Categories
Archive

Caribbean Island St. Kitts Goes Green for Tourism

By David SouthDevelopment Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY 

Going green may sound like the right thing to do but it can also be associated with being a costly burden and boring. But, as one island nation is proving, being green is a great selling point for attracting tourists and investors – especially in a world where many places are grappling with pollution and resource depletion.

St. Kitts, an island located between the Caribbean Sea and the Atlantic Ocean, is part of the Federation of Saint Kitts and Nevis and has a population of around 35,000 (stkittstourism.kn).

The country shut down its main source of income, the sugar industry, in 2005. Facing dropping profits, it decided the industry was not worth supporting anymore.

But what would be the replacement source of income and employment? St. Kitts has turned to tourism for the answer. While many other Caribbean islands have long drawn on tourism – along with banking and finance, in some cases – in order to diversify economies away from dependence on agriculture, St. Kitts had not developed this sector. As a latecomer, St. Kitts needed to think about how it could do things differently and stand out from the crowd.

St. Kitts decided to become a regional champion for green tourism and green energy, and to lure tourists to the island by championing its green credentials.

The launch in 2013 of a Euro 1.8 million (US $2.48 million) one-megawatt solar energy farm nearby the Robert L. Bradshaw International Airport (http://www.stkittstourism.kn/explore-st-kitts-getting-here-airport.php) – enough to power a few hundred houses – showed St. Kitts was getting serious about going green (http://www.cuopm.com/?m=201302&paged=13).

Joining the new solar farm, an all-green resort is hoping to further boost St. Kitts’ green credentials. The ambitious Kittitian Hill (kittitianhill.com) resort stretches across 162 hectares and includes four hotels, an organic farm and multiple restaurants. In the pipeline is a plan to open film production and editing facilities to lure movie-makers looking for a green film-making studio.

Kittitian Hill is the brainchild of property developer Val Kempadoo (http://www.linkedin.com/pub/valmiki-kempadoo/8/53a/339), who is trying to set a precedent for sustainable resorts in the Caribbean. It is being developed with a mix of foreign experts and local contractors.

The resort boasts organic food fresh from tropical farms and an on-site tropical forest, described as an “edible landscape” offering a bounty of fresh fruit and vegetables. Around the resort, “Pick Me” signs encourage visitors to pick ripe fruit and sit down and make a meal of it.

The grounds include rare and heirloom fruit trees, and the resort hopes to create a reserve to protect endangered species. To spread the green message, the plants and seeds are shared locally with farmers and others. It is part of a strategy to encourage farmers to produce organic food, avoiding pesticides and chemicals, and to farm animals ethically.

The resort’s green ethos even extends to its 18-hole golf course. Golf courses are notorious water-wasters, but this one has a smart water management system, using organic crops and fruit trees to help keep the soil moist, interweaving a farm throughout the golf course. Caddies will guide golfers to the ripest fruits while they putt their way around the course.

“My vision is to bring together community and culture, along with mindful conservation of natural resources,” said Kempadoo. “This means we can offer our guests an unforgettable experience, while bringing lasting, life-changing benefits to the local people and economy.”

As an added sweetener to get investment coming in, St. Kitts and Nevis offers citizenship to investors in the country. In return, investors can travel visa-free to 120 countries – something that has appealed to investors from around the global South.

“It is important for St. Kitts to be selective and careful about development and focus on high-end rather than high-volume tourism,” Kempadoo told Monocle magazine. “The best asset of this island is its natural beauty, and we want to preserve it.”

Published: June 2014

Resources

1) The International Ecotourism Society: The International Ecotourism Society (TIES) is a 501(c)(3) nonprofit organization dedicated to promoting ecotourism. Website: https://www.ecotourism.org/what-is-ecotourism

2) Top Five Eco Resorts of Mexico: Website: http://www.ecotourismtrips.org/topics/show/3809

3) 3 Rivers Dominica Eco Lodge: “An award-winning range of comfortable and charming self-contained cottages, nature, adventure and community-based ecotourism activities, restaurant, rivers and relaxation”. Website: http://www.3riversdominica.com/

4) Jungle Bay Resort and Spa: Award-winning Jungle Bay was built and is operated in alignment with international Geotourism and Ecotourism guidelines. As an alternative to traditional Caribbean tourism, the focus is on enjoyable nature-based activities and wellness of guests with quality service, guided by the principles as set by both National Geographic’s Center for Sustainable Destinations and The International Ecotourism Society (TIES). Website: junglebaydominica.com

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022

Categories
Archive

Global South’s Rising Economies Gain Investor Spotlight

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY

A new book is arguing that the world’s attention should switch away from BRICS countries – Brazil, Russia, India, China and South Africa – and take another look at nations and regions elsewhere across the global South. It argues many are lodestones of future growth and prosperity in the making and will see dramatic changes over the next decade.

