significantly reduced; by extension it reduces the potential burden on the state to provide relief and recovery support in the aftermath of a disaster.

Agencies such as the SSB ought to have a disaster fund that can provide resources in times such as these.  The quickness of response was most evident from the state of Quintana Roo, Mexico with their generous donation.  The urgency by the Government and all its agencies to respond adequately to ensure recovery by the affected people is of utmost importance.  Through adequate development planning the mitigation of risk and vulnerability could be greatly addressed.  Belizean lives need to be restored as quickly as possible by building on the hopes and aspirations of the affected people and their quest to complete recovery.  Government must act alacrity.

Gwyneth Sydney Nah

Comments welcome at GwynethNah@gmail.com

Government officials a few months ago released economic data indicating Gross Domestic Product (GDP) growth of 2.4% for 2^nd quarter of 2010.  As previously stated in this column such an achievement is not laudable under the current economic environment and that the proof of the economy’s performance is best measured by the quality of life of the average Belizean.   In  the absence of verifiable indicators, all evidence seem to point to the fact that Belizeans’ lives have not improved, but rather people have been grappling with the social disintegration resulting from the unprecedented levels of crime and violence.  Furthermore, Government’s policy response has been extremely limited in spurring economic growth and recovery.  However, this must also be examined within the global context.  Generally the global recovery from the recession remains fragile with performance being uneven across different developing economies within the region.  Belize, like most of the Caribbean remains most vulnerable to the weak level of recovery of the US economy.  This is the case since several Caribbean and Central American economies remain highly dependent on tourism and remittance flows from the US and other large economies.  Another key issue that also impinges on the policy response from small economies is the fact that large public debt severely constrains the level of policy support possible. There seem to be no direct target for addressing the debt burden in a sustainable fashion, instead the evidence points to an increase.

Earlier this year the IMF concluded their Article IV consultations at the end of June.  The initial remarks were that the outlook for economic growth to resume was modest.  The IMF also indicated that despite the recent hike in GST the benefits from this adjustment would not be forthcoming as overall fiscal deficit is likely to widen in FY 2010/11.  The widening of Government’s fiscal deficit could be clearly understood in the context of Government not undertaking any spending cuts in their administration of policy, but instead continues to employ excess human capacity with limited productivity.  A blatant example of this is within the Ministry of Health and the continuation of a project implementation unit that has rendered no deliverables.  Furthermore, since the focus of the current administration has been blindly hinged on domestic national issues such as all the litigations and being embroiled in the BTL nationalization and pending sale, no focus has been placed on short to medium term national policy priorities.  This is conspicuously evident with the progress and feedback being made with Horizon 2030.

The modus operandi of PM Barrow appears to demonstrate that whenever a crisis situation arises he has been comforted in always absenting himself from the realities facing the Belizean people.   One observation is that on many occasion the PM would be unavailable to address pressing issues due to international meetings and trips.  The senseless killing of an innocent little girl Eyani Nunez; the disappearance of two other innocent children, the Rash’s from Punta Gorda; blatant human smuggling and a poorly performing economy has all been crisis’ that the PM chose to not address with the level of conviction and purposeful leadership expected from a head of state.  This writer therefore calls on the opposition People’s United Party to demonstrate their leadership by providing a suitable response to the Belizean reality.  As they go to their national convention, it is expected that the leadership will so unite as to be able to engage in such a way that it is clear that they are better placed to address the many dilemmas of Belize’s development.

Gwyneth Sydney Nah

Comments welcome at GwynethNah@gmail.com

Securitization of investments therefore was demonized in the eyes of Belizeans, although a common investment option done all over the world that can yield positive results.  However, any investment undertaking done without the benefit of full due diligence ought to be denounced.   Now 6 years down the road, the SSB is faced with making a significant investment decision on purchasing shares in Belize Telemedia Ltd (BTL) and one would expect that since hindsight is 20/20 the current Investment Committee and Board of SSB would dare not repeat the folly of their predecessors; not the case, the lack of due diligence to guide SSB’s investment decision seem eminent.  For the benefit of the owners of the SSB fund, this writer will provide a succinct synopsis of the efficacy of a pension fund investment in equity investment in the infrastructure sector.

