Year in Review 2020: COVID-19 sends business and economy into tailspin

by Marlon Madden

The year 2020 started out on a high for many businesses in Barbados, with soaring expectations and plans for several projects.

Despite starting the year with an economic decline, Government was also optimistic about several key development projects getting started, and favourable economic growth.

Then came the novel Coronavirus (COVID-19) pandemic, and expectations were immediately lowered, hopes dashed and new plans emerged.

Shortly after the pandemic started affecting the island, rising debt and overall decline in the economy quickly became the order of the day as the Government was forced to borrow more and spend more to implement several social protection programmes and business support schemes, even as revenues declined.

The Mia Mottley-led administration was also forced to negotiate with the International Monetary Fund (IMF) to modify its four-year Barbados Economic Recovery and Transformation (BERT) programme.

The private sector was not spared the wrath of the pandemic, and following a curfew and other restrictions in early April, businesses started to lay off staff due to an immediate reduction in economic activity, which manifested itself in disappearing revenues.

No sector or industry was immune to the impact of the pandemic which resulted in several border closures and a disruption to supply chains.

However, the one arguably most affected was the bread and butter tourism industry.

Barbados had been a month shy of a record winter season based on forward bookings and cruise ship calls, and industry operators were busy planning ahead. But everything changed in mid-March when the COVID-19 pandemic began to affect most countries.

By the end of March, the island’s tourism product had witnessed its sharpest decline ever, and there were several ripple effects, including a sudden steep rise in unemployment and a dramatic decline in retail and wholesale, and then across the wider business sector.

“This year started out for all of us on a positive note in tourism. There was a lot of optimism about what 2020 had in store, numbers were looking great, and then early in the year we started to hear about this virus which started impacting us in March,” chairman of the Barbados Hotel and Tourism Association (BHTA) Geoffrey Roach recalled.

Asked recently by Barbados TODAY to look back at the year that was, the BHTA boss said the pandemic “pulled the rug out from under us and threw us into a whirlwind because there were so many issues that we needed to address in short order, which certainly none of us could have anticipated”.

“There were wage and salary issues, protocol issues across many fronts, the survival of operators, and it certainly demanded a level of attention from the directors at a strategic level,” he said.

The directors and members of the BHTA started the year with the intention of addressing a number of concerns and chart somewhat of a new path for the industry as they sought to continuously grow visitor numbers, improve the visitor experience, encourage greater visitor spend and refresh the island’s tourism offerings.

However, the pandemic side-tracked some of those plans.

Following the closure of hotels, restaurants, attractions and other tourism-related services, unemployment skyrocketed to close to 40 per cent.

It is estimated that some 15 000 people were directly employed in the tourism industry and another 32 000 in tourism-related jobs.

With the island’s main foreign exchange earner and one of the largest employers now under siege, coupled with the devastating impact of a dramatic reduction in revenue in the wider business community, the Government sprang into action, implementing several bailout schemes for the private sector.

Of note was the Barbados Employment and Sustainable Transformation (BEST) programme, which came into effect around September, focusing on the reengagement of workers.

Meanwhile, some hotel properties closed and made their entire staff redundant, while others welcomed back some or all workers who opted to return as the establishments took up the BEST offer.

The pandemic also took a bite out of the restaurant business over the past nine months, resulting in the closure of some of those businesses or a dramatic change in operation – from downsizing to placing staff on part-time or shorter work hours.

Government provided funds to help businesses through the state-run FundAccess and the Barbados Trust Fund Ltd.

The administration also introduced a Barbados Optional Savings Scheme (BOSS) with the hopes of raising just over $150 million to help fund infrastructure projects.

While it is geared primarily towards the public sector, just about any Barbadian is able to take up this four-year bond offer, which carries an annual interest rate of five per cent.

In relation to economic activity, growth in Barbados has been on a double-digit decline over the past several months, reaching a whopping -16.3 per cent by the end of September.

Some pundits estimated that the country could end the year with a decline as high as –15 per cent.

During the year, Government also managed to continue the reform of state enterprises and its roll out of digitisation – albeit on a limited scale – as it worked to meet the targets set out under the IMF-backed BERT programme.

The year was also dotted with some major developments across several sectors, one being the sale of majority shares of the Insurance Corporation of Barbados Ltd (ICBL) to BF&M in Bermuda, and its subsequent bid for complete takeover.

At the end of the first quarter of this year, insurance giant Sagicor went ahead with the launch of the first phase of its sprawling Estates at St George retirement community, signalling a vote of confidence in the economy.

During the year, Government finalised its compulsory acquisition of land on Bay Street for the construction of a new Hyatt Centric Hotel, and by June demolished the Liquidation Centre, formerly owned by businesswoman Asha Mrs Ram Mirchandani.

The financial services sector sprang into action shortly after the pandemic struck, and offered its clients several months of ease on the repayment of loans.

Meantime, Barbados was placed on the European Union (EU) Council’s blacklist in May, following the decision by the Organisation for Economic Cooperation and Development (OECD) Global Forum on Tax Transparency and Exchange of Information for Tax Purposes to list the island as “partially compliant”, based on its review for the period July 2015 to June 2018.

This controversial issue continued well towards the end of the year when the EU decided to keep Barbados on its blacklist in October, despite the country meeting all the OECD’s requirements by the end of 2019. The Government has since requested a review.

Despite all the setbacks and hurdles, all hope was not lost.

One thing officials agreed on was that the pandemic provided an opportunity for innovation, and the upskilling and retraining of staff, as well as a renewed focus on workplace health and safety as more people were allowed to work from home.

“The truth is that, while 2020 really had us in a whirlwind, we cannot allow it to divert us from the strategic mission of the association because it is even more critical at this stage to focus on where we are and where we are going to go and how we are going to get there,” said an optimistic Roach.

The BHTA chairman added: “This industry [tourism] is going to recover. It may take a little time but it will recover, and we have to ensure that as it recovers that we have the right things in place, [that] we line up all of our ducks to ensure we come out with the biggest possible benefits to Barbados.”

Meanwhile, Brittany Brathwaite, president of the Human Resources Management Association (HRMAB), said while 2020 was a year of “unprecedented challenges”, it could still be considered “an optimal year for practitioners to reaffirm their pivotal roles as strategic business partners”.

“This is made easier when we are knowledgeable of the legislative implications of our recommendations, when we consider the long-term impact of our solutions on both business and people, and ultimately how proactive and agile we are in the most disruptive of times,” she said.

“Many of us discovered unknown talents during this year and, similarly, we may have unearthed areas requiring significant improvements in our teams and, possibly, in ourselves as individual practitioners.

“An introspective and comprehensive look at how we execute our strategic roles must be the starting point as we journey into 2021 – even for those of us who fared well during this year,” she told Barbados TODAY.

There is no doubt that the year 2020 will go down as one of the most challenging for the business community and the wider economy, but one thing remains certain – determination and resilience will be critical to the re-emergence of good fortunes.

(marlonmadden@barbadostoday.bb)