The story of the BRIC and BRICS countries is an impressive one. In just eight years from 2000 to 2008, the BRIC countries’ combined share of total world economic output rose from 16 to 22 per cent. This led to a 30 per cent increase in global output during the period, showing how key these countries were to global prosperity in the 2000s. BRIC countries make up nearly half the world’s population and are regional leaders. Taken together, their gross domestic products (GDPs) are not far behind the United States.

Ruchir Sharma’s Breakout Nations: In Pursuit of the Next Economic Miracles (http://www.amazon.com/Breakout-Nations-Pursuit-Economic-Miracles/dp/0393080269) argues that the BRICS are now entering a more stable growth path and thus will not see the rapid-fire expansion and quick profits investors have become used to in the past decade.

“The BRICs,” Sharma told Forbes magazine, “were last decade’s team.”

The BRIC acronym (http://en.wikipedia.org/wiki/BRIC) was coined in 2001 by Goldman Sachs managing director Jim O’Neill, in a 2001 paper titled “Building Better Global Economic BRICs” (http://www.goldmansachs.com/ourthinking/brics/building-better.html). O’Neill predicted that this handful of countries would dominate the growth and economic development story for the years 2000 to 2010. This was because they all shared a similar stage of advanced economic development.

The BRIC states first began meeting together in 2006. South Africa was added in 2010 to form the BRICS acronym.

The buzz surrounding the BRICS countries over the past decade has been justified by their impressive growth rates, declining poverty levels,modernizing economies and societies and growing middle class populations.

China alone had seen its gross domestic product grow by US $5 trillion between 2001 and 2011.

Now, Sharma argues, it is someone else’s turn.

Sharma is head of emerging markets with Morgan Stanley Investment Management in New York, and Breakout Nations looks at where the next economic surprise stories will take place.

“A breakout nation is a nation that will grow above expectations, and will grow more than nations with similar per capita income,” Sharma told Forbes. “You can’t bunch all of the emerging markets together anymore. The last decade saw these countries behaving the same economically, but I think that is behind us now. Investors today will really have to pick their spots.”

He points out that Indonesia was the best performing emerging market in 2011 and has an economy that will surpass a trillion dollars in the coming years.

He also believes Sri Lanka and Nigeria are economies to watch.

Sharma says funds flowing into emerging market stocks grew by 478 per cent from 2005 to 2010, a massive jump compared to 2000 to 2005, when they grew by 92 per cent.

As he sees it, China has now reached middle-income status and its growth rates will not be as high as they have been for the past two decades. In his research, he found that countries like Japan, South Korea and Taiwan all slowed down once their per capita income went past US $5,000.

Investors who watch the emerging markets predict the hot growth areas for the next decade will be around energy, technology, and agricultural resources.

Sharma picks out Indonesia, Turkey, the Philippines, Poland and the Czech Republic for future investment interest, but urges caution with thinking all emerging economies are on course to boom.

“You’ve got to pick your spots, rather than just assume that because you put a tag of emerging on a particular nation, it’s going to boom,” Sharma told The Globe and Mail newspaper.

To make sense of the complexity of fast-emerging economies, a flurry of new investor acronyms has popped up. One of the country clusters is called the CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa (http://en.wikipedia.org/wiki/CIVETS).

The MINTS (Mexico, Indonesia, Nigeria and Turkey) are also set for great growth in the next decade, many investors believe.

Then there is the N-11 or Next 11. This is the MINTS plus Bangladesh, Egypt,Iran, Pakistan, the Philippines, South Korea and Vietnam.

And after that there is VISTA (Vietnam, Indonesia, South Africa, Turkey and Argentina). While clearly the creative juices are flowing at investment houses as they come up with ever-catchier acronyms, a more serious point is being made: many countries in the global South, for the first time in history, are no longer solely dependent on the Western economic system for demand.

These countries, investors note, now have an unprecedented range of options uncoupled from the political, financial and economic legacy of Western developed nations. They say that many nations in the global South are set for a runaway investment boom because they are making changes and modernizing their economies faster than many expect.

As the BRICS economies mature and slow down and take on different priorities based around improving the quality of life of their citizens, those seeking faster profits will look elsewhere. This trend is even happening within the BRICS, as Chinese and Brazilian companies offshore work to Vietnam and Colombia.

