Opportunity Africa: Leveraging Barbados’ First Cousin Advantages to Maximise Trade and Investment in Africa’s Economic Rising

Donna St.Hill – Bio

Caribbean people have long been at the forefront of African liberation and empowerment. From political giants like Sir Walter Rodney, Marcus Garvey and George Padmore, to more recent stalwarts in the vanguard like Bob Marley, Sir Hilary Beckles and Eddie Grant, out of the geographically tiny islands of the Caribbean have come the towering intellectual raison d’être of African emancipation, black power and Pan Africanism.

Today, as a second “scramble for Africa” ensues around the globe, Barbados along with the rest of the Caribbean has an opportunity to leverage our history of leadership on the frontlines of African unity, now that that same passionate engagement is needed in order to consolidate the economic transformation currently taking place on the African continent. However, while in the past Africa reaped the benefits of efforts of its stolen tribes in the middle of the Atlantic sea, in the midst of the worst economic crisis in living experience, the advantage is not just one way but a potential win-win for Continent as well as the Diaspora in the Caribbean.

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Canadian Government Continues to Hunt for Tax-Avoiders

Submitted by Not Taken

Canadian government has Cameco in its sights for $800 million – Photo credit: The Globe and Mail

Yet another interesting (scary for Barbados) article – Cameco’s $800-million tax battle. I have been sending these recent articles  as a public service so the Minister of Finance (MOF) and Governor of the Central Bank have a heads up on the attack on Canadian tax evaders/avoiders that is undoubtedly about to hit the Barbados offshore industry; if in fact it has not already hit – but unreported.

This is very bad news for Barbados revenue sources. While the Cameco case involves its Swiss subsidiary, it is probably just the tip of the iceberg in CRA’s efforts to collect taxes due to Canada. There must be hundreds, if not thousands, of  Canadaco (Barbados) Limited businesses doing the same same transfer pricing schemes (scams) in order to pay 2% income tax to Barbados, rather than 27% to Canada.

Even those Canadian companies not not already being audited for this this type of tax “management” may decide for close up shop in Barbados to avoid the publicity that a CRA audit will bring.

Government Needs to Protect Small Businesses

Adrian Loveridge – Owner of Peach & Quiet Hotel

Perhaps more than many, I can empathise with individuals who have recently seen their business either fail or brought dangerously close to insolvency. In 47 years it has happened to me twice and in both cases, they were largely external forces which caused near personal financial catastrophe.

Of course, it is easy to attribute the blame to others but in my case, I can unequivocally state that both near failures, which occurred years apart, were largely caused by strike action in the United Kingdom. Both involving the National Union of Seaman. Personally witnessing bus loads, of what can only be described as pickaxe wielding thugs, destroying property and intimidating ordinary people simply wanting to go about everyday work and operating their businesses.

More than a decade later, it was the same union, blockading the English channel ports, which prevented literally thousands of our booked holidaymakers taking their hard earned trips.

Small Business Cannot Get Government to Pay VAT Refund After Two and Half Years

Adrian Loveridge – Owner of Peach & Quiet Hotel

Over the last twenty five years, I believe our small company has been a model corporate citizen on Barbados. We have no outstanding debt to either Government or the private sector, yet next week we will be forced to go cap-in-hand and beg our bankers for an overdraft facility.

Why, you may ask?

Simply to be able to cover our expenses, while we await several VAT refunds totalling over $32,000, which have been overdue for as long as two and a half years. We are told that all the claims have been approved, but are ‘warned’ not to call the VAT office, to chase when payment will be paid. Of course, we have tried to approach Government discreetly by writing to two Ministers with responsibility for either VAT or small businesses, but weeks later, neither have bothered to respond.

Related Links:

• Peach and Quiet:Small Businesses Should Have the Right to Offset

• Are VIPs Exempt From Paying VAT?

• Vat Recall

• VAT Thieves

Notes From a Native Son: Has the Central Bank Failed to Give the Nation Any Direction on Economic Recovery

Hal Austin

Introduction:
The governor of the Central Bank appears quite clearly to have lost all sense of balance as far as the local economy is concerned. Not only has he been in office for the last five years or so, he is yet to come up with a publicly available reasoned and detailed plan for rescuing the nation’s economy from the situation it is in. His recent obvious confusion about the constitutional role of the Central Bank adds further to the confusion. Even local journalists are confused.