The purpose of a government pension fund is to hold contributions from employers and employees in a fund that is expected to grow over the long term so that the Fund can provide specific benefits to employees, including retirement benefits.  The SSB is one such scheme that has the legislative cover (Social Security Act Chapter 44, Laws of Belize) to ensure that contributions are mandatory to the fund.  It is further described as a defined benefit scheme, one which workers can expect a specific monthly pension at retirement based on a formula that takes account of their earnings history and years of employment.  The SSB can also be classified as an unfunded pension scheme, in that the benefits to be paid out to workers are collected from current contributors and paid out to beneficiaries as needed.  Such a financing structure is known as pay-as-you-go.  This, in an effort to grow the fund over the years the SSB has a critical function to investment surplus funds (current income/contributions less expected outgo/expenditures).  How this investment function is executed will determine the long term availability of funds for retirement benefits due to workers in the future.

Investments can be classified by asset classes.  Financial analyst would define an investment in the telecommunication company such as BTL as investment in an infrastructure asset.  Academic research has shown that for pension funds investing in infrastructure assets by way of shares or investment loans, there exists no established benchmark.  This means that the expected rate of return from such an investment is subject to a standard to be determined by the Fund.  This begs the question does the SSB has a benchmark for its expected rate of return from equity investment in similar companies; namely Belize Water Services Ltd and Belize Electricity Limited? A benchmark provides a gauge that will inform the fund managers when it is no longer feasible to hold such investments.  So with probably no known benchmark how can the SSB take an investment decision on how much to invest in BTL?  The risks of such an investment are significant to the long term sustainability of the Fund.  These risks can further be defined as the following:

a)    Operational risk – how can one anticipate the type of management and whether they would operate the new BTL in an efficient manner.

b)    Legal and ownership risk – what will be the outcome of current litigations against BTL, the value of compensation owed to previous owners and how liabilities and debt to other entities were dealt with are all unknown factors.

c)    Business risk – this speaks to the level of competition in the market and how advances being made in technology would impact the financial performance of BTL in the near term future.

It is an essential part of the fiduciary duty of the SSB to have a clear understanding of the specific risks associated with this infrastructure investment.  This writer begs the question how can any meaningful analysis and due diligence be undertaken by SSB on BTL without the benefit of current financial statements and prospectus on BTL?  The level of uncertainty associated with this looming investment by SSB is not only rank with the direct conflict of interest but also lack prudential financial management of the people’s fund.

Due to lack of data by way of a recent actuarial review for 2009 on the SSB along with quarterly financial reports for the most recent period ending in June 2010, detailed analysis on the status of the fund cannot be undertaken by this writer.  This lacuna in data provision is an area that requires Government’s attention, as the people must be able to access such records on public entities like the SSB.  Thus, with limited information and a mountain of uncertainty surrounding the operations and value of BTL, the people’s funds being managed by the SSB ought to be considered for far more meaningful investment options that will contribute to the long term development of Belize’s economy and her people.  An investment in BTL may not be good for the people of Belize, but with the rose coloured glasses being worn by PM Barrow that interest of the people is the last thing in sight.

Much reference is made of the effect the world recession has had on Belize by the GOB, the PM should therefore be aware that the basis of that recession sprung from the lack of regulation of the financial market. The lack of due diligence on this major financial player in the country may well lead to the irreparable damages to the development of a viable and secure pension scheme. How can it be acceptable that the members of the Investment Committee could be so divergent in their views that a casting vote would be required? Does this not indicate the legal contravention of the SSB Act and its provisions for investments that pose a conflict of interest?  If this is allowed to proceed without scrutiny, the current SSB Board and management would have been consigning the fund to probable serious jeopardy.  Channel 5’s informal poll reveals that this investment decision is not supported by the people.

Comments welcome at GwynethNah@gmail.com

To ascertain GDP growth the comparison is undertaken by reviewing the same period in two consecutive years.   So this comparison is done for January to July 2009 and 2010.

