I was quite interested a couple of weeks ago to see reported in the press a story quoting a representative from Cost-U-Less, suggesting that it could take at least two years for Barbadians to see lower prices.
Two years!!! Within two years, a whole lot could happen but essentially consumers are to sit with bated breath waiting until 2015 to see if we will get a dollar or more off food items.
I am admittedly growing older by the minute so at times my recall is not always as sharp as it should be. However, I do have a vague recollection of the context in which Cost-U-Less was introduced into Barbados.
If I recall, and please correct me if I am wrong, the coming of Cost-U-Less was supposed to be a critical part of the attempt by Government to break up monopoly control of the distributive sector and reduce high prices for consumer goods.
To therefore hear the representative suggest that while they are in the business of offering low prices they will not be lowering them just for the sake of lowering them was puzzling to say the least.
I am completely confused. When you add to this the suggestion that Government had all but given the kitchen skin to the business in concessions confusion gives way to amazement.
There are perhaps a couple of critical lessons. Just with the very limited outside view of the situation, I think concessions clearly do not work in the present environment.
The granting of numerous concessions to businesses to establish in the Caribbean is part of an economic legacy which was contextualized in the early post-independence history of the region as we struggled to transform our economies.
Its success or lack thereof has always been contested and Governments even today are only now unlocking some of the baggage associated with the scheme.
In today’s economic environment, there are several factors impacting on prices and business success. Clearly, at least from this example, a kitchen sink full of concessions appears now to have little impact at least for consumers.
It leads me wonder: if I give you concessions to make it cheaper and easier for you to business here and still your prices remain high, what about the other businesses which would have had to establish with little or no concessions?
I believe the Cost-U-Less scenario is worthy of some serious study. My intention is not to pick on them per se but there is a story here about the cost of doing business in Barbados. If we can get to the bottom of this story, then perhaps we can begin to develop effective solutions.
I believe that we do have a few unscrupulous people who intend to maintain 150 per cent profits on their goods and it is also true that prices have been artificially high for a long time due to the nature of our tourism and standard of living at some levels.
However, it is also true that we have honest and shrewd businessmen who understand the consumer market and know that it does not make sense to keep unnecessarily high prices if goods are not moving. So there are other factors.
My take on it that the cost of living and particularly food prices will not come down by the introduction of oversees retail and other outlets, granting concessions and other quick fixes.
The problem is complex and requires a nuanced solution. Of course, the politicians will not tell us that. It is easier to jump up and down pretending to have the solution and attempt to gobsmack the public. Oftentimes, however, we are astute enough to see through the smoke and mirrors.
I think that politicians believe that we only want quick solutions and therefore are impatient to take the time to explain the complexities involved and the need for patience. They continue to misjudge, as always, the discerning nature of the public they lead.
Government first has to decide if it wants to continue to continue collecting high import duties to bolster revenue or broker a compromise with the private sector to reduce taxes if they pass on the savings to consumers.
Further, we have to tackle high energy prices and that will require a long term investment and putting effective stimulus into alternative energy projects not as feel good strategy but as critical economic tool.
I could go on but you get the picture: complex problem – complex solution.
• Shantal Munro Knight is a development specialist and executive coordinator at the Caribbean Policy Development Centre.