Dr Worrell’s reported U-turn on a policy announcement – a veiled criticism of the government, then claiming the government was on track – was but the latest in a series of embarrassing episodes. But first, we must get the legislation right. The Central Bank Act is irrelevant to the new financial architecture post-2007 and the new global regulatory paradigm. I said before, and say again, that the Act needs serious reform, giving the Bank a legally defined role, on par with the Federal Reserve, Bank of England and all the other major Central Banks. Be that role inflation targeting, financial stability, or even more explicitly, managing unemployment rates, there must be a benchmark against which we could measure the Bank. Now we have a situation in which the governor is publicly expressing views about fiscal policy, and one local website even describing the governor/central bank as the government’s primary monetary and fiscal adviser. Not at all. The central bank should be independent of the government of the day and should be reporting direct to parliament.

CARICOM STOCK MARKET REVIEW 2012

Compiled by the Department of Management Studies, UWI, Cave Hill

NEW LISTINGS AND DELISTINGS

There were a number of listings and De-Listings across the regional exchanges in 2012. On the Bahamas International Securities Exchange, Arawak Port Development was listed on April 23 2012. In Guyana, Rupununi Development Company Limited was listed on March 19 2012. In Jamaica, First Caribbean International Bank Jamaica, First Jamaica Investments Limited, Montego Freeport and Pegasus Hotels were De-listed, while on the main market Proven Investments was listed, and, Consolidated Bakeries, Paramount Trading Jamaica, C2W Music Limited and K. L.E. Group Limited were listed on the Junior Market. Supreme Ventures was De-listed from the Trinidad and Tobago Stock Exchange.

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WEEKLY CARICOM STOCK REPORT 3 December to 7 December 2012

Compiled by the Department of Management Studies, UWI, Cave Hill

Keep It Simple.
Keeping it simple in investing is not stupid. Seventeenth-century philosopher Blaise Pascal once said, “All man’s miseries derive from not being able to sit quietly in a room alone.” This aptly describes the investing process. Those who trade too often, focus on irrelevant data points, or try to predict the unpredictable are likely to encounter some unpleasant surprises when investing. By keeping it simple–focusing on companies with economic moats, requiring a margin of safety when buying, and investing with a long-term horizon–you can greatly enhance your odds of success.

 

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WEEKLY CARICOM STOCK REPORT 26 November to 30 November 2012

Compiled by the Department of Management Studies, UWI, Cave Hill

The Float Ratio of a stock refers to the number of outstanding shares held by “public investors” as opposed to company officers, directors, controlling-interest investors or other strategic investors. In essence, the float ratio refers to the proportion of shares that are available for regular trading, as distinct from shareholdings that are only likely to be traded as part of a major re-organization of the firm.  The float ratio is a major determinant of the liquidity of a stock.  Stocks with relatively small float ratios tend be rather illiquid, with very little trading.  This makes it extremely difficult for investors to earn capital gains on such investments, and may leave minority investors at the mercy of the dividend policy set by dominant shareholders.  To help promote liquid markets, the Hong Kong Stock exchange, for example, requires a minimum float of 25% of the outstanding shares.  In a number of cases, stocks listed on Caricom exchanges have float ratios way below this minimum.

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Entrepreneurship Key to ‘Rebirthing’ This Fair Land

Richard Branson believes an entrepreneur searches for change, responds to it and exploits opportunities

“In plenty and in time of need. When this fair land was young, Our brave forefathers sowed the seed. From which our pride was sprung…”

From time to time in Barbados the debate centres on how Barbadians can enable the landscape for entrepreneurship to flourish. A casual observation confirms that a large and growing Barbados middleclass is of the collin-tie variety. Entrepreneurs who are wired to deliver goods and  service of a world class standard continue to struggle and earn respect in Barbados; in stark contrast to Jamaica, Trinidad and Guyana. In fact we may have a problem defining who is an entrepreneur versus a businessman.