All sectors recorded positive growth during the first half of this year with the exception of the manufacturing and utility sectors.   The largest growth was recorded in the government service.   16.1% growth is directly attributed to GOB’s increase spending as a result of the SIB employing a cadre of persons to complete the 2010 population and housing census.   Exactly how many people have been employed; such data was unavailable to the writer.   The manufacturing sector recorded a significant hit due to reduced petroleum and citrus production.

With the economy not showing any exponential growth in a particular sector, the performance can be considered normal growth.   What is far more important is the quality of life for Belizeans and whether this has improved or deteriorated over the same period.   This writer would opine that the deterioration has been so significant by the increase fear that has gripped most of the country.   Over the period January to September 2010 total recorded homicides were 93 compared to 71 in 2009.  This is an astronomical increase of 31% of Belizeans falling victims to violent crime resulting in their death.   This data proves far more relevant to validate that the increase fear and risk people are experiencing is so considerable that GDP growth of 2.4% means nothing to the average Belizean.   Families continue to be challenged by the increasing cost of living alongside limited employment opportunities.  As at May 2010 inflation had increased by 1.8%.  For skilled persons with formal academic training, several persons are underemployed in their current engagements; while others remain out of full-time work.  As to unskilled labourers, with less formal academic training growth in employment has been limited to non-existent.  Unfortunately the SIB does not provide employment data for the periods which GDP data is collected.  Nonetheless this writer asserts that the evidence would point to an increase in unemployment.

The question therefore, is what economic policies have the Government implemented over the last 6 months if any that would result in an improvement in the quality of life of Belizeans.   This writer dare say that pro-poor development policy has been woefully lacking.  Therefore, Belizeans have had to be baffling with the challenges of daily survival within a society that is on the brink of an insurgent criminal takeover. The priority challenge for Belizeans is safety and security.   While, Government policy on economic development has been non-existent, their constitutional obligation requires that an adequate policy response be provided to ensure the safety and preservation of Belizean lives. Economic growth can only be meaningful if it results in the concurrent economic development of a nation and its people.   This integral output thus far has been extremely deficient.   Belizeans deserve better and the call is made for the PM Barrow’s administration to perform its constitutional duty to warrant the sustainable development of Belize and her people.

Comments welcome at GwynethNah@gmail.com

The key to this saga is the Belizean workers. In the case of the Social Security Board (SSB) they are the custodians of the Social Security funds; the people or contributors are the owners of the FUND.  In relation to the Government of Belize (GOB) the people are the taxpayers or just pawns in a high stakes game.

The story is told of an Englishman who built an empire, with the help of some cleaver Belizean attorneys and political patronage. They served the Englishman well, on boards they sat.  At court they defended him and for that they were richly rewarded. Then they came to power with the finances of the Englishman and then they thought they will gobble up some of the kingdom that they helped to create and defend. We will tell the people that they will get lower phone prices and the new owners will be the people of Belize.  They said they will put it out so Belizeans can own it.  So they acquired their chunk of the Englishman’s castle. The pretext being that litigation will cease. This is the opinion of Anansi’s friends who are themselves attorneys.

The paradox of this saga is that the game is being played out with Belizean taxpayers monies and indication is further that they want to use substantial portion of workers monies from the Social Security Fund. All the ducks are lined up in a row and Anansi feels that he now has the leverage on the Englishman. Game is set and matched.  Anansi and his friends are laughing as they sell this feat of genus as a thing of national pride on our Independence Day. But the question is if you are bold on BTL so why so impotent on oil? While Rome burns Anansi schemes and the agents established to safeguard the people’s interest…they sleep.

The Facts:

We will recall that The Belize Telemedia Ltd (BTL) was nationalized via a legislative decree in late August 2009, when most felt that Government took this high-handed approach to address the various litigations it was facing from BTL.  Upon its nationalization the Barrow administration installed a new Board which saw the appointment of Nestor Vasquez as chairman along with Lois Young-Barrow and Anwar Barrow as directors, among others.  Now a bit over a year after the nationalization Belizeans can expect to see BTL shares being made available by way of public offering through a prospectus.  So as Belizeans look to celebrate our independence, the Prime Minister has indicated that he will make his announcement and the prospectus available on Independence Day. In light of these developments and his stated position “that there cannot be majority foreign ownership of BTL” the question that remains is which Belizeans will become the new owners of BTL.  This columnist will take a critical view of this proposed investment offering and the deeper implications for the Belizean taxpayer and contributor to the Social Security Board.

