Come March next year Government will have to start repayment on a Government-to-Government concession loan from the People’s Republic of China for over one billion dollars for the construction of...
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Mitchell visits his friend Manning
Not too many Caribbean islands can boast of having a prime minister who is not only an avid cricketer, but who is also a former university professor in mathematics and a dedicated advocate for science and technology training for development.
Keith Claudius Mitchell gained a BSc degree in Mathematics and Chemistry at UWI, followed by a master’s degree from Howard University and a doctorate in mathematics and statistics from the American University. He taught at Howard University from 1977 to 1983, and has written several textbooks on mathematics for Caribbean students.
Former captain of the Grenada cricket team in 1973, he has been the leader of the New National Party since 1989. He’s proved himself to be a veteran politician, winning the popular vote in Grenada four times: in 1995 (when he first became PM), 1999, 2003, and most recently, in the February 2013 Grenada national election, when thousands of the unemployed voted for his New National Party (NNP). Faced with a large national debt, PM Mitchell’s NNP administration has decided to implement an IMF structural adjustment programme.
SHEREEN ALI spoke to Dr Mitchell last week Monday during his visit to Trinidad to seek greater regional investment. Prime Minister Mitchell is also the Minister of Information, Implementation, National Security, Disaster Management and Home Affairs in Grenada.
Q: What are some of the interests you are working towards with your visit to T&T?
A: Interest from Trinidadians about investment in Grenada is based on a historic relationship. Given the strong family connection between the two countries, we have always felt that this is an important area to attract serious investment into Grenada. There are interests in the tourism and agricultural sectors. There is some interest already, and we would certainly like to see a lot more.
I also want to use the opportunity [of my visit] to pay my respects to the former prime minister Patrick Manning, who has been a very good friend to Grenada. I always remember his interest when [hurricane] Ivan struck and totally destroyed our country. He was the first Prime Minister to come into Grenada and literally spend a whole day with me, on a personal level…he came as Patrick, to a friend, Keith.
He spent the entire day with me at my home…his view was that: if I am not OK personally, then he would not be in a position as prime minister to be there for me…I have never forgotten that.
It is well known that Trinidad played a major role in Grenada’s revival. So my visit is twofold: to pay a personal visit to Patrick Manning, and also, to touch base with some key business people who have serious interest in investment in Grenada.
What advantages does Grenada offer to investors in tourism and other businesses?
For one, the stability of Grenada is crucial. When people come to Grenada, there is a sense of peace and order. Given the government initiative in providing incentives for people to take risk, we have stated consistently that our policy is to increase serious private sector initiative in development of the country as a way to reach Grenada’s true potential.
So we are lessening the role of the public sector in terms of its “over-reach” in the economy, and expanding the role of the private sector. The philosophy of the government is to encourage people to invest. There are very attractive investment packages in various areas.
Besides that, let’s face it, the beauty of Grenada. The good thing about our country is that we have a very diversified tourism product. Many countries have a beach-type tourism activity, and that’s the end of the story. We have a mixed tourism product: the eco-tourism potential is extremely exciting. We have lakes and waterfalls. And we have the beach and Grand Anse and other places. So there are enormous possibilities for people interested in all types of tourism activities.
Plus, our agricultural activities have rich opportunities: our cocoa is known as one of the best cocoa in the world, and there is nutmeg.
The nutmeg industry was devastated by the hurricanes of Ivan in 2004 and Emily in 2005. How is that industry recovering?
It’s coming…a lot of the trees have been resuscitated. But clearly we need a lot more investment in that area. And the question is the availability of resources to really expand the sector in the way we want it to. One problem is the lack of attraction for young people to get involved. Basically, we have not had the resources necessary to invest, to see the true potential of the sector and to encourage young people.
They want to see a useful lifestyle. Not like in my father’s time, when you don’t get to see your fruits grow. Young people today need to see a useful lifestyle. Government simply does not have the resources for the necessary investment [to make that happen for them].
In view of your current investment thrust, how secure is the offshore banking sector now, since the many banking, money laundering and bribery scandals in the late 90s and early 2000s, including one involving the First International Bank of Grenada, when Gilbert Ziegler defrauded investors of millions of dollars? What measures are in place to protect both investors and the public interest in monies earmarked for public sector investment initiatives?
