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‘No vacuum’ with loss of Bajan multinationals

by Emmanuel Joseph
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A former local central bank governor and Inter-American Development Bank consultant is suggesting that Barbados may not have lost much with the demise of several Barbadian-owned multinational firms in this country.

Dr Delisle Worrell, an independent international economic consultant, contended that although the number of Barbadian-owned multinational household brands has dwindled, the services they once provided are still available.

“It may be that not much has been lost with the demise of the household names of the 20th century, except the pride of local ownership,” Worrell noted, in his June economic newsletter.

Worrell is a former consultant to the International Monetary Fund (IMF) on monetary policy, financial stability and stress testing, as well as an ex-consultant to the World Bank, the UN Economic and Social Council, the Caribbean Community Secretariat, and the Foundation for Development Cooperation in Brisbane, Australia. He is also a member of the Bretton Woods Committee—a network of prominent global citizens which works to demonstrate the value of international cooperation and to foster strong, effective Bretton Woods institutions.

Identifying the defunct Barbados Mutual Life Assurance Society, which later became Sagicor Life, as one such locally owned multinational whose absence has not disadvantaged the country, Worrell said, “The Barbados Mutual Life Assurance Society is no more, but Sagicor Life provides Jamaicans, Barbadians and others in the Caribbean with the full range of insurance products available in the North American market.”

The former central bank governor further noted that commercial banks have curtailed personal banking services in favour of online banking and credit and debit cards, leaving credit unions and other nonbanks as the main providers of face-to-face services.

He also noted that a wide variety of new trade and distribution channels are replacing the Caribbean’s traditional trading, wholesale and retailing businesses.

Dr Worrell explained that after The Barbados Mutual’s directors and membership made the change from a mutual society to a corporation and traded their shares on the regional securities exchanges, the emergence of different exchange rates and low trading volumes, especially on the Barbados exchange, revealed that it was more efficient to trade on a single larger securities exchange outside the Caribbean.

“This,” he said, “prompted the move to the Toronto exchange. Other Barbadian multinational firms and insurance companies have also made the decision to sell to Canadian interests. Yet others have failed or have been bought by regional or foreign interests.

“The transformation of Sagicor has arguably made it a stronger company, by virtue of the extraordinary growth which the listing in Toronto has made possible. When the company was first listed on the Toronto Stock Exchange just six years ago, its assets were a little short of US$9 billion; today it has grown to two and a half times that size. Backed by assets and reserves in the Canadian financial market, its capacity to cover risks may be even higher than the growth in its assets suggests.”

Dr Worrell said, in addition, the company’s operating under the surveillance of the highly regarded Canadian Office for Supervision of Financial Institutions lends Sagicor a degree of credibility beyond what Barbados and the rest of the Caribbean can offer.

“It was from that Canadian institution that the region learned supervisory skills,” he said.

Dr Worrell noted that Sagicor is a Canadian-owned insurance company; 50 per cent of its assets are in Canada, another quarter in the US, and of the remainder, the largest share is in Jamaica, not in Barbados.

He also argued that none of the “top executives”, recently reported to have been paid $13.9 million, is Barbadian.

“Barbadians, however, will know that this modest-sized Canadian company is the modern incarnation of the Barbados Mutual Life Assurance Society, born in Bridgetown in 1840. By 1997 when the company’s history entitled The Rise of the Phoenix was published, it stood at the pinnacle of the Barbadian financial system,” the senior economist reasoned. (EJ)

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