The first key issue is the financial position and performance of BTL, these details ought to be provided in the prospectus when it becomes available, however a preliminary review is provided now based on last years’ performance.  As at March 31, 2009 BTL total assets and liability were valued at $311.5M.   Net income was $19.9M compared to $27.5M in 2008.   Notably are the operating expenses for 2009 which saw a whopping 28% increase from 2008.  It begs the question, why the significant increase?   Earnings per share on the other hand took a nose dive to $0.41 from $0.62 in 2008 this was a 34% drop.   Owners of BTL, GOB benefited from dividend declared and paid to the tune of $70.4M in 2009.   This was done by calling in $25M in long term notes that were held at Belize Bank Ltd, these securities were earning BTL interest at 10% with maturity in 2013.  How has Government as majority owner accounted for receipt of dividends from this entity?  BTL long term debts stood at $39.4M.   From the quick review of BTL’s financial position it is obvious that the company performed positively over the past year since it was nationalized, the issue however is how this wealth will be transferred to Belizeans and which Belizeans stand to benefit.

Word on the ground is that the people’s money held by the Social Security Board is expected to be one of the key investors in BTL.   This makes for a rather interesting transaction if it materializes.  There are several issues at hand, the first and foremost is the obvious conflict of interest that exists with conducting a financial transaction of this nature between SSB and BTL.

Look at the players:

Here are the key agents of BTL and SSB who are one and the same.  How can this be explained that the sellers would also be the buyers?   How can the  UDP Government,  that was elected on a premise of transparency, accountability  and the avoidance of conflict of interest expect that the Belizean people, who are  the owners of SSB funds,  will believe that  such a transaction  will be to  their best interest,?   The SSB Act is clear on the fiduciary responsibility placed on the Investment Committee and the Board of Directors in making investments for the fund.  “The Board and the Committee shall maintain the highest level of transparency and accountability and they shall take into consideration the social and economic utility of the investment, which shall be subsidiary to the primary objective of safety and profitability”.   The safety of the SSB fund is determined by the risk profile of the investments being done. Belizeans are urged to acquaint themselves with the SSB Act and the SSB Audited Financial Reports that was laid before the House last month .  The following figures are extracted from this Report.  SSB total assets were $377.6M.  That was the value of the people’s money in this pension fund.   SSB has 26.92% shares BEL or $61.2M with other shares or equity investment at $6.1M.  The SSB Act clearly provides certain restrictions on investments, which speaks to investments which raise major risk of conflict of interest; no single investment shall exceed 20% of the total amount of the reserves, which would be $73M since the reserves were $366M in December 2009.   If Belizeans are to own at least 51% of BTL then some $159M would need to be invested. The SSB Act limits the level of investment in any one entity.  But what is more bothersome is the financial risk associated with equity investment, as it posses the highest risk when compared to other investments.  As is noted in the 2009 reports BEL recorded a $10.8M loss in 2008 due to the PUC’s decision on the annual review proceeding and this resulted in SSB not receiving any dividends on this investment, but instead foregone was $6.8M that could have been realized. In other words, that $ 6.8M could have been used to pay workers more Social Security benefits.   Another issue to consider is, if SSB will be made to invest in BTL where will the funds come from?  It will be from its short term investment, or liquid assets.  These are cash at the banks and term deposits held at the various commercial banks.  This portion of SSB portfolio was $121M in 2009.  Extracting a large portion of these funds may result in serious capital flight from some of the commercial banks where these funds have been used to provide consumer loans to Belizeans.  As this writer has tried to elucidate readers, it is obvious that there are many issues of conflict and also prudential management that must be considered if the people’s money will be invested in BTL.   The SSB Act does not require public consultations on investment decisions, but public notice is the closest it can come.  The people of Belize must also demand that the Unions’ representatives and the  Private Sector (Belize Chamber of Commerce and Industry and the Belize Buniess Bureau) representatives insist that due diligence is carried out. The SSB’s CEO Merlene Martinez, who sat on the DFC’s Commission of Inquiry, should know that any appearance of conflict should be avoided. Remember Mr. Ariel Mitchell from the Association of Concerned Belizean (ACB),  well he is also a Board member of the SSB and his firm was the consulting firm who designed and supervised the construction of the  PG SSB office. Remember the decision to subcontract with a Guatemalan firm instead of a Belizean Firm?