BU suspects for an entrepreneurship culture to take root in Barbados  an old mindset has to be dismantled and be transformed, to become a Barbados where the school, heights and terrace, media etc are respectful of this segment. BU has a view that the socialist model which has served Barbados well in a post Independence period has lost its relevance. A consequence is that a mendicant culture is flourishing. Social benefits have morphed to be entitlements in the perception of many. The end result is that we have reached a point where public expenditure has outpaced our ability to generate matching revenue. Ignore the politicians who disagree!

What will it require to energize a comfortable ‘collin-tie’ class that a different approach is needed if we are to protect the standard living we have become addicted?

Here is one of the world’s best known entrepreneurs extolling on – what is an entrepreneur:

WEEKLY CARICOM STOCK REPORT 12 November to 16 November 2012

Compiled by the Department of Management Studies, UWI Cave Hill

Listen to Your Gut.
Any valuation model you may create for a company is only as good as the assumptions about the future that are put into it. If the output of a model does not make sense, then it’s worthwhile to double-check your projections and calculations. Use DCF valuation models (or any other valuation models) as guides, not oracles.

Know Your Friends, and Your Enemies.
What’s the short interest in a stock you are interested in? What mutual funds own the company, and what is the record of those fund managers? Does company management have “skin in the game” via a meaningful ownership stake? Have company insiders been selling or buying? At the margin, these are valuable pieces of collateral evidence for your investment thesis on a company.

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WEEKLY CARICOM STOCK REPORT 5 November to 9 November 2012

Compiled by the Department of Management Studies, UWI Cave Hill

Prepare for the Situation to Proceed Faster than You Think.
Most deteriorating businesses will do so faster than you anticipate. Be very wary of value traps, or companies that look cheap but are generating little or no economic value. On the other hand, strong businesses with solid competitive advantages will often exceed your expectations. Have a very wide margin of safety with a troubled business, but do not be afraid to have a much smaller margin of safety for a wonderful business with a shareholder-friendly management team.

 Expect Surprises to Repeat
The first big positive surprise from a company is unlikely to be the last. Ditto the first big negative surprise. Remember the “cockroach theory.” Namely, the first cockroach you see is probably not the only one around; there are likely scores more that you can’t see.

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CARIBBEAN STOCK REPORT 22 October to 26 October 2012

Compiled by the Department of Management Studies, UWI Cave Hill – Click image to read in PDF

Solid gains on manufacturing stocks drove the major Caribbean indices higher during the week ended October 26. For the week, 3,963,727 shares valued at $4,418,471 crossed the floors of the six stock exchanges across Caricom, with 43 stocks advancing, 36 declining and 44 remaining unchanged. Caribbean Producers was the volume leader with 719,093 shares being traded, Ciboney posted the largest gain for the week (12.32%), while on the losing end, Caribbean Cement fell (10.16%).

For the week, thirteen of the CSX 30 stocks advanced, eleven declined and six were unchanged. The CSX 30 gained 2.79 points to close the week at 1,404.27, up 6.79% year to date. In the CSX 30 there were gains for Wibisco (5.47%), Mayberry (3.17%) and scotia Group Jamaica (1.59%). On the negative side, Caribbean Cement fell (10.16%), NCB Jamaica (6.08%),CW Jamaica (4.78%), Guardian Holdings (3.68%), Desnoe & Geddes (2.12%) and Grace Kennedy (1.17%).

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Notes From a Native Son: What Ethics and Whose Social Responsibility?

Hal Austin

Introduction:
On Wednesday I delivered the keynote address to a Financial Times seminar on ethical and socially responsible investing and thought the content generally of interest to share with a number of you. I have turned the speech in to a blog.

Re-Defining Ethical:
Behaving in an ethical or socially responsible way is one of those things that most people think they know about, but like most social definitions, what is ethical to me may be fun to you. In the not so long ago days, when we talked about ethical and socially responsible investing – and the two are not the same – we knew broadly what we meant: that we did not want to invest in companies that manufactured alcoholic drinks, tobacco products, encouraged promiscuous behaviour, and so on – generally the sort of assets that churches, charities and other religious bodies invest in. However, in today’s climate we have to rip up that definition and start again. As the Chinese say, we are living in interesting times. But in a world of historic social and economic upheaval, this throw away phrase means far more than it at first suggests.