There are many new centres of economic activity and rising prosperity across the emerging markets that often fail to gain wider attention. Few would probably know that the Northeast Asian nation of Mongolia – mired in the 1990s in the worst peacetime economic collapse in half a century (http://www.scribd.com/doc/20864541/Mongolia-Update-1998-Book) – is now the world’s fastest-growing economy (http://www.worldbank.org/en/news/2012/02/28/what-behind-mongoliaeconomic-boom) and one of the top places for mobile phone usage and penetration (http://www.businessmongolia.com/mongolia/2012/03/19/mongolia-ringing-the-changes/).

Then there is Myanmar (formerly Burma), where many are hoping recent moves toward democracy and improvements in diplomatic relations will lead to an economic boon for the region. Investors are also targeting Kazakhstan in Central Asia.

Reflecting these changing realities, Standard Bank, Africa’s largest bank, has been documenting the rising role played by the Chinese currency in international trade. A recent report forecast US $100 billion (R768 billion) in Sino-African trade would be settled in the Chinese currency, the renminbi, by 2015. This would be double the trade between China and Africa in 2010. It also found 70,000 Chinese companies are using the renminbi in international trade transactions.

Resources 

1) Beyondbrics blog: A blog by the Financial Times calling itself “The Ft’s emerging markets hub”. Website: http://blogs.ft.com/beyond-brics/

2) BRICS Summit: The Fourth BRICS Summit was hosted in New Delhi on 29 March 2012 under the overarching theme of “BRICS Partnership for Global Stability, Security and Prosperity.” The Summit has imparted further momentum to the BRICS process. Website: bricsindia.in

3) Market Oracle: A good source for updates on investor sentiment about the emerging market economies. Website: marketoracle.co.uk

4) Monocle magazine: “A briefing on global affairs, business, culture and design” often featuring trends in the emerging market countries. Website:

monocle.com

5) BRICS Information Centre, University of Toronto. Website: brics.utoronto.ca

Creative Commons License

This work is licensed under a
Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2022

Categories
Archive

Province For Sale: Step Right Up For An Opportunity To Buy What You Already Paid For

“This is not being driven by fiscal or ideological motivation, though that may seem funny.” Conservative advisor James Small

By David South

Id Magazine (Canada), December 12 to December 26, 1996

It is looking more and more like the Conservative government will launch a massive privatization campaign by the middle of next year. And it is becoming clear how key government assets such as Ontario Hydro, liquor stores and public broadcaster TVO will end up in private hands. The prevailing ideology of key advisors to the Harris government, including influential financial heavyweights at Canada’s top underwriters, is leaning towards a free-for-all where the highest bidder will win. 

To date, the government has been coy about its plans, occassionally making vague threats that certain services need to be “looked at.” Assets that could go on the block include road maintenance, jails and the Ontario Clean Water Agency. In August, the government appointed former banker Rob Sampson as the minister for privatization. His days as vice-president of corporate finance at Chase Manhattan make him a popular candidate with the suit, tie and blouse crowd on Toronto’s Bay Street. 

While Sampson is so far surrounded by only a handful of advisors, the plan is to create a privatization agency that will supervise each sell-off after getting the go-ahead from Cabinet. 

Sampson’s policy advisor James Small, sums up the government’s attitude: “This is not being driven by fiscal or ideological motivation, though that may seem funny. We can do better for less, even though that may sound trite.”

The government’s taxpayer-is-always-right attitude means it believes the best option is to float the newly privatized companies on the stock market, letting the highest bidder win. 

“We have sophisticated investors in Ontario,” continues Small. “[Privatization] is not driving us to expand shareholders in Ontario. Can we, as taxpayers, benefit? What will give the best results. It is not ideological. In Canada we have a consumer culture and a very mature social structure. The market will determine what people will pay for things. We didn’t get elected to sell the family silver.

“There has been 16 years of this happening. But is Margaret Thatcher the way to go? One of the advantages for Ontarians is that we can pick and choose the best approach. It’s difficult to point to one part of the world, one way we could provide better service.”

Shareholder Democracy

A concept popularized by British prime minsiter Margaret Thatcher in the 1980s, shareholder democracy actually saw the light of day in British Columbia back in 1979. Then, premier Bill Bennett embarked on an ambitious scheme to give every citizen of the province, including children, five shares in the British Columbia Resources Investment Corporation, a mining and logging company. Out of a population of 2.4 million, 2.07 million applied for the shares. While that idealistic experiment eventually failed as a series of bad deals pushed the share price down and arrogant executives pissed people off, it was a bold initiative. 