Another fundamental issue with the offering of BTL is how Belizeans will be able to access these shares.  In a previous issue of this column, this writer made the point that with respect to the nationalized BTL, the Office of the Contractor General should so outline an insider-trading policy that would ensure that no individuals or firms within which persons of the current management or Board of Directors have any interest, would be allowed to purchase shares whenever they are made publicly available.  It can be anticipated that if such a policy is not forthcoming, there would be no basis on which to challenge any questionable purchase or acquisition of shares in that company.   This acquisition of BTL by the Barrow administration may prove to be the easiest way in which wealth can be transferred or made available to choice Belizeans and in so doing places some citizens at a greater advantage over others.

The entire process of the nationalization of BTL and now its pending public offering, speaks to the dilemma of development and the fact that the integrity of the institutional framework in any country rests significantly on the integrity of the persons who are part of that system and processes put in place, and when not adhered to gives rise to principal agent problems.  The conflict of interest is so blatantly evident that it is difficult to distinguish the principals from the agents and in that quagmire of persons failing miserably in executing their duties in the best interest of the people of Belize, the true beneficiaries stand to lose.

Gwyneth Sydney Nah

Comments welcome at GwynethNah@gmail.com

As a founding member of the World Trade Organization (WTO) and a signatory to the Uruguay Agreements, Belize’s commitments under the General Agreement on Trade in Services (GATS) was limited to only the telecommunication sector.  This meant that in 1993 when she became a member of the WTO, the only service sector that Belize agreed to liberalize and allow for foreign investment and competition was the telecommunication sector.   This was evidently achieved when the Belize Telecommunication Authority was privatized and became Belize Telecommunication Limited (BTL) and most recently the market has seen the entry of Speednet Communications.   Other services sectors such as tourism and all its related services did not see the level of commitment towards liberalization of trade.  However, due to the nature of how the Belizean tourism sector has developed over the years and the fact that it requires significant capital investments, one has seen vast levels of foreign investment in hotels, resorts, tour operators and other areas.  This de facto liberalization of the tourism sector is what has allowed for the high levels of foreign investment to be acceptable.

Belize’s trade policy in services is a direct reflection of her commitment as a party to the Revised Treaty of Chaguaramas that establishes the CARICOM Single Market and Economy (CSME).  The commitments therein under Chapter 3 allows for the establishment, provision of services, movement of capital and nationals within the Community.   Therefore, unlike her commitments under the WTO and other trading partners outside CARICOM, Belize is obligated to liberalize its trade in services with CARICOM member states.   This therefore, provides for foreign investment from within the region and movement of professionals and other persons to operate and provide services in Belize.   It is this trade policy arrangement that ought to be keenly examined to note the required waiver of obligations that would allow for the Government of Belize to determine the level of preferences and/or access allowed to Caribbean firms.

