The Barbados economy is in danger of being “denationalized” with key decision-makers residing abroad, a leading academic has warned amid a takeover bid for Banks Holdings Limited (BHL), the island’s largest beverage producer.
Director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES) Dr Don Marshall told Barbados TODAY the move by SLU Beverages Ltd, the largest single BHL shareholder, to purchase all outstanding shares at BDS$4 (US$2) per share after it acquired the 13.1 million shares of Massy Holdings last week would result in the “fall of a local titan” and there were glaring lessons for Barbadian enterprises.
“There is a danger in the economy becoming increasingly denationalized, in the sense that critically more and more important private sector related decisions in our country that are supposed to marry well with our macro economic policy are being determined outside of Bridgetown.
“So whether we are talking about banking, where that is being determined in Port of Spain and in Canada; or whether we are talking about certain kinds of import, trade and other business, and now in this case manufacturing or beverage business, that is increasingly going to be a decision taken offshore. I say that it is a titan that is fallen.”
Dr Marshall, who specializes in international political economics said while the move would be hailed by some as a victory for shareholders, it was alarming to those who understood that the Barbadian economy and society were stitched together for the effective growth and development of the country.
“You have to be concerned when greater and greater companies, small businesses and so on are being overtaken by other interests outside your domestic interests.
“We must see it as part of our enterprise legacy that Banks Beer, Plus, Coconut Cooler these have been important artifacts, products of Barbadian vintage. We do know there is nothing quite like a Banks Beer and we do know there is nothing like a Plus. Indeed we can say you’re as Bajan as Banks Beer or as Bajan as a Banks Plus.”
Dr Marshall lay the blame squarely at the foot of BHL, which he said had made itself vulnerable to capture by SLU Beverages Ltd which is a holding company of Cerveceria Nacional Dominicana S.A, a leading beer and malt producer in the Dominican Republic, controlled by Brazilian corporation Ambev S.A.
He insisted that BHL had failed to pay attention to its brand, product improvement, efficiency and expansion.
“This is capitulation on the part of those that have been in control of Banks. The building blocks are simply this: if you become a publicly listed firm you go on the stock market, you raise capital; but now you have neon lights on you as a publicly listed company. Other similar companies that are bigger will be looking at how you operate; your competitors will be seeking to outstrip you in the competition stakes. So you have got to develop a strategy for going global and it means that you have to continuously improve.
“You can’t be moaning to the Government to improve the enabling conditions to do business and at the same time fail to do your homework in relation to research development, product innovation, finding new markets and the rest of it. Because your shareholders who expect a bigger return on their dividends are going to be saying ‘this company is not growing’.
“So a bigger company that sees the opportunity because you have got a decent enough brand, a decent enough product says ‘oh so you don’t know how to go global well I will take over and go global for you’. So when they do that the shareholders whose only loyalty is not the flag but to the colour of money will simply say ‘we like it green, and we like plenty of it’” he told Barbados TODAY.
Against this background, he argued that a notice issued by BHL last Thursday urging its shareholders not to make any decisions on giving up their stake in the company until a valuation of its shares was conducted would not work.
Dr Marshall said it was a situation businesses should seek to learn from while mirroring the strategies of Goddards and Chefette, which he said were two examples of Barbadian companies that best represent how businesses should develop.
“We have to look at the Goddard example as the best that Barbados is seen by way of entrepreneurial expression; we have to look at Chefette as the best by way of sustaining and protecting one’s brand.”
The political economist stressed businesses must wake up to the reality that it was their duty and not Government’s to ensure they are competitive by paying attention to regional and hemispheric markets and trade agreements.
“Markets can be politically constructed and politically maintained but firms compete, not states,” he cautioned.
“We can’t always be beating on the Government to do this, to do that. Both administrations have provided an enabling environment, they have signed the EPA [Economic Partnership Agreement] and all kinds of agreements that open up new markets, but a Brazilian can’t drink Plus and the people in Belgium aren’t drinking Plus and the Dominican Republic haven’t tasted our Coconut Coolers. So whose fault is that?
“A Brazilian still does not know the taste of Plus but they will come to know one now.”