Similar schemes have been used in Eastern Europe to increase private ownership in the economy. 

But it is looking more and more like the government is going to try and avoid even a semblance of giving Ontarians a fair shake, by selling shares on the stock market to whoever can afford them. While the NDP and unions are opposed to privatization for some very good reasons, they are missing out on an opportunity to push the government to divide the shares up amongst all Ontarians (not necessarily a big stretch for the NDP, who brought us toll highways). 

Shareholder democracy has developed two broad – and opposing – interpretations. For the left, a shareholder democracy in its truest sense is public ownership. For right-wing idealists, it means a nation of share owners playing the stock market with all the aggressiveness and greed of free-market capitalists. 

Like any ideal, the reality is far more disappointing. Any small-time stock holder will tell you about arrogant CEOs and board members not listening to them. Ask any Ontarian on the street, and they will tell you about arrogant and incompetent civil servants who aren’t listening to them. 

There is a more radical and fairer approach to privatization that would suit the populist rhetoric of the Conservatives. It involves selling shares along the lines of WWII war bonds. This solution would satisfy left-wing concerns the rich would run away with all the loot, while massively increasing share ownership in Ontario and raising funds to improve services and infrastructure. By selling millions of shares cheaply, and forbidding the trading of those shares, millions of Ontarians could reap the benefits of profit-making assets. This scheme would be contingent on reorganizing those agencies to become profitable, but could avoid a fire sale of taxpayer-funded agencies to wealthy corporations and investors. If critics of the government took the opportunity to guide the Conservatives, when a privatization is announced, towards mass share ownership, some good would come of it. 

With all its scandals, bad publicity, grotesque executive salaries and inconsistent service that has turned privatization into a dirty word in the UK, the fact is share ownership did go up. In 1979 when Conservative prime minister Margaret Thatcher was elected, shares were owned by 2.5 million people; by 1992, 11 million people had shares or a quarter of the population. Narrowly defined, that is a success. 

But the mainstream financial community loathes the idea for obvious reasons. At consultants KPMG, corporate evaluater John Kingston symbolizes the opposition to anything other than a straight sell-off at the stock exchange. “Issuance of shares to employees doesn’t put any new money into the coffers, like in the Eastern European example of gifting shares,” he says. “But selling shares to the public does provide some compensation. They must satisfy taxpayers by getting the right amount.”

“I think if government is going to privatize then it is a good time to do it,” says Deloitte and Touche’s Jim Horvath, a veteran of privatizations in Argentina, Hungary and Brazil, who supports a quick sell. “The stock market is up. There are a lot of deep pockets looking for investments.”

The mantra for an open sale will get louder as each privatization approaches. But such a sale does have its disadvantages. 

Advantages of an open sale: 

Can get the highest price. Use the funds to pay down debt or a one-time only increase in funds for something like health care. Argue protecting taxpayers’ interests by selling for the best price. The asset could raise funds on the stock market to improve infrastructure/services. Once in private hands, future governments will have a hard time trying to buy assets back. 

Disadvantages of an open sale: 

Taxpayers are also consumers; they could get screwed by any increase in rates. There is no guarantee the government will use funds for public good (maybe they will build another casino?). Any pay-off is once only, whereas the LCBO for example, makes money every year. Government could make a mistake and sell for too low a price. 

Government Agenda

Two factors could significantly slow down the government’s ability to launch privatizations. The Conservatives have relished making cuts to government services despite labour unrest, but it has shown little skill at the more intellectual task of implementing a new philosophy. Major planks of their Common Sense Revolution, such as workfare, are bogged down and in chaos. Privatization will need a sophisticated sales job to counter-attack the slick television and newspaper ads unions have been running for the past year attacking privatization. Encouraging mass share ownership would show that leadership the government sorely needs. 

The second liability is its own ambitious agenda. Already the Legislature has had to extend its term to try and deal with a backlog in reforms, including chopping another $3 billion, rearranging how government services are delivered and fighting the province’s doctors. But if it must privatize, then the honourable thing to do is to offer mass ownership. To do otherwise will show Ontario isn’t even capable of the heights of imagination some of Eastern Europe’s new democracies have shown. 

Note: I debated this topic on CBC TV’s Face Off after this was published. 

Cover headline: “The Harris Tories have an opportunity to turn Ontario into a shareholder democracy. Will they take it?”

This work is licensed under a Creative Commons Attribution 4.0 International License.

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2021