This writer did not seek to verify the nature of the ownership structure of the tour operator Chukka-Bakka Bush; however based on media accounts it is claimed to be 75% foreign owned by Jamaican interest.  This therefore makes it a Caribbean company established and operating in Belize.  The nuances and peculiarities of Belize’s tour operators and tour guide sector, is such that it caters and allows for the coexistence of small to medium size indigenous companies  to be established and operated.   Majority of the firms are 100% Belizean companies, be them medium to large size or the one-man operation by independent tour operators.   Therefore, with a market structure of this nature, it is of utmost importance that Government ought not to have allowed a foreign company with the capacity to dominate the market to establish and operate in Belize.   Especially since her trade policy has not allowed for the liberalization of its tour guide and tour operators sectors.   Under the Revised Treaty establishing the CSME, Belize as a member state has the right to request a waiver of obligations to rights granted under the Agreement, whenever the provision of such rights results in economic dislocation or hardship on a particular sector.   This is evidently the case with this dominant tour operator in the market place.  It is incumbent on Government to avail itself of the special provisions afforded to Less Developed Countries under the Treaty.   It is rather foolhardy of the Ministry of Tourism to see it fit to rationalize and legitimize the monopoly arrangement that Chukka-Bakka Bush enjoys with Carnival Caribbean cruise line.  The Belize Tourism Board (BTB) and the Ministry of Tourism has an obligation to Belizean tour operators and tour guides to ensure that the adequate standards for operations are in place and adhered to.  That’s where their responsibility lies.   Not to condone and accept an arrangement that proves disadvantageous to Belizean operators.   Furthermore, Carnival Caribbean cannot impose any monopoly arrangement for Chukka-Bakka Bush that is contrary to Belize’s trade policy regime.  Carnival has the option to indicate to their patrons a preferred operator, but visitors must have the right to choose which operators and guides they wish to use.  It is this level of oversight the BTB and the Ministry ought to place their focus on.

Therefore, this writer calls on Government to undertake its responsibility for the implementation of effective trade policy that benefits Belizeans.   Belizean companies ought not to be haggling for preferential treatment in their own territory, this ought to be a given especially in an area where indigenous expertise lies with Belizeans.  The dilemma that this sector now faces is simply a result of poor monitoring and oversight by Government through the designated entities; the BTB and Ministry of Tourism.  This is a situation that could have been avoided provided there was a clear road map on how they envisaged the expansion of the cruise tourism sector would be accommodated.   Government’s obligation is first to its people and the development of Belizean companies.   The Barrow administration needs to understand the role of Government in fostering Belize’s development; it is not only about winning elections.

Gwyneth Sydney Nah

Comments welcome at GwynethNah@gmail.com

Firstly, the structure and processes that prevails within the sugar industry are embodied within the BSCFA, the regulatory body the Sugar Industry Control Board, the processors the Belize Sugar Industries Ltd (BSI) all of which are superimposed within a political system.  A review of the value chain in the industry clearly identifies the weaknesses at all levels of the industry from farm to factory.  The current organization of cane farmers leaves much to be desired.  Historically the BSCFA has been the only cane farmer association that membership has been mandatory.  Its organizational structure has had the legislative coverage under the Sugar Cane Industry (Control) Act previously and currently under the Sugar Industry Act of 2001.  The law sets out clearly the organizational structure of this association and how it ought to execute its functions to the benefit of its membership.   The benefits that have accrued to members over the years have been limited to the provision of chemical inputs such as fertilizers and herbicides, but far more important has been their political lobbying mechanism.  It is that mechanism and the level of membership that has allowed the BSCFA to access significant lines of credit over the years from Government and its related entities.   The management structure of the BSCFA has remained unchanged and the many challenges it is currently facing is a direct reflection of the lacuna in proper management.   Most recently with the judicial challenge and the court’s ruling that now allows for the freedom of association, it has paved the way for other associations; namely the United Cane Farmers Association and the Corozal Sugar Cane Producers Association.   Cane farmers livelihoods strongly depend on the efficient functioning of their representative organization and when this is not realized fragmentation and free-riding becomes prevalent.  Legislative amendment by way of a revised Sugar Industry Act will not be the panacea to the current management difficulties being experienced by the BSCFA.   Any review of the current Act should clearly not include the organizational structure and function of the BSCFA or any of the other named associations.  It is an imperative that farmers recognize the need to have their associations and their individual operations function as efficient economic enterprises that will enhance their livelihood and quality of life.

A second critical issue that has plagued this industry is the level of political intervention in the livelihood structure and vulnerability context of Belizeans engaged in the sugar industry.   The electoral base within the two northern districts makes the political capital of cane farmers far more valuable than any other asset that they have.  The challenge however is that this political capital does not work for the majority of famers; instead the BSCFA and its membership has been a spring-board for aspiring politicians.   The mismanagement in the high debt burden that the BSCFA is currently faced with is a result of increased usage of this political capital coupled with poor financial management and accountability.  Therefore the current task and dilemma of cane farmers is how to relinquish the high levels of dependency on government’s intervention to pave the way forward in an industry that is completely privately owned.