Following the difficulties of the early 2000s, Grenada embarked on a massive clean-up of the sector. As a consequence, there are no offshore banks operating in Grenada. Next, we established a strong regulatory framework with the establishment of the Grenada Authority for the Regulation of Financial Institutions (Garfin) in 2006. This authority is responsible for regulating all non-bank financial institutions including offshore financial services. Today, Garfin is a model institution.
At present, we are examining whether, and to what extent, there may be new opportunities in the offshore sector, though not necessarily in banking. One thing is very clear: we are going to be very selective in future. Moreover, the enduring lesson of the past is that the promotion of new business must be accompanied by strong regulation.
What are the business opportunities for investors from T&T?
Several. For instance, leasing the estates. There are several Trinidadians who have already [expressed interest] in acquiring leases and investing heavily, in soursop production, for instance. You know, soursop is seen as the “miracle drug” now. Also, our cocoa is one of the best in the world. They are making chocolate bars right now that sell all over Europe. Every bit they produce, they sell. But the resources to really expand are needed. The job creation from this is quite promising.
In light manufacturing, for example, there are many products made from nutmeg—oils, soaps, other products—but again, investment is the problem.
What attractions are you offering investors?
The tax incentives are very liberal. Also, getting your cash back out—there is no limitation on this. You can export your cash back to wherever you wish to. There is no hindrance at all in that respect. Government is not going to interfere with a lot of taxes. The country will benefit from the development in terms of job creation, and we get something out of the export earnings produced. So there’s a lot of potential there.
The unemployment level in Grenada is really high: 30 to 40 per cent. That must be extremely challenging to deal with.
Extremely challenging. And we’re dealing with a young population. For job creation, the tourism sector is key. Right now, we have a few hotel projects coming on stream and they are looking at training people. We are also doing a lot of training; over 3,000 young people are actively training in various sectors, particularly hospitality arts. So that when the jobs come, we won’t have to import people.
One of the key factors for developing these small economies is information and communications technology (ICT). We are deeply working that particular area because the ICT platform is key in developing our economy, not only for the direct job potential, but in terms of improving services.
There is wastage in the Government bureaucracy—I’m sure it exists here too, and all over the region—because we have simply not used enough technology in our operation. We are still operating in a lot of archaic ways; we need to modernise to gain more benefit for the resources that we are investing in.
So we are trying to get more people into IT services in the country. For instance, look at what’s happening in India. Indians went abroad and gained a lot of experience and knowledge, and returned home, creating firms that now provide outsourcing services all over the world.
Grenada was declared bankrupt by the Washington-based International Monetary Fund (IMF) in September 2013. How is this situation today? Has it been improving?
We met a very challenging situation—there was very poor management of the economy when we left office. We were in government from 1995 to 2008; during that period the average growth rate of the country was five to six per cent. The only two bad years were the year of 9/11—2001—which affected the tourism product of the entire region; and the year of hurricane Ivan, 2004, when the whole country was destroyed. But outside of that, in the economy we were meeting our responsibilities and creating jobs in the country.
But since we left office in 2008, the previous government made a mess of things to the point that they had negative growth for four and a half years. We are just back, and already we are back in positive numbers. The economy must be creating opportunities, and there must be expansion in several areas, for you to have the job opportunities for people. The fundamental problem that we met was that the country was in dire shape....
What they did to pay salaries every month was sell assets. And if all you are doing in a business is every month you sell a piece of the business to pay workers, then soon you will not have a business to run.
They were just selling land, buildings, they sold all the shares we had in the electricity company, the telephone company…They were just selling everything. In fact there is some land that we thought we had, which we were thinking of building hotels on, but when we checked, the NIS bought it. We are now negotiating with NIS to get it back.
So the fact is, they weren’t paying debts. Not to UWI, or other bodies. The Caribbean Development Bank (CDB) was downgraded twice because of Grenada. You know what that means for the entire region, because the downgrade meant that more money from CDB would costs the individual governments more. So they were owing the CDB millions of dollars. Two weeks after I came in, for example, I had to find five million dollars to pay CDB. And they were begging me: please, if you don’t pay, they will downgrade us again...
So we had to get into a structured programme with the IMF and the World Bank: (saying) this is where we are.
Soon I should be signing a letter of intent with the IMF and the World Bank which triggers the programme where we would expect to get some debt relief, and also some cash to invest in several areas, for example in training and development; in private sector development such as small businesses so that people who are interested in starting little businesses can do so and not depend on government for a job in the public service—because that doesn’t exist right now.