Attracting Local and Foreign Investments (Part VII)
In last week's article we discussed many elements of access to financing, which we noted was a huge hindrance to investments by our Dominican people. We touched on a range of financing options including - the use of personal savings; the pooling of savings to invest; borrowing from commercial banks and development banks; and venture capital.
Export-financing is a useful tool that the Dominica Freedom Party (DFP) will also champion. There are many small businesses that engage in exports and potentially many more will emerge as we seek to encourage creative thinking and entrepreneurship among our people. Take for instance our hucksters – they provide an important outlet for our agricultural produce. But the huckster trade can be strengthened in many ways, including, better organization of hucksters in the destination markets; improved transportation to markets; and better access to financing. Some farmers are discouraged from supplying produce to hucksters due to the risk associated with the arrangements for payment - which usually involves waiting until hucksters receive payment in the destination market before farmers are paid. An arrangement to provide upfront payment to farmers once they have delivered produce to hucksters (export financing), would help increase farmers willingness to engage with hucksters. Such an arrangement may be complemented by an adequate export insurance arrangement. Many other businesses that engage in exports can benefit from export financing arrangements. Such financing essentially provides access to working capital which can encourage investment by our local people where they engage in businesses that export their output.
Another hindrance to investment by our local people is the disadvantages that result from the small scale of operations. Our people will be more inclined to invest or to expand their operations where the potential for making a return is enhanced through other arrangements that can help overcome the limitations of small size. For example, arrangements for cooperation across enterprises in various elements of business operations can help reduce cost and thus improve returns. Areas for cooperation vary and could include importation, purchasing inputs, transportation, accounting, marketing, security and storage, among other. Essentially, we are talking about pooled services and the DFP will champion relevant approaches to this, which could involve encouraging businesses to enter into cooperation arrangements, or the organization of pooled services by entrepreneurs for the use of other businesses.
There is also a great need for pooled investments in order to encourage our local people to invest in large operations. This will be one option that the DFP will champion to encourage investment in large hotels for instance. We will not just rely on the Citizen by Investment Programme (CIP) which in any event is at risk of being shut down due to the corrupt management of the programme by the Roosevelt Skerrit administration. But as efforts are made under a new administration to restore economic vigour to our country, more of our people will have greater resources which they may be willing to invest. Yet for large projects, which are often desired to improve viability and profitability, the required investment may be beyond what an individual may be able to do – hence the need to pull resources together. But I know that we don't have a strong culture for that type of cooperation. Therefore, through deliberate strategies, DFP will work to overcome these cultural hindrances. For instance, this could include setting up pilot undertakings, and putting in place institutional arrangements to overcome or mitigate mistrust. But setting up large enterprises requires good organization. Given our country's current dominant "passive service" culture - being more oriented to offer our services to entrepreneurs than to be entrepreneurial ourselves, the DFP will champion the strategy to encourage an entrepreneurial culture and the strategy to organize large enterprises in collaboration with the private sector but where the intention is for the government to not take equity positions or hold these positions for long.
There will be occasions where joint ventures between local and foreign investors will be encouraged to supplement local capital, and to attract desired "know how", or for other strategic purposes. The DFP will champion efforts in those instances to ensure that local investors including our landowners/farmers are adequately supported to negotiate such arrangements.
But all we have said in the last six articles requires complementary effort to foster an entrepreneurship culture among our people. Unless there begins to be a strong entrepreneurial mindset among our people. we would not be as successful as we would like to be in getting our people to invest. How then do we encourage that entrepreneurial culture? Stay tuned for that discussion in the next article.
We continue to strongly encourage all political parties to embrace encouraging our people to invest as a mantra for improving their prosperity and economic dignity. But alas, the Roosevelt Skerrit administration can't be trusted to do anything honourable. They may actually prefer to keep the people dependent on puny handouts while they live like the "wicked rich"!
Let's go places with Freedom!
Dominica Freedom Party.