Consequently, the challenge the industry is currently facing is a structural deficiency that must be addressed by those who have the economic investment in the industry.  The antagonistic relationship between farmers and BSI needs to be bridged to the benefit of all parties.   The requirement to become a cost competitive sugar industry is an imperative for its long term sustainability and by extension the improvement in the quality of life of Belizeans engaged in this industry.   All indicated to date, is that the levels of unemployment has increased over the past decade as a result of the inefficiency functioning of this industry.  People can no longer depend solely on sugar cane production.  However, if the industry stakeholders and government were to make the required meaningful interventions the economic prospects of Belizeans livelihood would be greatly enhanced.  So the call is made on all parties, cane farmers to get organized and find a way forward that will benefit the majority; and BSI to address greater levels of transparency and accountability with respect to the areas of marketing, shipping and handling of sugar; and government to guide the reform process required, by way of legislative amendments that will allow for the efficient functioning of a sugar industry that continues to make a meaningful contribution to the Belizean economy.  Belizeans deserve a better way of life and the cañeros should continue to demand the levels of respect from the political directorate.  With a national party convention in their back yard it was rather amazing that no policy statement was made to address this very key industry.  This obviously reflects the level of importance to the current government; one must pray that in their remaining term the industry does not continue to languish.  Where there is no direction the people shall perish.

Gwyneth Sydney Nah

Comments to GwynethNah@gmail.com

In 2004 the WTO as part of its mandate and as a requirement of member countries undertook to review Belize’s trade policy regime.  Their observations noted the significant steps Belize had made in liberalizing various aspects of its trade regime whilst also seeking to protect selected domestic industries.  Belize as a small middle income developing country has an open economy that is characterized by an export mix that consist of both tourism services along with a few basket of commodities and other goods.  Trade plays an important role in the economy as trade to GDP ratio has consistently increased to above 120% of GDP.  This therefore, means that most of what the economy produces is for an export market.  This would therefore, expect one to conclude that because trade is so vital to the economy’s existence, that trade policy supported by an investment policy would also be deemed important by the government.  However, the level of attention and public information coming from the Ministry of Foreign Trade and the Belize Trade and Investment Development Service (BELTRAIDE) has been rather dismal.   There is the need for systematic emphasis on the development of quality and standards of products and a phased approach to protectionism that will enable quality product to be provided to both the domestic and international market.

Belize as a member of CARICOM ought to be actively engaging in bilateral and regional trade negotiations with Canada and the USA under the US-Caribbean Basin Trade Partnership Act (CBTPA).  Full implementation and market access arrangements under the Economic Partnership Agreement (EPA) between Caribbean Forum countries (CARIFORUM) and the European Union (EU) ought to be made available to the business community so that firms are made well aware of the market access arrangements that they can avail themselves of and any accompanying assistances. As a member of the WTO Belize can continue to take steps to liberalize its trade in services and increase the benefits to be derived from such engagement.   Various service sectors are already engaged in international trade, outlining and creating a road map is not the paramount required at this point, but rather the supporting policies included alongside capacity development and training so that the engagement in developing meaningful roadmaps would be assured so that service providers benefit from the market access already negotiated.  The WTO noted in its recent assessment of trade development globally, that in keeping trade open has been and remains crucial in providing opportunities for countries to emerge from the global crisis, in particular at times when public deficits are growing for many.  The Government of Belize seems to not have realized the importance of trade policy and a complimentary investment regime that would allow for Belize to strengthen its competitiveness as she continues to engage in the global economy.  As we enter the second half of 2010 the WTO is once again scheduled to undertaken their second Trade Policy Review, it would be interesting to note the progress made to date.  Over the past two years, the reactionary response by Government to domestic issues and no meaningful policy response to the global recession have left the Belizean economy just hanging by a tread.   The business of a political party winning an election could never be an end to itself.  The responsibility of governance is a whole other level and it certainly involves giving Belizean citizens, private and corporate a fighting chance to compete to survive in a globalized world.

Gwyneth Sydney Nah

Comments welcomed at GwynethNah@gmail.com