The decision of the Sagicor Group to move its headquarters from Barbados is an inconvenient truth which cannot be ignored; and it would have come as a shock to most Barbadians as they went about their usual business wishing each other a happy new year.
Sagicor is a company whose “navel string is buried in Barbados” and the unanimous decision by its Board to move the domicile of the Sagicor Financial Corporation from this country is one that could not have been taken lightly.
Equally important must be the reasons which provided the fulcrum for this momentous decision.
It now seems that the several downgrades by the international rating agencies of this country’s credit rating have had a knock-on effect on the credit ratings of Sagicor Life and Sagicor Finance Limited; both of which have also been downgraded by Standard & Poor’s.
The important link is that the country’s downgrades may be having an impact on those outward looking companies like Sagicor who have ventured out into the international economy as investors.
And this may be so even if those companies are in good financial shape; because the underlying country risk cannot be ignored or dismissed. Junk bond status does no one any good.
The Minister of Commerce and International Business Donville Inniss hit the nail on the head when he said that Sagicor’s decision means that Government should redouble its efforts to get back to investment grade level for its bonds.
We could not agree more with the Minister on this point; but nothing that has been said so far by anyone including Mr Inniss can minimise the adverse impact which this decision can have on the perception that Barbados’ image as a global business centre of high quality in which companies can locate their headquarters, has taken a major hit, since the Sagicor downgrades followed almost inevitably on the national downgrades. Hence the decision to relocate.
There is therefore a political element to this matter since management of the local economy is an important factor because the only way we can get back to investment grade rating, is if as a country we get our national finances, the deficit in particular, returned to order. That means the correct remedial policies must be implemented.
The Government must therefore take ownership of this issue and seek to put in place those policies which will enure to the benefit of the entire country. In modern democracies the role and status of corporate entities cannot be ignored.
Companies provide jobs, taxes and earn foreign exchange for the communal benefit of the society at large.
All governments in democracies therefore owe a duty to the people and to corporate citizens to create the correct conditions in which such companies can survive and, within reason, prosper.
We have come a long way from the very elementary bare-bones agricultural economy which we took up on Independence and we have established a thriving economy which is interdependent on aspects of the international economy. But in the last regard we are responsible for paddling our own canoe.
We must be acutely aware that we are now operating in a global village. It is because of such a reality that while we are now masters of our own destiny, we should pay such regard as is necessary to external factors which can influence our economic plans and outcomes.
The rating agencies are a fact of life but this country has shown time and again a long heritage of resilience in the face of mighty challenges.
Once the right policies are explained to the public our leaders may be assured of national support to restore fiscal balance and confidence to our national affairs.
